ACIT(E),Circle-1(1), New Delhi V. Divya Jyoti Jagrati Sansthan, New Delhi

ITA 4188/DEL/2017

• Counselvise Citation: [2022] 105 COUNSELVISE.COM (IT) 9831 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 7 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-01-2022
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2012-2013
• Appeal Filed On: 22-06-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: YAGYASAINI KAKKAR
• Keywords: Capital asset; Depreciation; Charitable institution; Rule of consistency; Benefit of exemption
• Section: 32; 12; 11; 143(3); 133(6); 80G; 12A; 12AA; 43; 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH ‘B’ : NEW DELHI) BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER and SHRI AMIT SHUKLA, JUDICIAL MEMBER ITA No.4188/Del./2017 (ASSESSMENT YEAR : 2012-13) ACIT (E), Circle 1 (1), vs. Divya Jyoti Jagrati Sansthan, New Delhi. Plot No.3, Pocket OCF, Behind Suraksha Enclave, Parwana Road, Pitampura, New Delhi – 110 034. (PAN : AAATD2307D) (APPELLANT) (RESPONDENT) ASSESSEE BY : Shri Sudesh Garg, Advocate REVENUE BY : Ms. Yagyasaini Kakkar, CIT DR Date of Hearing : 25.11.2021 Date of Order : 24.01.2022 O R D E R PER AMIT SHUKLA, JM : Aforesaid appeal has been filed by the assessee against the impugned order dated 21.04.2017 passed by the ld. CIT (Appeals)-40, New Delhi for the quantum of assessment passed under section 143(3) of the Income-tax Act, 1961 (for short ‘the Act’) for the assessment year 2012-13. 2. In the grounds of appeal, the Revenue has raised following grounds:- 2 ITA No.4188/Del/2017 “1. The Ld. CIT (A) has erred on facts and in law in holding the assessee to be a religious charitable society ignoring the objects of the assessee as per it object clause and also ignoring the fact that assessee is also holding registration u/s 80G(5)(vi) and as per the provision or section 80G(5B) read with explanation 3 to section 80G, an institution existing wholly or substantially for religious purpose is not allowed to get the benefit of sec. 80G. 2. The Ld. CIT (A) has erred on facts and in law in deleting the addition of Rs.18,36,05,498/- u/s 115BBC of the Income Tax Act, 1961. 3. The Ld. CIT (A) has erred on facts and in law in ignoring the fact that the amount of Rs.8,79,20,100/- out of corpus donations and RS.10,97,53,280/- out of other donations were anonymous donation within the meaning of section 115BBC of the Income Tax Act, 1961. 4. Whether the Ld. CIT (A) has erred in allowing the appeal of assessee by ignoring the fact that assessee society like charitable or religious institutions are governed by almost the separate or independent provisions of Section 11, 12, 12A, 12AA & 13 and these provisions are independent code in itself in Chapter III of the Income Tax Act, 1961 and claim of depreciation u/s 32 comes under Chapter IV of the Act under the head ‘D’ Profit and Gains of Business or Profession and depreciation is allowed when capital assets are used for the purpose of business? 5. Whether ld. CIT (A) has erred in allowing the appeal of the assessee by ignoring the facts that the assessee is not eligible for any type of deprecation as the entire expenditure for the purpose of capital assets is allowed as a deduction and the same is treated as application of income u/s 11(1) and claiming depreciation on the same capital assets is a double deduction and is not as per law as these capital assets are not used for the purpose of business or profession as provided u/s 32(1)?” 3. Facts in brief are that, assessee society was granted registration u/s 12A vide certificate dated 24.02.2000, looking to its aims and 3 ITA No.4188/Del/2017 objects which were charitable in nature as defined u/s 2(15) of the Act. The main aims and objects of the assessee society were to provide relief and medical help to poor, destitute and physically handicapped persons and to secure peace, happiness and brotherhood in the society through various activities. The activities of the assessee society was by and large socio-spiritual and religious in nature which include organizing spiritual events and creating awareness about various social objects such as water conservation, female feticide, prisoner reforms, employment programmes for blind etc. The Assessing Officer in the assessment order also noted that the aims and objects of the assessee were in accordance with the trust deed. AO also held that the overall activities carried out by the assessee during the relevant accounting period fell between the ambit of ‘charitable purpose’ as per definitions contained in section 2(15) and benefit of exemption under section 11 and 12 has to be allowed. 