Muslim Education Society, Calicut V. CIT, Calicut

ITA 409/COCH/2009

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 4579 (ITAT-COCHIN)
• Duration Of Justice: 1 year(s) 9 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-04-2011
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Assessment Year: misc
• Appeal Filed On: 07-07-2009
• Court: TRIBUNAL
• Department Lawyers: T J VINCENT
• Assessee Lawyers: C B M WARRIER CAAR
• Keywords: Charitable institution; Competent authority
• Section: 143(3); 80G

Judgement Text

IN THE INCOME TAX APPELLAT E TRIBUNAL COCHIN BEN CH, COCHIN BEFORE S/SHRI N.VIJAYAKUMARAN, JM AND SANJAY AR ORA, AM I.T.A. NO. 409/COCH/ 2009 THE MUSLIM EDUCATIONAL SOCIETY (REGD.), BANK ROAD, CALICUT - 673 001. [PAN:AAATM 3669D] VS. THE COMMISSIONER OF INCOME-TAX, KOZHIKODE. (ASSESSEE -APPELLANT) (REVENUE-RESPONDENT) ASSESSEE BY SHRI C.B.M.WARRIER, CA-AR REVENUE BY SHRI T.J.VINCENT, DR O R D E R PER SANJAY ARORA, AM: THIS IS AN APPEAL BY THE ASSESSEE-APPLICANT CHALLEN GING THE DENIAL OF APPROVAL SOUGHT U/S. 80G(5)(VI) OF THE INCOME TAX ACT, 1961 (`THE A CT' HEREINAFTER) BY THE COMMISSIONER OF INCOME-TAX, CALICUT (CIT OR THE COMPETENT AUT HORITY FOR SHORT) VIDE HIS ORDER DATED 22.5.2009. 2.1 OPENING THE ARGUMENTS ON BEHALF OF THE APPELLAN T, IT WAS SUBMITTED BY THE LD. AR, ITS COUNSEL, THAT THE ASSESSEE IS A SOCIETY, CONSTI TUTED AND REGISTERED UNDER THE SOCIETIES REGISTRATION ACT, 1860, BEARING REGISTRATION NO. 54 /1964 DATED 29.12.1964. THE PRINCIPAL ACTIVITY OF THE SOCIETY IS RUNNING OF EDU CATIONAL INSTITUTIONS, ORPHANAGES, ETC. ACCORDINGLY, ITS ENTIRE INCOME IS, SINCE A.Y. 2002- 03, EXEMPT U/S. 10(23C) (IV) OF THE ACT; ITS LATEST ASSESSMENT U/S. 143(3) OF THE ACT B EING FOR A.Y. 2008-09, ACCEPTING THE RETURNED INCOME AT NIL (PB PG. 1 ). IT IS BEING GRANTED APPROVAL U/S. 80G OF THE AC T (ERSTWHILE S. 88) BY THE COMPETENT AUTHORITY SINCE 1979 (BEING FOR A PERIOD OF 3 YEARS AT A TIME); THE LATEST BEING FOR THE PERIOD 1.4.2006 TO 31.3.2009 VIDE ORDER DATED 20.7.2006 (PB PG. 3 ). SO, HOWEVER, ITS LATEST APPLICATION FOR RENEWAL OF APPROVAL U/S. 80G(5)(VI) DATED 24.12.2008 MET REJECTION AT THE HANDS OF THE COMPETENT AUTHORITY. THE REASON CITED ITA.NO. 409/COCH/2009 2 IS THAT THE SOCIETY HAS MIXED OBJECTS, I.E., RELIGI OUS AND CHARITABLE, WHICH ARE PROVIDED FOR THE BENEFIT OF A PARTICULAR RELIGIOUS COMMUNITY, EV EN AS IT STOOD CLARIFIED DURING THE COURSE OF HEARING BEFORE HIM THAT THE APPLICANT IS NOT DOING ANY RELIGIOUS ACTIVITY, BUT ONLY RUNNING EDUCATIONAL INSTITUTIONS. HE ADVERTED TO THE VARIOUS DOCUMENTS FILED IN THE ASSESSEES PAPER-BOOK (PB PGS. 1 TO 14) IN SUPPORT OF HIS CONTENTIONS. TO A SPECIFIC QUERY BY THE BENCH REGARDING THE FINDING BY THE LD. CIT T HAT THE ACCOUNTS OF THE SOCIETY SHOWED ITS ACTIVITIES AS DIRECTED TO A SPECIFIC RELIGIOUS MINORITY, HE REPLIED OF IT BEING A VAGUE FINDING, FURTHER STATING THAT THE ACCOUNTS OF THE S OCIETY ARE MAINTAINED AS IN THE PAST, AND THAT THE APPELLANT WAS PREPARED TO PRODUCE THE SAME BEFORE THE TRIBUNAL. 