Avadhana Saraswathi Peetham, Hyderabad V. DIT (E), Hyderabad

ITA 357/HYD/2013

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 4812 (ITAT-HYDERABAD)
• Duration Of Justice: 5 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-08-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: misc
• Appeal Filed On: 21-03-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R LAXMAN
• Assessee Lawyers: S RAMA RAO
• Keywords: Charitable institution
• Section: 80G; 12AA; 6; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES A : HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER ITA.NO.357/HYD/2013 AVADHANA SARASWATHI PEETHAM, HYDERABAD PAN AAATA5272A VS. DIRECTOR OF INCOME TAX (E) HYDERABAD. (APPELLANT) (RESPONDENT) FOR APPELLANT : SHRI S.RAMA RAO (A.R.) FOR RESPONDENT : SHRI R.LAXMAN (D.R.) DATE OF HEARING : 08.08.2013 DATE OF PRONOUNCEMENT : 23.08.2013 ORDER PER SMT. ASHA VIJAYARAGHAVAN, J.M. THE APPEAL OF THE ASSESSEE IS AGAINST THE ORDER OF DIT (EXEMPTION) REFUSING TO GRANT APPROVAL UNDER SECTION 80G FOR TH E ASSESSEE. ORIGINALLY OIT HAD REJECTED APPROVAL UNDER SECTION 80G(5) FOR T HE ASSESSEE VIDE HIS ORDER DATED 22.05.2010. ON APPEAL, ITAT IN ITA.NO.4 96/H/2010 DATED 28.06.2012 SET ASIDE THE MATTER TO THE FILE OF DIT (EXEMPTION) TO CONSIDER IN ACCORDANCE WITH LAW. 2. DIT(E) WHILE GIVING EFFECT TO THE ORDER OF THE I TAT, AGAIN REJECTED APPROVAL UNDER SECTION 80G(5). THE FIRST OBJECTION O F THE DIT(E) IS THAT SHRI SHARMA, CHAIRMAN AND MANAGING TRUSTEE HAS BEEN OCCU PYING THE PREMISES OF THE TRUST WITHOUT PAYING RENT. 3. THE NEXT OBJECTION OF DIT(E) IS THAT TEMPLE EXITS IN THE PREMISES OF THE TRUST WHICH IS INVOLVED RELIGIOUS ACTIVITIES. A TEM PLE OF GODDESS SARAWATHI HAS BEEN CONSTRUCTED INSIDE THE TRUST PREMISES. DIT (E) CONCLUDED THAT EXPENDITURE ARE OF RELIGIOUS IN NATURE EXCEEDS 5% OF THE INCOME AND ALSO THE ASSESSEE HAS NOT ESTABLISHED REASONABLENESS OF PROV IDING HOUSE FOR RENDING 2 TO MR. SHARMA. HENCE THE ASSESSEE IS NOT ENTITLED T O APPROVAL UNDER SECTION 80G(5). 4. AGGRIEVED THE ASSESSEE IS ON APPEAL. THE LEARNED COUNSEL FOR ASSESSEE, SUBMITTED THAT THE ASSESSEE HAS BEEN GRANTED APPROV AL UNDER SECTION 80G(5) (VI) TILL 31.03.2009 AND THAT THERE IS NO CH ANGE IN CIRCUMSTANCES AFTER 31.03.2009 AND THE RETURN OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2009- 10 TO 2012-13 HAS BEEN ACCEPTED BY THE DEPARTMENT AND N O OBJECTION OR DISALLOWANCE HAS BEEN MADE ON THE SAME SO FAR. 5. THE LEARNED COUNSEL RELIED ON THE FOLLOWING CASE LAWS : 1. THE DECISION OF HIGH COURT OF GUJARAT IN THE CAS E OF N.N. DESAI CHARITABLE TRUST VS. CIT REPORTED IN 246 ITR 452 (GUJ.) WHEREIN THE HON'BLE HIGH COURT HELD THAT ONCE THE TRUST WAS REGISTERED AND WAS GRANTED APPROVAL UNDER SECTION 80G(5), THE CIT CAN NOT REJECT THE REQUEST FOR SUCH APPROVAL ON THE GROUND THAT THE INCOME OF THE APPELLANT TRUST WAS LIKELY T O BE INCLUDED IN THE TAXABLE INCOME. 