M/s. The Pyramid Spiritual Trust India, Bangalore V. DIT(E), Bangalore

ITA 360/BANG/2009

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 0617 (ITAT-BANGALORE)
• Duration Of Justice: 5 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-10-2009
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 10-09-2009
• Assessment Year: 2009-2010
• Appeal Filed On: 21-04-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JASON P BOAZ
• Assessee Lawyers: SRIDHAR
• Keywords: Charitable institution
• Section: 80G; 12A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : BANGALORE BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBE R AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ITA NO.360/BANG/2009 ASSESSMENT YEAR : 2009-10 THE PYRAMID SPIRITUAL TRUST (INDIA), NO.609/1, 15 TH CROSS, 6 TH PHASE, J.P. NAGAR, BANGALORE 560 078, : APPELLANT VS. THE DIRECTOR OF INCOME-TAX (EXEMPTIONS), BANGALORE. : RESPONDENT APPELLANT BY : SHRI SRIDHAR RESPONDENT BY : SHRI JASON P. BOAZ O R D E R PER A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER THE ASSESSEE HAS FILED THIS APPEAL AGGRIEVED BY T HE ORDER OF THE LD. DIT(EXEMPTIONS), BANGALORE, REJECTING ITS APPLICATI ON FOR RENEWAL OF RECOGNITION U/S. 80G OF THE ACT VIDE ORDER NO. DIT(E)BLR/80G(R)/685/AAATT6830H/ITO(E)-2/VOL. 2008- 2009 DATED 19.02.2009. 2. THE APPELLANT IS A TRUST ESTABLISHED DURING THE YEAR 2003 BY WAY OF A REGISTERED DEED AND HAVE BEEN GRANTED REGISTRATION UNDER SECTION 12A OF ITA NO. 360/B/09 PAGE 2 OF 7 THE ACT BY THE DIT(EXEMPTION), BANGALORE AND SUBSEQ UENTLY RECOGNITION GRANTED U/S. SECTION 80G OF THE ACT FOR THE PERIOD 1.4.2005 TO 31.3.2008. AFTER EXPIRY OF THE PERIOD, THE APPELLANT FILED AN APPLICATION FOR RENEWAL ON 16.9.08. HOWEVER, LD. DIT(EXEMPTIONS) REJECTED THE APPLICATION FOR GRANT OF RECOGNITION U/S. 80G OF THE ACT ON THE FOLLOWING GR OUNDS: (1) FROM THE ACTIVITIES OF THE APPELLANT TRUST, THE TRUST COULD BE HELD ONLY FOR THE PURPOSE OF ADVANCEMENT OF ANY OT HER OBJECT OF GENERAL PUBLIC UTILITY AS DEFINED IN THE FOURTH LIMB OF SECTION 2(15) OF THE I.T. ACT. (2) ON VERIFICATION OF THE ACCOUNTS SUBMITTED FOR T HE YEAR ENDED 31.3.2008 BY THE APPELLANT, IT WAS SEEN THAT THE AP PELLANT TRUST COLLECTED FEES FOR MEDICATION COURSE CONDUCTE D BY THE TRUST, CHARGED THE VISITORS FOR FOOD AND BEVERAGES PROVIDED, COLLECTED ROOM CHARGES FOR ROOMS PROVIDED AND WAS A LSO ENGAGED IN THE SALE OF BOOKS AND CDS. (3) THE FINANCE ACT, 2008 HAS BROUGHT IN CHANGES TO SECTION 2(15) OF THE I.T. ACT WITH EFFECT FROM F.Y. 01.04.2 008, WHEREIN IT WAS PROVIDED THAT ANY ACTIVITY IN THE NATURE OF AD VANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY AS C ONSTRUED UNDER SECTION 2(15) OF THE ACT, SHALL NOT BE CONSID ERED AS AN ACTIVITY OF CHARITABLE PURPOSE, IF SUCH ACTIVITIES INVOLVES IN THE NATURE OF TRADE, COMMERCE OR BUSINESS OR ANY ACTIVI TY OF RENDERING ANY SERVICE