2.2 THE LD. DR, ON THE OTHER HAND, DREW OUR ATTENTI ON TO CLAUSE 4(M) OF THE RULES AND REGULATIONS OF THE SOCIETY (AT PB PG. 14), WHICH EN UMERATES ZAKATH AS ONE OF THE MODES WHEREBY FUNDS FOR ITS ACTIVITIES MAY BE RAISED BY T HE SOCIETY. THE SAME IS RELIGIOUS ACTIVITY IN AS MUCH AS IT DENOTES THE OBLIGATION CA ST ON A MUSLIM AS PER THE TENETS OF ISLAM TO CONTRIBUTE A PART OF ITS WEALTH FOR THE POOR AND THE NEEDY. THE LD. CIT HAS GIVEN A DEFINITE FINDING AS TO THE ACTUAL ACTIVITIES OF THE APPLICANT-SOCIETY WITH REFERENCE TO ITS ACCOUNTS AND, ACCORDINGLY, DENIED APPROVAL U/S. 80G (5)(III), WHICH MERITS CONFIRMATION. 3. WE HAVE HEARD THE PARTIES AND PERUSED THE MATERI AL ON RECORD. 3.1 THE DENIAL OF THE APPROVAL HAS BEEN MADE EX PLICITLY U/S. 80G(5)(III), WHICH READS AS: (5) THIS SECTION APPLIES TO DONATIONS TO ANY INSTI TUTION OR FUND REFERRED TO IN SUB CLAUSE (IV) OF CLAUSE (A) OF SUB-SECTION (2), ONLY IF IT IS ESTABLISHED IN INDIA FOR A CHARITABLE PURPOSE AND IF IT FULFILS THE FOLLOWING CONDITIONS, NAMELY:- I).; II); III) THE INSTITUTION OR FUND IS NOT EXPRESSED TO BE FOR THE BENEFIT OF ANY PARTICULAR RELIGIOUS COMMUNITY OR CASTE; IV).. [EMPHASIS, OURS] WE DO NOT OBSERVE ANY CONFLICT OR DISAGREEMENT QUA THE LAW IN THE MATTER IN THE INSTANT CASE, I.E., WITH REFERENCE TO THE RESPECTIV E CASES OF THE OPPOSING PARTIES. THE ITA.NO. 409/COCH/2009 3 BENEFIT OF S. 80G OF THE ACT IS NOT AVAILABLE FOR R ELIGIOUS TRUST/INSTITUTION (ALSO REFER EXPLANATION 3 TO S. 80G). THE ASSESSEE, HOWEVER, CONTENDS THAT I T IS NOT UNDERTAKING ANY RELIGIOUS ACTIVITY, BUT ONLY CHARITABLE ACTIVITIES, WHICH ARE NOT DIRECTED TOWARD ANY PARTICULAR COMMUNITY, RELIGIOUS OR OTHERWISE, BUT A RE AVAILABLE TO ALL SECTIONS OF THE SOCIETY, WITHOUT ANY PREFERENCE TO ANY RELIGION OR CASTE . THE REVENUES FINDING; THE MATTER BEING FACTUAL, IS HOWEVER DE HORS ANY BASIS OR MATERIAL ON RECORD, SO AS TO BE OF ANY CONSEQUENCE, WITH THE ASSESSEE BEING ADMITTEDLY ENTITLED TO THE EXEMPTION U/S. 10(23C)(IV). 