4. AO noted that during the year under consideration, the assessee had received corpus donation and voluntary donations aggregating to Rs.28,13,57,624/- (corpus donation – Rs.16,13,94,776/-; voluntary donations – Rs.11,99,62,848/-). The assessee was required to substantiate its claim of corpus donations along with details of donors, i.e., name, address and amount along with mode of receipt. Details of donors above Rs.10,000/- were given which aggregated to Rs.8,10,92,247/- in the month of January 2015 and the donations amount below Rs.10,000/- was Rs.8,03,02,529/-, thus totalling to Rs.16,13,94,776/-. AO in order to verify the genuineness of the donations issued notice u/s 133(6) in 27 cases and in response to which, various persons sent their replies. However, 9 notices were returned back. Assessee provided another list of documentary evidence 4 ITA No.4188/Del/2017 to substantiate the donors. However, ld. AO held that certain corpus donations remained unverified due to incomplete addresses, non- confirmations by the donors and non-submissions of details by the assessee which was tabulated by him in the following manner :- Particulars Amount (Rs.) Remarks Incomplete addresses / No address cases (donors) above Rs.10,000/- 62,95,571 As per details filed by the assessee, these figures have been worked out from Page no.1-81 of list filed on 25.03.2015 (276 persons) Unverifiable donors as per 133(6) 19,72,000 As mentioned in above para Donors below Rs.10,000/- no details provided 7,96,52,529 As mentioned in above para Total 8,79,20,100 5. Thus, AO held that assessee could not substantiate the corpus donation of Rs.8,79,20,100/-. He again called for the details of voluntary donation amounting to Rs.11,99,62,848/- and found that there are donations less than Rs.1,000/- for more than Rs.10 crores and more than Rs.1,000/- was Rs.1.13 crores. However, no details of general donation of less than Rs.1,000/- was given by the assessee. Accordingly, he disallowed voluntary donation of Rs.10,97,53,280/-in the following manner :- “After consideration of the details filed, the following general donations have remained unverifiable due to incomplete addresses, non-confirmation by the respective donor’s and non-submission of details by the assessee itself. 5 ITA No.4188/Del/2017 Particulars Amount (Rs.) Remarks Incomplete addresses / No address cases (donors) above Rs.10,000/- 11,79,307 As per details filed by the assessee, these figures have been worked out from Page no.82- 148 of list filed on 25.03.2015 (633 persons) Donors below Rs.1,000/- no details provided 10,85,73,973 As mentioned in above para Total 10,97,53,280 3.7 As mentioned above, the assessee was given ample opportunities to substantiate its claim regarding the receipt of voluntary donations. However, assessee could not substantiate its claim with supporting documentary evidences in respect of above mentioned voluntary donation amounting to Rs.10,97,53,280/-.” 6. Accordingly, he taxed donation of Rs.18,36,05,498/- under the provisions of section 115BBC(i) of the Act. He further disallowed the claim of depreciation of Rs.3,85,61,953/-. 7. Ld. CIT (A), after considering the various submissions and explanation furnished by the assessee which has been dealt and incorporated in the impugned order as well as the findings and observations of the AO, has deleted the said additions. The main reasons and grounds for deletion of the said addition was that; the legislature has exempted fully public religious trust from the provisions of 115BBC which was in accordance with the CBDT Circular No.14/2006 dated 28.12.2006 which has clarified that anonymous donations made to wholly religious charitable institution 6 ITA No.4188/Del/2017 is not hit by section 115BBC. For this, he has made following observations :- “4.1.3 I have considered the assessment order and the submissions of the appellant. The issue that first needs to be addressed is that whether the objects of the trust are charitable or religious or a mix of both since the Assessing Officer has held that the assessee is hit by section IISBBC since it is not a public religious trust and the appellant contends that the objects of the trust are clearly indicative of its religious/spirit al nature and its activities clearly demonstrate that it falls more within the religious rather than of charitable nature of general public utility and just for arguments sake, the appellant can be categorized as a religious and charitable trust/ institution. 