2. THE DECISION OF THE GUJARAT HIGH COURT IN THE CA SE OF ORPAT CHARITABLE TRUST VS. CIT REPORTED IN 256 ITR 690 HELD THAT CONTRAVENTION OF SEC.11(5) WOULD HAVE BEARING ONLY AT THE POINT OF TIME OF ASSESSMENT OF THE CHARITABLE TRUST AND COULD NOT BE A MATERIAL CONSIDERATION FOR REFUSAL OF APPROVAL U/S. 80G(5). 3. THE DECISION OF HIGH COURT OF KARNATAKA IN THE C ASE OF DIT (E) VS. ADHAAR AJHAR REPORTED IN 60 DTR 365 HELD THAT THE APPLICATION FOR RENEWAL OF RECOGNITIO N UNDER SECTION 80G CAN NOT BE REJECTED EVEN WHEN THERE WERE CERTAIN CONTRADICTIONS OF SEC.13(I)(D)(I IA) R.W.S.11(5) OF THE I.T. ACT. 4. THE HIGH COURT OF PUNJAB & HARYANA IN THE CASE OF CIT VS. RAJAMALE EDUCATIONAL SOCIETY REPORTED IN 65 DTR 307 HELD THAT ONCE EXEMPTION U/S. 12AA WAS GRANTED AND THE SAME WAS CONTINUING, THE CIT WAS NOT JUSTIFIED IN DENYING APPROVAL UNDER SECTION 80G OF THE I.T. ACT. 5. THE HIGH COURT OF PUNJAB & HARYANA IN THE CASE OF SONEPAT HINDU EDUCATIONAL AND CHARITABLE SOCIETY 3 VS. CIT REPORTED IN 278 ITR 262 HELD THAT THE SCOPE OF ENQUIRY BY THE CIT EXTEND ONLY TO SEE THE ALLOWABILITY OF THE APPLICATION FOR EXEMPTION AND NOT WHETHER THE INCOME OF THE APPELLANT WOULD BE TAXABLE OR NOT CAN NOT BE DETERMINED AT THE TIME OF GRANTING RECOGNITION U/S. 80G(5) OF THE I.T. ACT. 6. THE KARNATAKA HIGH COURT IN THE CASE OF DIT (E) VS. INTERNATIONAL SOCIETY FOR KRISHNA CONSCIOUSNESS REPORTED IN 54 DTR 126 HELD THAT WHERE EXPENDITURE INCURRED IN THE PRECEDING TWO YEARS ON RELIGIOUS ACTIVITIES IS LESS THAN 5% OF THE TOTAL INCOME, RENEWAL OF RECOGNITION U/SEC. 80G(5) CAN NOT BE DENIED. 7. THE DECISION OF THE HON'BLE ITAT, JAIPUR BENCH-A IN THE CASE OF BHAGWAN MAHAVIR PURUSHARDHA PRERANA NIDHI NYAS VS. CIT REPORTED IN 144 TTJ 379 HELD THAT IF THERE IS VIOLATION OF THE PROVISIO NS U/SEC.13(1)(B) OF THE I.T. ACT IT EFFECTS THE EXEMPTION U/SEC.11 FOR SUCH ASSESSMENT YEAR AND WOULD NOT EFFECT THE REGISTRATION. 8. THE DECISION OF THE HON'BLE ITAT, PUNE BENCH IN THE CASE OF SHIKSHAN PRASARAK MANDALI VS. CIT REPORTED IN 10 DTR 470 AND 117 TTJ 337 HELD THAT AS LONG AS THE EXEMPTION UNDER SEC. 11 IS AVAILABLE TO THE SOCIETY THE REQUIREMENT OF 80G(5) IS TO BE CONSIDERED AS FULFILLED. 