3.2 THE ISSUE AT LARGE IS WHETHER S. 80G(5)(III ) IS ATTRACTED OR APPLICABLE, BEING THE BASIS OF WHICH THE APPROVAL STANDS DENIED IN THE INSTANT CASE. THE PROVISION MAKES NO REFERENCE TO THE ACTUAL ACTIVITIES, THE LANGUAGE EMPLOYED, TO WHICH WE MUST GIVE FULL PLAY AND DUE DEFERENCE WHILE INTERPRETING, IS: ` EXPRESSED TO BE FOR THE BENEFIT OF .. . THE LEGISLATIVE INTENT, AS EXPRESSED IN THE STATUTE, IS THUS THAT W HERE THE CHARTER IS EXPRESSED TO BE FOR THE BENEFIT OF A PARTICULAR RELIGIOUS COMMUNITY OR CAST E, THE INSTITUTION HAVING RESERVED THE POWER FOR THE SAME THUS, THE PROHIBITION UNDER THE ACT WOULD FOLLOW, IRRESPECTIVE OF WHETHER THE ACTIVITIES ACTUALLY EXHIBIT ACCORDING S UCH PREFERENCE OR NOT. THIS, APART FROM THE CLEAR PROVISION OF THE STATUTE UNDER REFERENCE (S. 80G(5)(III)), ALSO FOLLOWS THE DECISION BY THE APEX COURT IN THE CASE OF CIT V . PALGHAT SHADI MAHAL TRUST (2002) 254 ITR 212 (SC), RENDERED IN THE CONTEXT OF SEC. 13(1)(B), A PARI MATERIA PROVISION, BEARING THE SAME PROSCRIPTION, I.E., AS IN S. 80G(5)(III), ONLY IT E MPLOYING THE WORDS: ` CREATED OR ESTABLISHED FOR THE BENEFIT OF ., INSTEAD. 3.3 WE MAY NOW REFER TO THE RULES AND REGULATIO NS OF THE APPELLANT-SOCIETY (ON RECORD). THE OBJECT CLAUSE (3) OF THE RULES AND REG ULATIONS, READS AS:- 3. AIMS AND OBJECTS: TO WORK FOR THE EDUCATIONAL, SOCIAL, CULTURAL AND ECONOMIC ADVANCEMENT OF THE PEOPLE OF INDIA IN ALL POSSIBLE WAYS. 3A. THE SOCIETY IS ESTABLISHED AND ADMINISTERED BY THE MUSLIM COMMUNITY WHICH IS A MINORITY COMMUNITY IN INDIA AS WELL AS KERALA AND THE INSTITUTIONS ESTABLISHED AND ADMINISTERED BY THE SOCIETY SHALL BE ENTITLED FOR ALL RIGHTS AND PRIVILEGES GUARANTEED UNDER ARTICLES 25 TO 30 OF THE CONSTITUTION OF INDIA. [EMPHASIS, OURS] ITA.NO. 409/COCH/2009 4 RULE 4 ENUMERATES THE PROGRAMME OF WORK, AND RULE 4 (A) READS AS: 4. PROGRAMME OF WORK : WITHOUT PREJUDICE TO THE GENERALITY, THE ABOVE AI MS AND OBJECTS `AND IN FURTHERANCE THEREOF, THE SOCIETY SHALL STR IVE TO:- A) PROMOTE HIGHER AND TECHNICAL EDUCATION AND IMPROVE THE STANDARD AND QUALITY OF EDUCATION AMONG THE PEOPLE IN GENERAL AND MINORITIES AND BACKWARD CLASSES IN PARTICULAR GRANTING SCHOLARSHIPS, LOANS, GRANTS AND OTHER FOR MS OF AID TO POOR AND DESERVING STUDENTS AND INSTITUTIONS. APART FROM THESE TWO CLAUSES, I.E., CLAU SE 3A AND CL. 4(A), WE DO NOT FIND ANY REFERENCE TO ANY WORD REFERABLE TO ANY IDENTITY DRA WN ALONG THE LINES OF `RELIGION OR `CASTE IN ANY OF THE CLAUSES OF THE RULES & REGULA TIONS. 3.4 THE NEXT ISSUE THAT WOULD ARISE IS, WHETHER IN VIEW OF THE ASSESSEE-SOCIETY BEING SET UP AND ADMINISTERED BY A PARTICULAR RELIGIOUS COMMU NITY, I.E., AS A MINORITY INSTITUTION UNDER ARTICLES 25 TO 30 OF THE CONSTITUTION OF INDI A (COI), TO WORK FOR THE BENEFIT OF THE MINORITIES IN PARTICULAR, CAN BE SAID TO BE EXPRESS ED TO BE FOR ITS BENEFIT. IN OTHER WORDS, IS SUCH AN INTENTION TO BE EXPRESSED BY ALL THE CLAUSE S BEFORE IT COULD BE SAID THAT THE SAME IS EXPRESSED TO BE FOR THE BENEFIT OF A PARTICULAR REL IGIOUS COMMUNITY. THAT TO OUR MIND WOULD BE A PEDANTIC APPROACH. THE FINDING