4.1.4 From a plain reading of the provisions of section 115BBC and also Circular No. 14/2006 dated 28.12.2006 it is clear that these provisions will not apply in a case where anonymous donations are received by a trust institution created for religious purposes. In case of partially religious and partially charitable organizations, anonymous donations received shall be subjected to tax it the donations have been received with the specific direction that such donation is for a university, education situation or hospital or medical institution run by such trusts or institutions. 4.1.5 Looking to the case of the assessee, some of the objectives of the assessee trust as per the trust deed, a copy of which was filed during the appellate proceedings, are as follows: 1. To create of sense of brotherhood, communal & social harmony, cooperation, love and affection amongst general public at large through spiritual advancement for the attainment of national unity and global peace. 2. To organize/arrange spiritual discourses, sadhna camps, meditation camps/centres and also to establish or open/run and manage yoga, Meditation 7 ITA No.4188/Del/2017 centre and spiritual retreats, Ashrams, Institutes and also to organize/hold Seminars, Meetings, Exhibitions, Press-Conferences from time to time to spread the message of oneness & compassion and eternity. 3. To create spiritual atmosphere in the Institutes/Mandir Ashram Bhawan of which are under the management of the Society and spread spiritual awareness among the wide range of people irrespective of their caste, creed and colour by 'Self-Realisation', special discourses and relevant literature etc. 4. To arrange/celebrate and organize, social, cultural, procession, programmes, functions to propagate the message of the Sansthan from time to time. 5. To undertake reformation of the prisoners in jails through spiritual discourses and self-realisation and organize/arrange rehabilitation activities for the reformed prisoners to enable them to join the mainstream of society as respected and responsible citizen. 6. To undertake programmes for awareness, education, disseminating relevant informations, training and lectures by Experts/Preachers of the Sansthan on drug addiction, HIY, smoking, smack etc. and to set up and run rehabilitation centres for HIY +ve and de-addiction patients. 7. To create awareness amongst younger generation against various vices viz. drug addiction. crime, communal violence, domestic violence, female foeticide, dowry, corruption, terrorism etc, prevalent in society, enthuse & promote national integration, patriotism, universal brotherhood, moral values, morality, purity, sincerity, chastity, austerity, devotion, spiritual consciousness and to persuade them to follow ethical values of life and ideology of great men in their life. 8 ITA No.4188/Del/2017 8. To arrange, organize, safeguard, promote, transit vedic chanting (an oral/intangible cultural heritage) to generate, respect for cultural diversity, to encourage peace and develop mutual respect and tolerance amongst communities, groups and individuals and also to develop Research & Development Centres. 9. To adopt all spiritual and social measures 10 eliminate discrimination, resolve conflict and remove misconceptions amongst various communities and promote communal harmony, compassion and unity.” 8. After relying upon the decision of ITAT, Delhi Bench in the case of Bhagwan Shree Laxmi Narain vs. ITO (E), Trust Ward-III Delhi (2014) 50 taxmann.com 23 (Delhi) and decision of Hon’ble Delhi High Court affirming the said decision and looking to the aims & objects of the assessee, ld. CIT (A) held that assessee is engaged in religious and charitable activities which are in the nature of social- spiritual in nature. He also observed that in subsequent assessment year 2013-14 and 2014-15, Department itself has held that the assessee is carrying out socio-spiritual in nature and enormous donations have been accepted. Accordingly, Ld. CIT(A) held that assessee’s activities being spiritual in nature is religious in nature and also charitable in nature and would be qualified under the exception of section 115BBC(2)(b), therefore, AO was not justified in invoking the provisions of section 115BBC. 9. As regards disallowance of depreciation as application of income, he relied upon the decision of Hon’ble Delhi High Court in the case of DIT (E) vs. Indraprastha Cancer Society (2015) 53 taxmann.com 463 (Delhi) wherein the assessee has been held to be allowed for 9 ITA No.4188/Del/2017 depreciation for religious institution also. He further noted that this issue has been led at rest by the Finance Act, 2014 w.e.f. assessment year 2015-16 and subsequent years. Therefore, this amendment could not be applicable for the AY 2012-13. 