6. WE HEARD BOTH THE PARTIES AND PERUSED THE MATERI AL AVAILABLE ON RECORD. AS REGARDS PROVIDING FREE RESIDENTIAL HOUSE TO SHARMA, THE PROVISIONS OF SECTION 13(2) WILL APPLY ONLY IF THE BENEFIT ACQUI RED BY SHARMA IS UNREASONABLE OR EXCESSIVE HAVING REGARD TO THE MARK ET CONDITION. THE ASSESSEE SUBMITTED THAT SHRI SHARMA HAS BEEN TEACHI NG VARIOUS ASPECTS OF MEMORY AND OTHER RELATED MATTER TO THE STUDENTS AND HAS NOT BEEN CHARGING ANY FEES FROM THE TRUST FOR DOING SO. THEREFORE IF R ENT WERE TO BE COLLECTED FROM THE SHARMA THEN THE FEE PAYABLE TO HIM FOR THE SERVICES RENDERED BY HIM SHOULD ALSO BE TAKEN INTO ACCOUNT. IF THAT IS T AKEN INTO ACCOUNT THEN THERE WILL BE NO BENEFIT ACCRUING TO HIM, AS FEE PA YABLE TO HIM IS MUCH MORE THAN THE RENT RECOVERABLE FROM HIM. THE DEPARTMENT HAS NOT ESTABLISHED THAT THE PROVISION OF RENT FREE ACCOMMODATION TO MR .SHARMA IS EXCESSIVE AND UNREASONABLE HAVING REGARD TO THE SERVICES REND ERED BY HIM. 4 7. AS REGARDS TEMPLE IN THE TRUST PREMISES, AS POIN TED OUT BY THE ASSESSEE THAT GODDESS SARASWATHI IS ACCEPTED BY PEOP LE AS GOD OF WISDOM AND IS ONLY TO SUPPORT AND ENCOURAGE STUDENTS. IT IS SUBMITTED TEMPLE WAS SARASWATHI, GODDESS OF LEARNING HAS BEEN CONSTRUCTE D BY THE STUDENTS THEMSELVES BY COLLECTING MONIES AMONG THEMSELVES. TH E OBJECT OF THE TRUST IS NOT FOR CARRYING OUR ANY RELIGIOUS ACTIVITY. IN FACT O UT OF THE EXPENSES ALLOCATED BY DIT(E) AS TEMPLE EXPENSES, EXPENSES OF ME ALS HAVE TO BE EXCLUDED BECAUSE THE ASSESSEE TRUST IS PROVIDING MES S TO STUDENTS AND POOR PEOPLE. IN THE PROFIT AND LOSS STATEMENT, THERE IS NO SEPARATE ALLOCATION OF EXPENSES SPECIFICALLY FOR THE TEMPLE. 8. AS REGARDS PUBLICATION OF CD AND BOOKLETS, IT HA S BEEN SUBMITTED THAT IT IS ONLY IN CONNECTION WITH THE PROCESS OF DEVELOP MENT OF MEMORY, WHICH IS PART OF THE EDUCATION. EVEN OTHERWISE, AS RECEIPT O F SALE OF CD ETC DID NOT EXCEEDS RS.10 LAKHS IN ANY OF THE YEAR OR PREVIOUS YEAR , PROVISO TO SECTION 2(15) HAS NOT APPLICATION. 9. IN THE CIRCUMSTANCES, WE FEEL THAT PROVISIONS OF RENT FREE ACCOMMODATION TO SHRI SHARMA WHO IS RENDERING THE YEOMAN SERVICE OF IMPARTING EDUCATION TO THE STUDENTS AND EXISTENCE OF THE TEMPLE OF GODDESS SARASWATHI BUILT BY STUDENTS AND SALE PROCEEDS OF CD S, BOOKLET ETC WHICH CONSTITUTED MATERIAL FOR STUDENT (RECEIPT FROM WHIC H WAS IN ANY EVENT LESS THAN RS.10 LAKHS PER YEAR) CANNOT BE THE REASON FOR REFUSING APPROVAL UNDER SECTION 80G. 10. IN THE DECISION OF ITAT, NAGPUR BENCH IN THE CA SE OF SHIV MANDIR DEVSTTAN PANCH COMMITTEE SANSTAN VS. CIT-1, NAGPUR (2013) 56 SOT 456 (NAGPUR) IT HAS BEEN HELD AS FOLLOWS : 10. NOW COMING TO THE QUESTION WHETHER THE ASSESSE E TRUST HAS VIOLATED THE CONDITIONS AS LAID DOWN IN CLAUSE (III) OF SECTION 80G(5), WE REPRODUCE THIS CLAUSE WHICH READS AS UNDER: '(III). THE INSTITUTION OR FUND IS NOT EXPRESSED TO BE FOR THE BENEFIT OF ANY PARTICULAR RELIGIOUS COMMUNITY OR CA STE.' 5 THIS CLAUSE STIPULATES THAT THE INSTITUTION OR THE TRUST MUST NOT BE FOR THE BENEFIT OF ANY PARTICULAR RELIGIOUS COMMUNITY OR CASTE. THE WORDS 'RELIGIOUS COMMUNITY' MEANS THE GROUP OF PEOPLE HAVING A COMMON RELIGION OR