AS TO THE CHARACTER OF THE TRUST COULD ONLY BE WITH REFERENCE TO THE RELEVANT DOCUMENT, READ AS A WHOLE, AND NOT WITH REFERENCE TO SOME OF ITS PROVISIONS ALONE. AGAIN, AS THE ISSUE, I.E., THE DOMINANT CHARACTER OF THE INSTITUTION, IS PRIMARILY QUALITATIVE IN NATURE, IT IS NOT THE N UMERICAL STRENGTH OF THE OPPOSING PROVISIONS IN ITS CHARTER, I.E., IF SO, THAT WOULD HOLD THE FIELD OR BE DECISIVE OF THE MATTER. THE INSTITUTION COULD VALIDLY ENGAGE IN ONLY ONE OF THE SEVERAL CHARITABLE ACTIVITIES SET OUT IN ITS CHARTER, AND WHICH MAY BEAR A DISQUALIFICATI ON, I.E., INSOFAR AS THE ACT IS CONCERNED, WHICH THOUGH WOULD NOT STAND TO BE CONSIDERED IN DE FINING THE CHARACTER OF THE TRUST IN VIEW OF IT BEING NOT ON A STAND ALONE BASIS BUT FOR MING PART OF A NUMBER OF OTHER CHARITABLE OBJECTS. AS INDEED IS THE CASE IN THE PR ESENT CASE, WITH ONLY TWO, I.E., CLS. 4(A) & 4(B), OF THE TOTAL TWENTY SUB-CLAUSES IN CLAUSE 4 BEING TOWARD EDUCATIONAL INSTITUTIONS, WHICH, I.E., EDUCATION, AS CONTENDED, AND EVEN AS I TS NAME SUGGESTS, IS THE SOLE OR AT LEAST THE PRINCIPAL FIELD OF ACTIVITY OF THE SOCIETY. THE MATTER, THUS, HAS A FACTUAL DIMENSION TO IT AS WELL. AND WHERE THE CHARACTER IS NOT BORNE OUT C LEARLY, BEING NOT UNEQUIVOCALLY ITA.NO. 409/COCH/2009 5 EXPRESSED ONE WAY OR THE OTHER, A REFERENCE TO THE ACTUAL ACTIVITIES OF THE TRUST WOULD ALSO BECOME, FOR THAT REASON, PERFECTLY JUSTIFIED. SO HO WEVER, WE MAY CLARIFY THAT THE FACT THAT A PARTICULAR TRUST OR INSTITUTION MAY NOT BE ACTUAL LY DOING WHAT IS STATED IN ITS CHARTER OR DOING IT DIFFERENTLY, HAVING A BEARING ON THE RELEV ANT QUALIFICATION UNDER THE ACT, THOUGH RELEVANT, INASMUCH AS GENUINENESS IS A PRE-REQUISIT E FOR BEING ACCORDED ANY BENEFIT UNDER THE LAW, IS A DIFFERENT MATTER ALTOGETHER. AND ONE WITH WHICH WE ARE NOT CONCERNED WITH AT THIS STAGE OR IN THIS CASE; THE CHARGE OF THE REVEN UE BEING SPECIFIC THAT ITS ACTIVITIES, ARE DIRECTED TO THE BENEFIT OF A RELIGIOUS COMMUNITY. T HE SAME IS PERFECTLY FEASIBLE AND JUSTIFIABLE IN VIEW OF CLAUSE 4(A) R/W CL. 3A OF TH E RULES AND REGULATIONS. 3.5 AT THIS STAGE, IT WOULD BE RELEVANT TO ADVERT T O ARTICLES 25 TO 30 OF THE COI, TO THE RIGHTS AND PRIVILEGES WHERE-UNDER, THE SOCIETY, BEI NG A MINORITY INSTITUTION, IS ENTITLED. ART. 25 BEGINS A GROUP OF PROVISIONS, FALLING UNDER PART III (FUNDAMENTAL RIGHTS) OF THE COI, WHICH ENSURE EQUALITY OF ALL RELIGIONS, THEREB Y PROMOTING SECULARISM. THE EMPHASIS IN ART. 25 IS ON THE PRACTICE OF RELIGION BY INDIVI DUALS. ART. 26 GUARANTEES RELIGIOUS FREEDOM THROUGH ESTABLISHMENT OF INSTITUTIONS. THI S IS AS THE INSTITUTIONS ARE ESSENTIALLY FOR THE PROFESSION AND PROPAGATION OF RELIGION, FRE EDOM FOR WHICH IS ENSHRINED IN