10. Before us, ld. CIT DR apart from strongly relying upon the order of AO, tried to convince us on a different line of argument that assessee is holding recognition/registration u/s 80G(5)(vi) and as per provisions of section 80G(5)(vi) read with Explanation 3 thereto, an institution existing wholly or substantially for religious purpose is not allowed benefit of section 80G. Thus, there is a dichotomy in the findings of ld. CIT (A) that, on one hand, assessee is entitled for recognition u/s 80G existing solely for religious purpose wherein, as per the Explanation 3, charitable purpose does not include any purpose the whole or substantially the whole of which is of a religious nature; and on the other hand, ld. CIT (A) cannot hold that provisions of section 115BBC would apply for the reason that assessee is carrying out the activities which are religious in nature. Thus, the finding of the ld. CIT (A) and the submissions made by the assessee are self contradictory. She also relied upon the decision of ITAT, Agra Bench in the case of Shri Girraj Education and Welfare Society vs. ITO 3(4), Mathura (2012) 27 taxmann.com 89 (Agra) wherein the Tribunal has held that merely filing the list of donors containing names and addresses/incomplete addresses does not satisfy the condition laid down u/s 115BBC(3). The relevant para 13 of the said judgment was also cited before us. She also referred to the decision of Hon’ble Supreme Court in the case of Shri Sai Baba Sansthan Trust (Shirdi) vs. UOI (2020) 114 taxmann.com 489 (SC). Thus, she submitted that activities of the assessee fall in the nature of 10 ITA No.4188/Del/2017 Explanation 3 to section 80G, therefore, the findings of ld. CIT (A) requires to be reversed, because the assessee is holding 80G certificate and at the same time, the assessee cannot claim exemption u/s 115BBC. She also referred to the aims & objects of the Trust as listed in para 4.1.5 of the appellate order and pointed out specific clause 6, 7, & 8 (supra) and held that assessee cannot be held to be performing religious activities per se. In support of certain activities carried out by the assessee trust, she pointed out certain judgments that these activities have been held to be charitable in the nature of general public utility and social activities and not for the religious activities by the various courts. 11. Ld. counsel for the assessee strongly relied upon the order of the ld. CIT (A) and also submitted that assessee’s case has been under scrutiny for various past and subsequent years u/s 143(3) wherein not only the assessee has been accepted religious and charitable institution but also carrying out social activities and all petty small donations have been allowed. In support, he also filed copies of various assessment orders. 12. We have carefully considered the submissions and gone through the impugned order as well as material placed on record. The case of the AO was that though assessee is a charitable institution carrying out the charitable activities, however has disallowed donations made for the corpus fund and voluntary donation on the ground that the same could not be verified by the assessee and accordingly he has taxed the donations under the provisions of section 115BBC(1)(i). First of all, from the perusal of the aims & objects as incorporated by the ld CIT (A) in para 4.1.5 as incorporated (supra), we find that the 11 ITA No.4188/Del/2017 assessee’s activities are mixed of religious, charitable and social activities. The religious activities have to be given a wide treatment and cannot be interpreted narrowly because in the concept of Hinduism there is no line of demarcation between religious or charitable. It is always mixed of both. Hon’ble Supreme Court in the case of CIT vs. Dawoodi Bohara Jamat reported in (2014) 43 taxmann.com 243 held that if the assessee trust is formed with both religious and charitable objects in terms of section 13(1)(b), its claim for registration u/s 12AA cannot be denied and it can only denied in case when such objects are carried out for the benefit of a particular religious community or caste. If the purpose of the assessee trust is not indicative of wholly religious purpose but collectively indicate both charitable and religious purpose then it has to be treated cumulative and would be outside the purview of section 13(1)(b). 