FAITH. THE WORD 'RELIGION' MEANS THE BELIEF IN AND WORSHIP TO A SUPERHUMAN CONTROLLING POWER, SPECIALLY THE PERSONA L GOD OR GODS, A PARTICULAR SYSTEM OF FAITH AND WORSHIP. IT MEANS THE TRUST SHOULD NOT BE FOR THE BENEFIT OF ANY PART ICULAR GROUP OF PERSONS HAVING THE COMMON BELIEF IN WORSHI PING OF SUPERHUMAN CONTROLLING POWER OR HAVING COMMON SYSTEM & FAITH AND WORSHIP. IF THE TRUST IS FOR THE BENEFIT OF ANY PARTICULAR RELIGIOUS COMMUNITY, IT WOULD INCLUD E THE ADVANCEMENT, SUPPORT OR PROPAGATION OF A RELIGION A ND ITS TENANTS, IT COULD BE SAID THAT A TRUST HAS VIOLATED THE CONDITION NO. (III) OF SECTION 80G(5). THE OBJECTS A S HAS BEEN POINTED OUT BY CLT, NOWHERE TALKS OF ADVANCEME NT, SUPPORT OR PROPAGATION OF A PARTICULAR RELIGION, WO RSHIPPING OF LORD SHIVA, HANUMANJI, GODDESS DURGA AND MAINTAINING OF TEMPLE, IN OUR OPINION, CANNOT BE RE GARDED FOR THE ADVANCEMENT SUPPORT OR PROPAGATION OF A PAR TICULAR RELIGION. NO EVIDENCE OR MATERIAL WAS PLACED ON REC ORD OR BROUGHT BEFORE US BY THE LEARNED DR WHICH MAY PROVE THAT THESE OBJECT RELATE TO A PARTICULAR RELIGION. NO DO UBT THE DR ARGUED THAT IT RELATE TO HINDU RELIGION BUT IN OUR OPINION IT IS NOT SO. LORD SHIVA, HANUMANJI, GODDESS DURGA DOES NOT REPRESENT ANY PARTICULAR RELIGION, THEY ARE MERELY REGARDED TO BE THE SUPER POWER OF THE UNIVERSE. . . . . . .. . . . . . . . 12. EVEN WE NOTED THAT ALL THE BUILDING MAINTENANC E EXPENSES, FREE FOOD EXPENSES AND FESTIVAL, PRAYER A ND DAILY EXPENSES CANNOT BE REGARDED TO BE THE ONE INC URRED FOR RELIGIOUS OBJECT, EVEN IF THE OBJECT IS REGARDE D TO BE RELIGIOUS ONE. IT IS NOT DENIED THAT IN THE BUILDIN G THE ASSESSEE WAS CARRYING YOGA CENTRE, TAILORING TRAINI NG CENTRE AS WELL AS FOOD FOR THE NEEDY AND OPTICAL CE NTRE FOR THE POOR. 13. EXPLANATION 3 TO SECTION 80G(V) STATES THAT 'IN THIS SECTION, 'CHARITABLE PURPOSE' DOES NOT INCLUDE ANY PURPOSE T HE WHOLE OR SUBSTANTIALLY THE WHOLE OF WHICH IS OF A R ELIGIOUS NATURE.' THIS EXPLANATION TAKES NOTE OF THE FACT TH AT AN INSTITUTION OR FUND SHALL BE FOR A CHARITABLE PURPO SE AND MAY HAVE A NUMBER OF OBJECTS. IF ANYONE OF THESE OB JECTS IS WHOLLY OR SUBSTANTIALLY WHOLLY OF A RELIGIOUS NA TURE, THE INSTITUTION OR FUNDS FALLS OUTSIDE THE SCOPE OF SEC TION 80G 6 AND THE DONATION TO IT WILL NOT MAKE THE DONOR ENTI TLED FOR THE DEDUCTION UNDER SEC. 80G. THE OBJECTS AS PER EXPLANATION 3 MUST BE WHOLLY OR SUBSTANTIALLY WHOLE OF WHICH MUST BE OF RELIGIOUS NATURE THE ASSESSEE HAS SUBMITTED ALL THE EVIDENCE INCLUDING THE OBJECTS AN D HOW THE EXPENDITURE HAS BEEN INCURRED BY IT. THE ONUS, IN OUR OPINION, GETS SHIFTED ON THE REVENUE TO PROVE THAT THE ASSESSEE-TRUST IS WHOLLY OR SUBSTANTIALLY FOR THE R ELIGIOUS PURPOSE. THERE IS NO ALLEGATION ON THE PART OF