ART. 25. ARTS. 28 TO 30 DEAL WITH, INTER ALIA , EDUCATIONAL INSTITUTIONS . ART. 28 RELATES TO FREEDOM AS TO ATTENDANCE AT A RELIGIOUS INSTITUTION OR RELIGIO US WORSHIP IN CERTAIN EDUCATIONAL INSTITUTIONS. SUB-CLAUSE (1) THEREOF PROVIDES THAT NO RELIGIOUS INSTRUCTION SHALL BE PROVIDED IN ANY EDUCATIONAL INSTITUTION WHICH IS MAINTAINED BY OR OUT OF STATE FUNDS. SUB-CLAUSE (2) DRAWS AN EXCEPTION TO SUB-CLAUSE (1) WHERE THE EDUCATIONAL INSTITUTION IS ESTABLISHED UNDER AN ENDOWMENT OR TRUST THAT REQUIRES RELIGIOUS INSTRUCTION TO BE IMPARTED IN SUCH INSTITUTION. SUB-CLAUSE (3) FURTHER PROVIDES THAT T HE REQUIREMENT OF ATTENDANCE TO ANY RELIGIOUS INSTRUCTION OR RELIGIOUS WORSHIP IN SUCH A RELIGIOUS INSTITUTION WOULD BE ONLY VOLUNTARY. ART. 29 PROVIDES FOR PROTECTION OF CULT URAL AND EDUCATIONAL RIGHTS, EVEN AS IT CLARIFIES THAT EDUCATIONAL INSTITUTIONS MAINTAINED BY OR OUT OF THE FUNDS PROVIDED BY THE STATE SHALL NOT RESTRICT ADMISSION TO ANY CITIZEN O N GROUNDS OF RELIGION, RACE, CASTE OR LANGUAGE. ART. 30 GIVES THE RIGHT TO ALL MINORITIE S (LINGUISTIC OR RELIGIOUS) TO ESTABLISH AND ADMINISTER EDUCATIONAL INSTITUTIONS OF THEIR CHOICE . IN A SENSE, ARTS. 26 TO 30 ARE ITA.NO. 409/COCH/2009 6 OPERATIVE PROVISIONS FOR THE PROPER EFFECTUATION OF THE FUNDAMENTAL RIGHT TO RELIGIOUS FREEDOM GUARANTEED BY ART. 25 . 3.6 THE EDUCATIONAL INSTITUTIONS SET-UP AND BEING A DMINISTERED BY THE APPELLANT-SOCIETY ARE, THEREFORE, UNDER ART. 30. THE WORDS OF THEIR CHOICE THEREIN ARE IMPORTANT. THEY DENOTE COMPLETE FREEDOM OF CHOICE, I.E., NOT ONLY W ITH REGARD TO THE MANNER IN WHICH THE EDUCATIONAL INSTITUTION IS TO BE RUN/MANAGED, BUT A S TO ITS CHARACTER AS WELL; THE WHOLE PREMISE OF THE ARTICLE/S BEING PROMOTION OF MINORIT Y INTEREST, WHETHER CONSTRUED WITH REFERENCE TO LANGUAGE OR RELIGION, WITH THE ONLY RE STRICTION BEING TOWARD IMPARTING OF RELIGIOUS INSTRUCTION THEREAT. THE WORDS FOR THE BENEFIT OF ANY PARTICULAR RELIGIOUS COMMUNITY OR CASTE IN SECTION 80G(5)(III), THEREFORE, HAVE TO BE REA D IN THE BACKGROUND, AND IN LIGHT, OF THE WORDS OF THEIR CHOICE OCCURR ING IN ART. 30, WHERE-UNDER THE EDUCATIONAL INSTITUTIONS OF THE APPELLANT-SOCIETY A RE ESTABLISHED AND BEING MAINTAINED, SO THAT IT WOULD COVER ALL THE ASPECTS OF THEIR FUNCTI ONING. WHAT IS BEING TAUGHT AT SUCH INSTITUTIONS; BY WHOM; AND TO WHOM IT IS BEING TAUG HT . THIS IS AS THESE WOULD GO TO DEFINE THE NATURE AND CHARACTER OF THE EDUCATIONAL INSTITU TION/S, AND THEREBY DETERMINE WHETHER, IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE SAM E IS SET-UP FOR THE BENEFIT OF ANY RELIGIOUS COMMUNITY THE CHARGE AGAINST IT OR NO T. IT WOULD APPEAR, EX FACIE , PARADOXICAL THAT AN INSTITUTION/S ESTABLISHED BY A