Ajramar Active Assort Trust, Ahmedabad V. The CIT- Exemption, Ahmedabad

ITA 376/AHD/2023

• Counselvise Citation: [2024] 101 COUNSELVISE.COM (IT) 8993 (ITAT-AHMEDABAD)
• Duration Of Justice: 8 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-01-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 30-01-2024
• Assessment Year: misc
• Appeal Filed On: 14-05-2023
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 80G

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL “C” BENCH, AHMEDABAD BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER & Ms. MADHUMITA ROY, JUDICIAL MEMBER आयकर अपील सं./I. T. A. No . 376/Ahd/20 23 A jr am ar A c t iv e A s so r t T r us t Sa nan d C i r c le S . G . H i gh w a y, A h me da b a d G uj ar a t - 38 2 2 10 बनाम/ Vs . T h e C I T( E x e m pt io n) A h m e da b ad थायी लेखा सं./जीआइआर सं./P A N / G I R N o . : A A I T A 5 9 9 8 F (Appellant) . . (Respondent) अपीलाथ ओर से /Appellant by : Shri Mehul Thakker, A.R. यथ क ओर से/Respondent by : Shri Kamlesh Makwana, CIT DR D a t e o f H e a r i ng 31/01/2024 D a t e o f P r o n o u nc e me n t 31/01/2024 O R D E R PER Ms. MADHUMITA ROY - JM: Th e i nst ant app eal fi l ed at t h e inst an ce of t he assessee i s di r ect ed agai nst the or der dated 18. 03. 2023 passed b y t he CI T( E) Ah med abad, under Sect i on 80G( 5) of t he Act. 2. Th e cru x of t he mat t er i s t hi s t hat t he ap pr oval of th e 80 G has been di sal lowed by t he Ld. CIT( E) as one of t he objects of t he Tru st is f ound t o be r elig ious. The Ld. CIT( E) rel i ed u pon Exp l anat i on 3 of Sect ion 80 G of t h e Act to thi s eff ect t hat i f any of t he o bj ects men t i oned i n S ecti o n 80 G o f t he Act i s who l l y, or sub st ant i all y who l l y, of a r el i giou s char act er , t he in sti t ut io n or fund f al l s out side ITA No. 376/Ahd/2023 [Ajramar Active Assort Trust vs. CIT(E)] - 2 - th e scope of Sect ion 80 G of th e Act and a do nati on t o i t does not secur e t he advantag e o f the deduct ion that i t gi v es. Fur ther t hat, 80G(5 ) (i i i) o f t he Act st i p ul at es t hat t he i nsti tuti on or fu nd i s not exp ressed t o be fo r t h e benefi t of an y par t i cul ar rel igious co mmuni t y or cast e. So me of the obj ect s of t he appel l ant t rust ar e f ound rel i gi ous in natur e and the assessee viol at ed t h e pr ov i si on of the Act and n ot ent i tled to g et ap proval under Sect i on 80 G(5) of t he Act was th e mai n g round of rej ect ion of approv al of t he assessee Tr ust . 3. At t he t i me o f hear i ng of t he i nst ant appeal , t he Ld. Counsel app ear i ng for th e assessee sub mi t ted bef or e us t hat Secti on 80G(5 B) of the Act st at es th at th e insti t ut io n or t rust or f und whi ch incurs exp endit ure i n previ o us year wh i ch i s of r el igious nat ur e for an amo unt ex ceedi ng 5% of i t s t ot al in co me i n that pr evious year shal l be dee med t o b e an i nst it uti on or fun d to whi ch the p r ovi sions of Secti o n ap pli es. Th e j udg ment rel i ed u pon b y t he Ld. CI T( E) whi le rej ect in g approval und er Secti on 80G of t he Act passed b y t he Hon ’b l e Supr e me Cour t i n case of Upp er Gan ges Sugar M il l s Ltd. vs. CI T, r eport ed i n 93 Tax man 645 has b een argued to be not app li cabl e b y t he Ld. AR i n t he p resent f act s an d ci r cu mst ances o f th e case si nce t he pr ovi si on of Sect i on 80G( 5B) of t he Act as men t i oned h er einabov e ca me i nt o f or ce b y t he Fi n ance Act , 19 99. Th e CBDT Ci r cul ar No.7 79 dat ed 1 4. 09.1 999 d eal in g wit h thi s par t i cul ar amend men t h as been su b mi t t ed befo re us which sp eaks as fo l lo ws: “ D e d u c t i o n f o r d o n a t i o n s m a d e t o f u n d s o r i n s t i t u t io n s f o r c h a r i t a b l e p u r p o s e s ITA No. 376/Ahd/2023 [Ajramar Active Assort Trust vs. CIT(E)] - 3 - 3 3 . 