THE REVENUE THAT THE WHOLE OR SUBSTANTIALLY WHOLE OF THE OBJECT OF THE TRUST IS TO PROPAGATE OR ADVANCE SUPPORT TO PARTICU LAR SECT. WE MAY OBSERVE THAT HINDUISM IS A WAY OF LIFE OF A CIVILIZED SOCIETY, IT AS SUCH IS NOT A RELIGION. IN THIS REGARD WE RELY ON THE CASE OF T.T.KUPPUSWAMY CHETTIAR V. STATE OF TAMIL NADU STATE OF TAMIL NADU [1987] 100 LW 1031 IN WHICH IT WAS HELD 'THE WORD 'HINDU' HAS NOT BEEN DE FINED IN ANY OF THE TEXTS NOR IN JUDGMENT MADE LAW. THE W ORD WAS GIVEN BY BRITISH ADMINISTRATORS TO INHABITANTS OF INDIA, WHO WERE NOT CHRISTIANS, MUSLIMS, PARSIS OR JEWS. THE ALLEGED HINDU RELIGION CONSISTS OF FOUR CASTES BRAHMINS, KSHATRIYAS, VAISHYAS AND SUDRAS BELONGING ULTIMATELY TO TWO SCHOOLS OF LAW, MITAKSHARAS AND DAYABHAGA. THERE IS, HOWEVER, NO RELIGION BY THE NA ME 'HINDU', IT ONLY SHOWS THAT SO CALLED HINDU RELIGION HAS BEEN CALLED FOR CONVENIENCE.' CIT MUST BE AWARE OF THAT THE HINDU CONSISTS OF A NUMBER OF COMMUNITIES HAVIN G THE DIFFERENT GODS WHO ARE BEING WORSHIPPED IN A DIFFER ENT MANNER, DIFFERENT RITUALS, DIFFERENT ETHICAL CODES. EVEN THE WORSHIP OF GOD IS NOT ESSENTIAL FOR A PERSON WHO HA S ADOPTED HINDUISM WAY OF LIFE. THUS, HINDUISM HOLDS WITHIN ITS FOLD MEN OF DIVERGENT VIEWS AND TRADITIO NS WHO HAVE VERY LITTLE IN COMMON EXCEPT A VAGUE FAITH IN WHAT MAY BE CALLED THE FUNDAMENTALS OF THE HINDUISM. THE WORD 'COMMUNITY' MEANS A SOCIETY OF PEOPLE LIVING IN THE SAME PLACE, UNDER THE SAME LAWS AND REGULATIONS AND WHO HAVE COMMON RIGHTS AND PRIVILEGES. THIS MAY APP LY TO CHRISTIANITY OR MOSLEM BUT NOT TO HINDUISM. THEREFO RE, IT CANNOT BE SAID THAT HINDU IS A SEPARATE COMMUNITY O R A SEPARATE RELIGION. TECHNICALLY HINDU IS NEITHER A R ELIGION NOR A COMMUNITY. THEREFORE, EXPENSES INCURRED FOR WORSHIPPING OF LORD SHIVA, HANUMAN, GODDESS DURGA A ND FOR MAINTENANCE OF TEMPLE CANNOT BE REGARDED TO BE FOR RELIGIOUS PURPOSE. UNDER THESE FACTS AND CIRCUMSTAN CES, WE ARE OF THE VIEW THAT THE CIT IS NOT CORRECT IN L AW IN NOT ALLOWING THE APPROVAL TO THE ASSESSEE TRUST U/S. 80 G OF THE ACT. 11. WE, THEREFORE, DIRECT THE DIT(E) TO GRANT THE A PPROVAL UNDER SECTION 80G(5) OF THE ACT TO THE ASSESSEE, BASED ON THE APP LICATION MADE BY THE 7 ASSESSEE ON 31.08.2009. 12. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D. ORDER PRONOUNCED IN THE OPEN COURT ON 23 RD AUGUST, 2013. SD/- SD/- (CHANDRA POOJARI) (SMT.ASHA VIJAYARAGHAVAN) ACCOUNTANT MEMBER JUDICIAL MEM BER HYDERABAD DATE 23 RD AUGUST, 2013. VBP/- COPY TO 1. AVADHANA SARASWATHI PEETHAM, C/O. S.RAMA RAO, ADVOC ATE, FLAT NO.102, SHRIYAS ELEGANCE, ROAD NO.9, HIMAYATHNAGAR, HYDERAB AD-29. 2. DIRECTOR OF INCOME TAX (E), HYDERABAD. 3. ADDL.DIRECTOR OF INCOME TAX (E)-II, HYDERABAD. 4. D.R. A BENCH, ITAT, HYDERABAD. 5. GUARD FILE