13. Here, in this case, it cannot be said that the assessee was purely carrying out either charitable activities and not religious or purely for the religious purpose. It was carrying out its activities as per objects which were culmination of religious in nature and social economic in nature. The case of the AO is that the assessee is hit by section 115BBC, since it is not a public religious trust. Ld. CIT DR has harped upon the fact that since assessee has been granted certificate u/s 80G which as per the Explanation 3 charitable purpose has been defined not to include any activities substantially or wholly for the religious nature, therefore, assessee cannot be held to be carrying out religious activities, and hence not eligible for saving clause of section 115 BBC. For the sake of reference, Explanation 3 reads as under :- 12 ITA No.4188/Del/2017 Explanation 3.—In this section, "charitable purpose" does not include any purpose the whole or substantially the whole of which is of a religious nature.” 14. Thus, what has been envisaged is that charitable purpose does not include any purpose the whole or substantially the whole of which is a religious nature for the purpose of granting certificate u/s 80G. Here, in this case, as stated above, it is not wholly or substantially of religious nature, albeit mixed of both. Moreover in the concept of Hinduism, religious and charitable are both mixed and are blended together especially it is done for benefit of public at large. The main reasoning of the CIT DR before us is that since provisions of section 115BBC is not applicable for any anonymous donations received by any trust of institution created or formed for religious purpose or created for charitable purpose, therefore, in assessee’s case this exception is not available as assessee is carrying out activities which are mainly socio-economic activities. Sub-section (2) of section 115BBC reads as under :- “(2) The provisions of sub-section (1) shall not apply to any anonymous donation received by— (a) any trust or institution created or established wholly for religious purposes; (b) any trust or institution created or established wholly for religious and charitable purposes other than any anonymous donation made with a specific direction that such donation is for any university or other educational institution or any hospital or other medical institution run by such trust or institution.” 15. Thus, section 115BBC does not apply to any institution or trust created or established wholly for religious purposes. CBDT vide its Circular No.14/2006 dated 28.12.2006 has categorically clarified that 13 ITA No.4188/Del/2017 anonymous donations made to wholly charitable and religious institutions, i.e. mixed purpose institution, shall be taxed only if it is having university or other educational institution or any hospital or other medical institution run by them. The assessee also, as held by the ld. CIT (A), have its activities more within the religious realm and it can be categorized as charitable and religious trust and, therefore, provisions of section 115BBC read with aforesaid CBDT circular is clearly applicable even for partial religious or partly charitable institution. Further, only those anonymous donations are to be disallowed subject to a specific direction if it is for any university, educational institution or medical institution run by such institution which is not the case here. Here it is not the case that any anonymous donation made is with a specific direction that such donation is for any university or other educational institution or any hospital or other medical institution run by such trust or institution. In fact nowhere there is any finding or it is a matter of fact that assessee is running any such educational or medical institution. Accordingly, we do not find any infirmity in the order of the ld. CIT (A). 16. We are also unable to appreciate the arguments of the ld. CIT DR that, since assessee had been granted certificate u/s 80G which cannot be granted if the trust/institution is wholly and substantially for religious purposes. First of all, this was not the ground taken by the AO and secondly, if there is any infirmity in the grant of certificate issued u/s 80G then it is for the Department to look into that aspect otherwise it has no relevance or bearing in interpreting whether sub- section (2) of section 115BBC is applicable in this case or not. Otherwise also, similar donations have been accepted not only in the earlier years but also in the subsequent years u/s 143(3) and it has 14 ITA No.4188/Del/2017 been categorically found that provisions of seciton115BBC is not applicable, therefore, in view of the rule of consistency, such donations cannot be disallowed. 17. In the result, the appeal filed by the Revenue is dismissed. Order was pronounced in open court on 24 th day of January, 2022. Sd/- sd/- (N.K. BILLAIYA) (AMIT SHUKLA) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated: 24.01. 2022 TS Copy forwarded to: 1.Appellant 2.Respondent 3.CIT 4.CIT(A-24, New Delhi. 5.CIT(ITAT), New Delhi. AR, ITAT NEW DELHI.