PARTICULAR RELIGIOUS COMMUNITY, ENTITLED TO THE RIGHTS AND PRIVILEGES UNDER ARTS. 25 TO 30 O F THE COI, IS YET NOT SET-UP FOR ITS BENEFIT, I.E., AS A RELIGIOUS COMMUNITY; THE WHOLE INTENT AND PURPORT OF ESTABLISHING SUCH INSTITUTIONS BEING THEIR OPERATION FOR THE PROMOTIO N OF THE RIGHTS/INTERESTS OF A PARTICULAR RELIGIOUS GROUP/DENOMINATION, EVEN AS EMPHASIZED PE R CLAUSE 4(A) OF ITS RULES AND REGULATIONS. THE SAID CLAUSE, AS ALSO AFORE-NOTED, ALONG WITH CL. 4(B), ARE THE ONLY TWO CLAUSES DEALING WITH THE ESTABLISHMENT AND RUNNING OF EDUCATIONAL INSTITUTIONS, WHILE THE LATTER (CL. 4(B)), SHOWS NO SUCH BIAS OR EMPHASIS. AGAIN, IT NEEDS TO BE CLARIFIED THAT THE WORDS `FOR THE BENEFIT IN S. 80G(5)(III) WOULD NOT IMPLY ` SOLELY FOR THE BENEFIT OR `FOR THE EXCLUSIVE BENEFIT, SO AS TO MEAN THAT THE SECTION WOULD NOT BE ATTRACTED WHERE PEOPLE DRAWN FROM OTHER RELIGIONS OR DENOMINATIONS ARE ALS O NOT DENIED THE BENEFITS OF THE INSTITUTION; IT BEING IMPERMISSIBLE TO IMPUTE OR RE AD WORDS INTO THE STATUTE. THE WORD `BENEFIT, TO OUR MIND, WOULD EXTEND TO ANY PREFERE NTIAL OR, CORRESPONDINGLY, AN UNEQUAL ITA.NO. 409/COCH/2009 7 TREATMENT ACCORDED TO THE MEMBERS DRAWN FROM A PART ICULAR RELIGIOUS IDENTITY. AS SUCH, ANY SUCH PREFERENCE IN ITS WORKING WOULD QUALIFY IT TO FALL WITHIN THE PURVIEW OF THE CLAUSE. THIS VIEW IS ALSO GUIDED BY THE CONSIDERATI ON OF ACCORDING A PURPOSIVE INTERPRETATION TO THE LANGUAGE OF THE ACT, AS WELL AS BY THE FACT THAT THE SAME REPRESENTS A QUALIFYING CRITERION FOR EXEMPTION, SO THAT IT HAS TO BE INTERPRETED STRICTLY. NOT SO READING WOULD MEAN (FOR EXAMPLE) THAT EVEN A MINIMAL INTAKE OF (SAY) STUDENTS (AS, SAY, 2% OR 5%) FROM OTHER THAN THE DOMINANT GROUP WOULD ENABLE IT TO CLAIM OF THE INSTITUTION BEING NOT, EITHER EXPRESSLY OR PRACTICALLY, SOLELY FOR TH E BENEFIT OF A PARTICULAR RELIGIOUS COMMUNITY. IF THE LEGISLATURE INTENDED SO, NOTHING PREVENTED IT TO INCLUDE THE SAID WORDS IN THE QUALIFYING CONDITION, WHICH WOULD OPERATE TO RELAX THE RIGOUR OF THE SAME. THE BENEFIT/S THAT IS BEING EXTENDED OR POSSIBLE TO BE, HOWEVER, MUST BE REAL AND NOT IMAGINARY OR ILLUSORY. ANY PREFERENCE, SAY, BY WAY OF PROVIDING FOR A QUOTA, MANAGEMENT DISCRETION, ETC. ACCORDED TO THE MEMBERS OF THE PUB LIC DRAWN ON THE BASIS OF RELIGIOUS AFFILIATION; BE IT FOR EMPLOYMENT AS FACULTY/STAFF THEREIN, ADMISSION TO THE STUDENTS, GRANT OF LOANS OR SCHOLARSHIPS FOR STUDY, ETC., WOULD AMO UNT TO A BENEFIT IN TERMS OF THE QUALIFYING PROVISION. HERE IT MAY ALSO BE RELEVANT TO CLARIFY THAT THE FACT THAT THE EDUCATIONAL INSTITUTIONS BEING SET-UP AND ADMINISTE RED BY THE ASSESSEE-SOCIETY, OR ANY OF THEM, IS AIDED BY THE STATE, WHICH PRECLUDES DISCRI MINATION QUA ADMISSION