IN RELATION TO ANY TRADE, COM MERCE OR BUSINESS FOR A CESS OR FEE OR ANY OTHER CONSIDERATI ON ITA NO. 360/B/09 PAGE 3 OF 7 IRRESPECTIVE OF THE NATURE OF USE OR APPLICATION, O R RETENTION OF THE INCOME FROM SUCH ACTIVITY. (4) SINCE THE APPELLANT TRUST HAS INDULGED IN COLLE CTION OF REVENUE FROM ITS ACTIVITIES WHICH AMOUNTS TO COMMERCIAL OPE RATIONS, THE TRUST CAN NO LONGER BE CONSIDERED TO BE FOR CHA RITABLE PURPOSE AS PER THE AMENDED PROVISIONS OF SECTION 2( 15) OF THE ACT AND THEREFORE RENEWAL OF RECOGNITION U/S. 8 0G CANNOT BE GRANTED. 3. THE LD. AR SUBMITTED BEFORE US THE OBJECTS OF TH E TRUST AS UNDER: (1) TO CONSTRUCT A WORLD CLASS ANAPANASATI MEDITATI ON CENTRE. (2) TO PROVIDE ACCOMMODATION FOR ELIGIBLE SENIOR CI TIZENS FOR LODGING AND BOARDING. (3) TO ESTABLISH A WORLD CLASS SPIRITUAL SCIENCE LI BRARY. (4) TO CONSTRUCT A BIG PYRAMID FOR PROMOTING PYRAMI D DHYANA CULTURE. (5) TO DEVELOP A NATURAL GREENERY (FOREST). (6) TO CONSTRUCT COTTAGES WITH ALL FACILITIES FOR T HE BENEFIT OF ANAPANASATI MEDIATORS VISITING FROM ALL PART OF THE COUNTRY. (7) TO PROVIDE A HOLISTIC HEALTH CENTER AND IN-DOOR AUDITORIUM FOR CONFERENCES, SEMINARS ETC. (8) TO GUIDE PEOPLE IN VISITING ANAPANASATI PYRAMID MEDIATION CENTRE EVERYWHERE AND TRAIN ALL THE PEOPLE IN ANAPA NASATI MEDIATION AND SPIRITUAL SCIENCE. (9) TO DEVELOP COSMIC CONSCIOUSNESS AMONG ALL. 4. THE LD. AR FURTHER SUBMITTED THAT THE ACTIVITIES MENTIONED ABOVE COULD BE CONSTRUED FOR THE PURPOSE OF EDUCATION AS DEFINED IN SECTION 2(15) OF THE ACT CITING VARIOUS CASE LAWS OF DIFFERENT HO NBLE HIGH COURTS. 5. THE LD. DR RELIED UPON THE ORDER OF THE LD. DIT( E) AND ARGUED IN SUPPORT OF IT. ITA NO. 360/B/09 PAGE 4 OF 7 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND MINUTELY PERUSED THROUGH THE DOCUMENTS AND RECORDS FURNISHED BEFORE US BY EI THER PARTIES. THE HONBLE SUPREME COURT IN THE CASE OF SOLE TRUSTEE, LOKA SHIKSHANA TRUST V. CIT REPORTED IN [1975] 101 ITR 234 (SC) HAS MADE THE POSITION CLEAR AS ON DATE WHICH IS REPRODUCED HEREBELOW FOR REFERENCE . CLAUSE 2 OF THE TRUST DEED OF THE LOKA SHIKSHANA T RUST PROVIDED THAT THE OBJECT OF THE TRUST SHALL BE TO EDUCATE PE OPLE OF INDIA IN GENERAL AND OF KARNATAKA IN PARTICULAR BY : (A) EST ABLISHING, CONDUCTING AND HELPING DIRECTLY OR INDIRECTLY INSTI TUTIONS CALCULATED TO EDUCATE THE PEOPLE BY SPREAD OF KNOWL EDGE ON ALL MATTERS OF GENERAL INTEREST AND WELFARE; (B) FOUNDI NG AND RUNNING READING ROOMS AND LIBRARIES AND KEEPING AND CONDUCT ING PRINTING HOUSES AND PUBLISHING OR AIDING THE PUBLICATION OF BOOKS, BOOKLETS, LEAFLETS, PAMPHLETS, MAGAZINES, ETC., IN KANNADA AND OTHER LANGUAGES, ALL THESE LANGUAGES BEING STARTED, CONDUCTED AND CARRIED ON WITH THE OBJECT OF EDUCATING PEOPLE; (C) SUPPLYING THE KANNADA SPEAKING PUBLIC WITH AN ORGAN OR ORGANS OF EDUCATED PUBLIC OPINION AND CONDUCTING JOURNALS IN KANNADA A ND OTHER LANGUAGES, FOR