1 U n d e r t h e p r o v i s i o n o f s e c t i o n 8 0 G o f t h e I n c om e - t a x A c t , 1 9 6 1 , a d e d u c t i o n i n r e s p e c t o f d o n a t i o n s t o c e r t a i n f u n d s , i n s t i t u t i o n s , e t c . , i s p r o v i d e d . H o w e v e r , c l a u s e ( i i ) o f s u b - s e c t i o n ( 5 ) of t h a t s e c t i o n p r o v i d e s t h a t i f s u c h f u n d o r i n s t i t u t i o n h a s i n i t s i n s t r u me n t a n y p r o v i s i o n f o r t h e t r a n s f e r o r a p p l i c a t i o n o f t h e w h o l e o r a n y p a r t o f t h e i n c o m e o r a s s e t f o r a n y p u r p o s e o t h e r t h a n a c h a r i t a b l e p u r p o s e , i t c o ul d n o t a v a i l o f t h e b e n e f i t u n d e r t h i s s e c t i o n . I t h a s a l s o b e e n p r o v i de d i n E x p l a n a t i o n 3 t h a t f o r t h e p u r p o s e o f t h i s s e c t i o n , " c h a r i t a b l e p u r p o se " d o e s n o t i n c l u d e a n y p u r p o s e t h e w h o l e o r s u b s t a n t i a l l y t h e w h o l e o f w h ic h i s o f a r e l i g i o u s n a t u r e . T h e s e p r o v i s i o n s h a v e b e e n i n t e r p r e t e d t o de n y t h e b e n e f i t t o e v e n s u c h f u n d s o r i n s t i t u t i o n s a s a r e p r e d o m i n a n t l y e n ga g e d i n c h a r i t a b l e a c t i v i t i e s b u t a r e e i t h e r i n s p i r e d t o d o c h a r i t y b y t e n e t s o f r e l i g i o n o r s p e n d a n e g l i g i b l e a m o u n t s o n p u r p o s e s o t h e r t h a n ch a r i t a b l e . I t w o u l d b e h a r s h t o d e n y t h e b e n e f i t s t o t h e i n s t i t u t i o n s w h i ch a r e e n g a g e d i n a c t i v i t i e s , t h e w h o l e o r s u b s t a n t i a l l y t h e w h o l e o f w h i c h a r e o f c h a r i t a b l e n a t u r e . 3 3 . 2 I n o r d e r t o m i t i g a t e h a r d s h i p t o s u c h f u n d s o r i n s t i t u t i o n s , t h e p r o v i s i o n s o f s e c t i o n 8 0 G a r e a m e n d e d s o a s t o p r o vi d e t h a t i n c a s e s u c h i n s t i t u t i o n s o r f u n d s s p e n d u p t o f i v e p e r c e n t . o f t h e i r i n c o m e d u r i n g t h e r e l e v a n t p r e v i o u s y e a r f o r r e l i g i o u s p u r p o s e , t h e be n e f i t o f d e d u c t i o n w i l l n o t b e d e n i e d t o t h e m . 3 3 . 3 T h i s a m e n d m e n t w i l l t a k e e f f e c t f r o m t h e 1 s t da y o f A p r i l , 2 0 0 0 , a n d w i l l , a c c o r d i n g l y , a p p l y i n r e l a t i o n t o t h e a s s e s s me n t y e a r 2 0 0 0 - 2 0 0 1 a n d s u b s e q u e n t y e a r s . [ S e ct i o n 4 3 ] ” 4. It app ears t h at aut ho rit y w as o f t he vi ew t hat the i nst i tution whi ch ar e p re-domi nan t l y en gag ed i n char it abl e act iv i ti es but are ei t her inspir ed to do ch ar it y b y t enet s of reli gion o r spen d a neg lig ibl e amount s o n p ur poses o t her t han ch ar i t ab le, i t wo ul d be har sh to den y t he benef i t s t o t hose i nst it ut i ons in t er m of t he pr ovi sion of Section 80G of th e Act . I n order t o mi t i gat e h ar dship to such fu nds o r inst it uti ons, th e provi si ons of Sect ion 8 0G of t he Act ar e a mend ed b y Fi nan ce A ct , 1 999 so as t o pr ovide t hat i n case such inst it ut i ons or funds spend u pt o 5% of thei r in come du ri n g the rel evant pr evi ous year f or r el i gi ou s pur pose, t he benefi t of deducti on wou l d not be denied t o t he m. As t h e j udgmen t r el i ed upo n b y t he Ld . CIT( E) i n case of Upper Ganges Su gar M il l s Lt d. vs. CIT ( supr a) was pr ono unced in pr e- amen ded er a , t he sa me i s no t appl i cabl e to ITA No. 376/Ahd/2023 [Ajramar Active Assort Trust vs. CIT(E)] - 4 - th e f act s an d ci rcu mst ances of t he case as cont ended b y t he Ld. Adv ocat e i s, t her ef or e, found to be accept abl e b y us i n vi ew of t he CBDT Ci r cul ar No . 77 9 d at ed 14 .09. 1999 ment i oned h er ei n above. Th us, keep ing in v iew t hi s par t i cular aspect of t he mat t er , we set asi de t he i ssue t o fi l e o f Ld . CI T( E) for ad judi cati on o f t he sa me de novo keep i ng i n vi ew t he pr ovi sion of Sect i on 80G( 5B) o f t he Act and u pon g rant i ng an op por t unit y o f b ei ng h eard to t he assessee and con si deri ng the evi dence on r ecor d or an y o t her ev idence whi ch t he assessee ma y ch oose t o fi l e at the ti me o f h eari n g of the matt er . The Ld . CI T( E) i s di r ected t o pass reasoned order st r i ct l y i n acco rd ance wi t h l aw. 5. In t he r esul t, t he appeal pr ef er r ed by t he a ssess ee i s al l owed fo r st at i sti cal purpo ses. This Order pronounced on 31/01/2024 Sd/- Sd/- (WASEEM AHMED) (MADHUMITA ROY) ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad; Dated 31/01/2024 S. K. SINHA True Copy आदेश क त ल प अ े षत/Copy of the Order forwarded to : 1. अपीलाथ / The Appellant 2. यथ / The Respondent. 3. संबं धत आयकर आय ु त / Concerned CIT 4. आयकर आय ु त(अपील) / The CIT(A)- 5. "वभागीय &त&न ध, आयकर अपील)य अ धकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाड/ फाईल / Guard file. आदेशान ु सार/ BY ORDER, उप/सहायक पंजीकार (Dy./Asstt. Registrar) आयकर अपील य अ!धकरण, अहमदाबाद / ITAT, Ahmedabad