ON ANY GROUND (ART. 29(2)), WOULD NOT BY ITSELF OPERATE TO EXCLUD E IT FROM THE PURVIEW OF THE SECTION. THIS FOLLOWS OUR READING OF THE TERM `BENEFIT OCCU RRING IN THE PROVISION, AS ALSO IN S. 13(1)(B), IN AN UNQUALIFIED, BROAD MANNER, WHILE TH E ONLY BENEFIT OR THE ASPECT QUA WHICH AN EQUAL TREATMENT IS ENSURED THROUGH THE CONSTITUT IONAL MANDATE, IS WITH REGARD TO `ADMISSION TO THE EDUCATIONAL INSTITUTION. 3.7 THE ASSESSEE HAS ARGUED AND MADE OUT ITS CASE O N THE BASIS OF ITS PAST, WHEREAT IT HAS BEEN OSTENSIBLY WORKING/RUNNING FOR THE BENEFIT OF ALL WITHOUT ANY RESERVATION. WE ARE NOT INCLINED, BEING A QUESTION OF FACT, TO PRE- DETERMINE THE ISSUE BASED ON PAST CONDUCT, WHICH THOUGH WOULD DEFINITELY GO TO ESTABL ISH A PRIMA FACIE CASE IN FAVOUR OF THE ASSESSEE, BUT NO MORE, PARTICULARLY IN VIEW OF THE LANGUAGE OF ITS CHARTER AND CONSTITUTIONAL FRAME-WORK SUGGESTING A PREFERENCE I N RESPECT OF ITS PRINCIPAL ACTIVITY. BESIDES, AS APPARENT, THERE HAS BEEN NO EXAMINATION OF THE RELEVANT AND VITAL FACETS OF ITS ITA.NO. 409/COCH/2009 8 FUNCTIONING EITHER IN THE PAST (AS WE FIND ON THE B ASIS OF THE EARLIER APPROVAL ORDERS (ON RECORD), AND WHICH, EVEN IF SO, WOULD HAVE BEEN ONL Y OVER THREE YEARS AGO) OR EVEN WHILE EXAMINING THE INSTANT APPLICATION, AND WHICH ONLY W OULD LEAD TO FINDINGS ENABLING THE DETERMINATION OF THE QUESTION AS TO WHETHER THE SOC IETY IS SET-UP OR OPERATES FOR THE BENEFIT OF A PARTICULAR RELIGIOUS COMMUNITY OR NOT. THE LD. CIT HAS BASED HIS ORDER ON A CLEAR FINDING, WHICH, THOUGH DOES NOT SPELL OUT THE REASONS EXPLICITLY AND, THEREFORE, CANNOT BE ACCEPTED AS SUCH. THAT IS, THE MATERIAL ON RECORD DOES NOT ENABLE US TO ISSUE ANY DEFINITE FINDINGS OF FACT, EITHER ACCEPTING OR REJECTING THE SAME, STATING OUR REASONS FOR DOING SO. THE REQUIREMENT IN LAW IS THAT THE FUND/ INSTITUTION SHOULD NOT BE EXPRESSED TO BE SO; WHILE R. 4(A) R/W R. 3A INDICATES A PREFEREN CE FOR A (RELIGIOUS) MINORITY, THE EXPRESSION IN CLAUSE 4(A) IS ONLY INDICATIVE, AND N OT UNEQUIVOCAL, TO ENABLE US TO IDENTIFY THE MUSLIM COMMUNITY AS THE PREDOMINANT OR PRINCIPA L BENEFICIARY. ALSO, IT MAY WELL BE THAT THE EDUCATIONAL INSTITUTIONS SET-UP ARE NOT WO RKING IN A MANNER SO AS TO ACCORD ANY PARTICULAR BENEFIT THERETO, AS WE FIND NO REFERENCE THERETO IN CLAUSE 4(B). HOW THE OBJECTS ARE PUT INTO PRACTICE, EACH OF WHICH WOULD, THOUGH COVERED UNDER THE SCOPE OF THE OBJECTS, THEREFORE, BE DECISIVE OF THE MATTER. 