THE DISSEMINATION OF USEFUL NEWS AND INFORMATION AND FOR THE VENTILATION OF PUBLIC OPINION ON MATTER S OF GENERAL PUBLIC UTILITY; AND (D) HELPING DIRECTLY OR INDIREC TLY SOCIETIES AND INSTITUTIONS WHICH HAVE ALL OR ANY OF THE AFORESAID OBJECTS IN VIEW. UNDER CLAUSE 6 THE ORIGINAL TRUSTEE HAD POWER TO UT ILISE THE MONEYS AND PROPERTY OF THE TRUST FOR ANY OF THE PUR POSES OF THE TRUST IN SUCH MANNER AS TO HIM MIGHT APPEAR PROPER. HELD (I) THAT THE OBJECT OF THE TRUST WAS NOT EDUC ATION WITHIN THE MEANING OF SECTION 2(15) BUT AN OBJECT OF GENERAL P UBLIC UTILITY; 7. FOLLOWING THE DECISION OF THE HONBLE APEX COUR T, WE HOLD THE APPELLANT TO BE A TRUST FOR THE PURPOSE OF ADVANCEM ENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY AS ARRIVED AT BY THE LD. DIT(E). 8. HOWEVER, THE OTHER SUBMISSIONS OF THE LD. AR WER E FORCEFUL. THE LD. AR SUBMITTED THAT THE APPELLANT TRUST HAD COLLECTED A NOMINAL AMOUNT IN RESPECT OF FOOD AND BEVERAGES PROVIDED SO AS TO REC OVER COST. SO WAS IT ITA NO. 360/B/09 PAGE 5 OF 7 FOR ALL SUCH FACILITIES PROVIDED BY THE APPELLANT. ON THE SALE OF BOOKS AND CDS ALSO, ONLY COST WAS RECOVERED. LD. AR SUBMITTE D A PAPERBOOK BEFORE US CONSISTING OF 1 TO 111 PAGES WHEREIN THE STATEME NT OF AFFAIRS OF THE TRUST WAS ALSO ENCLOSED. ON ANALYZING THE DOCUMENTS SUB MITTED IT IS APPARENT THAT THE APPELLANT HAD ONLY RECOVERED THE COST FROM ITS ACTIVITIES AND THERE WAS NO ELEMENT OF SURPLUS OR PROFIT ARISING OUT OF THE COLLECTIONS MADE. 9. ON A SIMILAR MATTER BEFORE THE SAME TRIBUNAL ON AN EARLIER OCCASION IN THE CASE OF SANGEETHA BHARATHI TRUST IN ITA NO.5 23/BANG/2009, ORDER DATED 11.9.2009, THE BENCH HAS DECIDED THAT WHERE AN AMOUNT IS RECEIVED ONLY FOR THE PURPOSE OF RECOVERING COST, THE RIGOR OF THE AMENDED PROVISO TO SECTION 2(15) OF THE ACT WILL NOT COME INTO PLAY, B ECAUSE SUCH RECOVERY OF COST DOES NOT AMOUNT TO ANY VENTURE AMOUNTING TO AN ACTIVITY IN THE NATURE OF TRADE, COMMERCE OR BUSINESS OR ANY ACTIVITY OF R ENDERING ANY SERVICE IN RELATION TO ANY TRADE, COMMERCE OR BUSINESS. THE E XTRACT OF THE RELEVANT ORDER IS REPRODUCED HEREBELOW : 9. WE HAVE HEARD THE RIVAL SUBMISSIONS AND MINUTE LY PERUSED THE MATERIALS AVAILABLE ON RECORD PRODUCED BEFORE U S. IT IS PERTINENT TO NOTE THAT THE TRUST HAD ENJOYED RECOGN ITION U/S. 80G OF THE ACT IN THE PAST. ALL THE ACTIVITIES OF THE TRUST REMAIN THE SAME AS IN THE PAST. ON A PLAIN READING OF THE ACT ALONG WITH THE VARIOUS DECIDED CASE LAW AND THE DECISION OF THE AP EX COURT IN THE CASE OF SOLE TRUSTEE, LOKA SHIKSHANA TRUST V. CIT REPORTED IN [1975] 101 ITR 234 , IT IS APPARENT THAT THE APPELLANT TRUST FALLS IN THE CATEGORY OF ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY AS ENVISAGED IN THE FOURTH LIMB OF SECTION 2(15) OF THE ACT. FURTHER ON A MINUTE SCRUTINY OF THE ACTIV ITIES OF THE TRUST FROM THE RECORDS PRODUCED BEFORE US, WE DO NOT FIND ANY ACTIVITY IN THE NATURE OF TRADE, COMMERCE, BUSINESS OR SERVI CE IN RELATION TO ANY TRADE, COMMERCE OR BUSINESS. ALL THE ACTIVITIE S CONDUCTED BY THE APPELLANT TRUST ARE DIRECTLY RELATED TO THE OBJ ECT OF THE TRUST VIZ., TO PROMOTE MUSIC AND IMPART EDUCATION OF MUSI C. THE STATEMENT OF INCOME OF THE TRUST NO DOUBT REVEALS T HAT THE TRUST HAD GENERATED REVENUE BY WAY OF RECEIPT OF TUITION FEES FROM THE ITA NO. 360/B/09 PAGE 6 OF 7 STUDENTS OF THE MUSIC SCHOOL, SPONSORSHIP AND ADVER TISEMENT CHARGES FOR THE YEAR ENDED 31.3.2006, 31.3.2007 AND 31.3.2008. BY VIRTUE OF THIS REVENUE COLLECTION, LD. CIT WAS O F THE MISCONCEPTION THAT THE TRUST HAD COLLECTED REVENUE AND INDULGED IN THE ACTIVITIES OF TRADE, COMMERCE AND BUSINESS T HEREBY EXCLUDING THE APPELLANT TRUST FROM THE SCOPE OF CH ARITABLE PURPOSE AS DEFINED IN SECTION 2(15) OF THE ACT AND THE AMENDED PROVISO. LD. CIT HAS FAILED TO OBSERVE THAT FOR AL L THESE THREE YEARS, THE STATEMENT OF INCOME SHOWS A DEFICIT BALA NCE IMPLYING THAT THE ENTIRE AMOUNT IS SPENT TO MEET ITS CHARITA BLE OBJECTIVES. THE APPELLANT TRUST HAD NO PROFIT MOTIVE. IT GOES WITHOUT SAYING THAT WHEN ANY SUCH ACTIVITIES ARE TO BE CONDUCTED, SOURCING OF FUNDS IS ESSENTIAL. WHEN SUCH SOURCING OF FUND ARE GENERATED WITHOUT INDULGING IN ANY ACTIVITY IN THE NATURE OF TRADE, COMMERCE OR BUSINESS ETC., PROVISO TO SECTION 2(15) OF THE A CT WILL NOT APPLY. CONSIDERING THE FACTS OF THE CASE, WE ARE O F THE FIRM OPINION THAT (1) THE APPELLANT TRUST FALLS IN THE CATEGORY OF ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY AS P ROVIDED IN THE FOURTH LIMB OF SECTION 2(15) OF THE ACT. (2) THE TRUST HAS NOT INDULGED IN ANY ACTIVITY WHI CH CAN BE CONSTRUED TO BE IN THE NATURE OF TRADE, COMMERCE OR BUSINESS OR ANY ACTIVITY OF RENDERING ANY SERVICE IN RELATION T O ANY TRADE, COMMERCE OR BUSINESS. (3) THE GENERATION OF REVENUE BY THE APPELLANT TRUS T BY WAY OF COLLECTING SPONSORSHIP, ADVERTISEMENT CHARGES, TUIT ION FEE ETC. WAS ONLY FOR THE PURPOSE TO MEET OUT EXPENDITURE IN RELATION TO THE FULFILLMENT OF THE OBJECTS OF THE TRUST. 10. BECAUSE OF OUR ABOVE FINDINGS AND REASONS, WE HEREBY DIRECT THE LD. CIT TO GRANT RENEWAL OF RECOGNITION U/S. 80G OF THE ACT. 10. IN VIEW OF OUR ABOVE DISCUSSION, WE ARE OF THE FIRM OPINION THAT THE TRUST IS ELIGIBLE FOR RECOGNITION UNDER SECTION 80G OF THE ACT THOUGH THE TRUST FALLS UNDER THE FOURTH LIMB OF SECTION 2(15) OF THE ACT NAMELY, ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY. IT IS ORDERED ACCORDINGLY. ITA NO. 360/B/09 PAGE 7 OF 7 11. IN THE RESULT, THE ASSESSEES APPEAL IS ALLOWED . PRONOUNCED IN THE OPEN COURT ON THIS 9 TH DAY OF OCTOBER, 2009. SD/- SD/- (SHAILENDRA KUMAR YADAV ) (A. MOHAN ALANKAMONY ) JUDICIAL MEMBER ACCOUNTANT MEMBER BANGALORE, DATED, THE 9 TH OCTOBER, 2009. DS/- COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE (1+1) BY ORDER ASSISTANT REGISTRAR ITAT, BANGALORE.