3.8 BEFORE CONCLUDING, HOWEVER, WE MAY ALSO DISCUSS ANOTHER RELATED ASPECT. IT COULD BE ARGUED THAT THE SOCIETY IS ADMITTEDLY ENTITLED T O EXEMPTION UNDER SECTION 10(23C)(IV) OF THE ACT, SO THAT ITS OBJECTS ARE CHARITABLE IN C HARACTER. THERE IS NO DISPUTING THE SAME; EDUCATION IS BY ITSELF A `CHARITABLE PURPOSE, AND PUBLIC CHARITY HAS NOT NECESSARILY TO INURE FOR THE BENEFIT OF ALL MANKIND. IT WOULD BE SUFFICIENT IF IT IS SO FOR A RECOGNISABLE AND IDENTIFIABLE CROSS-SECTION OF THE PUBLIC, IRRES PECTIVE OF THE SAID CROSS-SECTION BEING IDENTIFIED BY A BOND OF RELIGIOUS COMMUNITY OR CAST . THE CHARACTER OF THE APPELLANT- SOCIETY AS A PUBLIC CHARITABLE TRUST IS, THEREFORE, NOT IN DISPUTE. HOWEVER, VIDE SS. 13(1)(B) AND 80G(5)(III), THE ACT DRAWS AN EXCEPTIO N TO SUCH INSTITUTIONS, I.E., FOR THE BENEFIT THERE-UNDER, AS A MATTER OF PUBLIC POLICY, WHERE THE BENEFICIARY GROUP IS IDENTIFIED ALONG THE LINES OF RELIGION OR CASTE, MAKING FURTHE R EXCEPTION, THOUGH, FOR SCHEDULED CASTES, SCHEDULED TRIBES, BACKWARD CLASSES, ETC. ITA.NO. 409/COCH/2009 9 4. DECISION : IN VIEW OF THE FOREGOING ANALYSIS, AND THE GIVEN FA CTS AND CIRCUMSTANCES, WE CONCLUDE AS UNDER, WHICH COMPRISE A WHOLE, TO BE READ CUMULATIV ELY: A) THAT THE APPELLANT-SOCIETY IS FORMED FOR THE EDU CATIONAL, SOCIAL, CULTURAL AND ECONOMIC ADVANCEMENT OF ALL THE SECTIONS OF THE SOCIETY IN I NDIA; B) BEING A MINORITY INSTITUTION, ENTITLED TO THE R IGHTS AND PRIVILEGES COMPLIED UNDER ARTS. 25 TO 30 OF THE CONSTITUTION OF INDIA, IT IS, HOWEV ER, ENTITLED TO WORK PARTICULARLY FOR THE BENEFIT OF THE RELIGIOUS COMMUNITY, TO FURTHER WHOS E INTERESTS IT IS CONSTITUTED, I.E., THE MUSLIM COMMUNITY, BESIDES BACKWARD CLASSES. THE EDU CATIONAL ACTIVITY, WHICH THE APPELLANT-SOCIETY CLAIMS TO BE SOLELY (OR PRINCIPAL LY) ENGAGED IN (THERE IS NO FINDING BY THE REVENUE ON THIS), BRINGS OUT THIS FOCUS PER CL. 4(A), WHICH IS ABSENT IN OTHER CLAUSES, RELATING TO THE SOCIAL, CULTURAL AND ECONOMIC ACTIV ITIES; C) WITH REGARD TO THE OTHER THAN EDUCATIONAL ACTIVI TY, THEREFORE, THE SOCIETY IS NOT EXPRESSED TO BE FOR THE BENEFIT OF A PARTICULAR REL IGIOUS COMMUNITY, SO AS TO ATTRACT S. 80G(5)(III); D) WITH REGARD TO THE EDUCATIONAL ACTIVITIES, HOWEV ER, IT CANNOT BE SO SAID AND THE MATTER WOULD, THEREFORE, REQUIRE BEING RESTORED BAC K TO THE FILE OF THE COMPETENT AUTHORITY TO DECIDE THE SAME WITH REGARD TO THE ACTUAL ACTIVI TIES OF THE SOCIETY; AND E). THE EARLIER FINDINGS OF THE COMPETENT AUTHORI TY ARE VACATED. WE DECIDE ACCORDINGLY. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED FOR STATISTICAL PURPOSES. . SD/- SD/- (N.VIJAYAKUMARAN) (SANJAY ARORA) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE: ERNAKULAM DATED: 29TH APRIL, 2011 GJ COPY TO: 1. THE MUSLIM EDUCATIONAL SOCIETY (REGD.), BANK ROA D, CALICUT - 673001. 2. THE COMMISSIONER OF INCOME-TAX, KOZHIKODE. 3. D.R., I.T.A.T., COCHIN BENCH, COCHIN. 4. GUARD FILE. BY OR DER (ASSISTANT REGISTRAR ) ITA.NO. 409/COCH/2009 10