Shri Markandey Sanyas Ashram Public Trust, Khandwa V. The CIT, Indore

ITA 420/IND/2009

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 0084 (ITAT-INDORE)
• Duration Of Justice: 1 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-09-2009
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 14-09-2009
• Assessment Year: misc
• Appeal Filed On: 17-08-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V K KARANADDL
• Keywords: Charitable institution; Rule of consistency; Retrospective amendment
• Section: 80G; 12AA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL INDORE (S.M.C.-I) BENCH : INDORE BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER PAN NO. :AAAS16666D I.T.A.NO. 420/IND/2009 U/S 80-G SHRI MARKANDEY SANYAS ASHRAM PUBLIC TRUST, COMMISSIONER OF INCOME-TAX, INDORE. GODARPURA, VS. BHAGWAT GHAT ROAD, ONKARESHWAR, DISTRICT KHANDWA APPELLANT RESPONDENT APPELLANT BY : SHRI RAKESH GARG, ADV RESPONDENT BY : SHRI V.K.KARAN,ADDL. CIT DR O R D E R THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF LD. CIT(A)-II, INDORE, DATED 30 TH JUNE, 2009, REFUSING TO GRANT APPROVAL U/S 80- G OF THE INCOME-TAX ACT, 1961. - 2 - 2 2. BRIEFLY, THE FACTS OF THE CASE ARE THAT THE ASSESSE E TRUST UNDER REFERENCE HAS BEEN FORMED BY A TRUST DEED EXECUTED ON 7 TH JULY, 1976, AND IS REGISTERED UNDER THE M.P.PUBLIC TRUST ACT. IT HAS F ILED APPLICATION FOR GRANT OF APPROVAL/CONTINUATION U/S 80G(5)(VI) OF THE INCO ME-TAX ACT, 1961, ON 6 TH MARCH, 2009. 3. THE LD. COMMISSIONER AFTER CONSIDERING MAIN OBJECTS OF THE TRUST DEED IN PARA 5 NOTED THAT ONE OF THE OBJECTS OF THE TRUST IS TO PROVIDE FACILITIES FOR THE STUDY OF UPNISHAD, VEDAS, JYOTIS H AND AYURVED. YET ANOTHER OBJECT IS FOR ESTABLISHING AND MAINTAINING ASHRAMS AND MANDIRS NOT ONLY IN INDIA, BUT ANYWHERE IN THE WORLD. ACCORDING TO THE LD. COMMISSIONER, THESE, IN FACT, FORM THE CORE ACTIVIT IES OF THE TRUST IN SO MUCH AS IN ALLIED ACTIVITIES PRINTING, PUBLISHING, DISTR IBUTING AND PROPOGATING PRINCIPLES WITH ADHYATMIK VIDYA SUPPLEMENT RELIGIOU S HINDU TEACHINGS AND BELIEF. IT IS ALSO NOTED THAT THE ASSESSEE SPENT RS . 91,054/- ONLY OUT OF RS. 26,51,359/- FOR RELIGIOUS PURPOSES. THE BALANCE AMO UNT IS FOR THE WELFARE OF THE PUBLIC. THE LD. COMMISSIONER NOTED SECTION 80G( 5)(II) AND (III) OF THE INCOME-TAX ACT, 1961, ALONGWITH EXPLANATION 3 TO TH E ABOVE PROVISIONS AND NOTED THAT AS PER EXPLANATION 3, THE CHARITABLE PUR POSES DOES NOT INCLUDE ANY - 3 - 3 PURPOSE, THE WHOLE OR SUBSTANTIALLY THE WHOLE OF WH ICH IS OF A RELIGIOUS NATURE. THE LD. COMMISSIONER, THEREFORE, NOTED THAT THE DONATION TO CHARITABLE INSTITUTIONS ARE ENTITLED TO DEDUCTION. HE HAS RELIED UPON THE DECISIONS IN SUPPORT OF HIS FINDINGS AND ULTIMATELY HELD THAT PREPONDERANT OBJECTS OF THE TRUST ARE RELIGIOUS, THEREFORE, THE ASSESSEE WOULD NOT BE ENTITLED FOR APPROVAL U/S 80-G OF THE INCOME-TAX AC T, 1961. APPLICATION WAS, ACCORDINGLY, REJECTED. 4. THE LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE LD. COMMISSIONER AND SUBMITTED THAT TRUST DEED WAS EXECUTED IN THE YEAR 1976 AND SINCE THEN THERE IS N O CHANGE IN THE OBJECTS AND ACTIVITIES OF THE ASSESSEE. THE ASSESSEE TRUST IS REGISTERED U/S 12AA OF THE INCOME-TAX ACT, 1961, VIDE ORDER DATED 17TH SEP TEMBER, 1991, AND THAT ASSESSEE TRUST IS GRANTED APPROVAL U/S 80G OF THE I NCOME-TAX ACT, 1961, DURING DIFFERENT INTERVALS STARTING FROM THE YEAR 1 991 TO 31 ST MARCH, 2009. THE DETAILS ARE FILED AT PAGE 2 OF THE PAPER BOOK. HE HAS SUBMITTED THAT THE FACTS ARE SAME AND OBJECTS AND ACTIVITIES OF THE AS SESSEE ARE ALSO SAME. THEREFORE, ON THE SAME SET OF FACTS, THE LD. COMMIS SIONER SHOULD HAVE EXTENDED THE APPROVAL U/S 80-G OF THE INCOME-TAX AC T, 1961. HE HAS - 4 - 4 SUBMITTED THAT THOUGH THE PRINCIPLE OF RES JUDICATA DOES NOT APPLY TO INCOME TAX PROCEEDINGS, BUT RULE OF CONSISTENCY SHOULD BE FOLLOWED BY THE INCOME TAX AUTHORITIES. IN SUPPORT OF THE CONTENTION, HE H AS RELIED UPON THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF RADHA S WAMY SATSANG VS. CIT, 193 ITR 321. HE HAS ALSO REFERRED TO CERTIFICATE (P .B. 39 AND40) IN SUPPORT OF THE CONTENTION THAT THERE WAS NO CHANGE IN THE CONS TITUTION AND ACTIVITIES OF THE ASSESSEE. HE HAS REFERRED TO HIS REPLY FILED BE FORE THE LD. COMMISSIONER ( P.B. NOS. 10 & 11) AND AFFIDAVIT (P.B. 13 TO 15). H E HAS FURTHER STATED THAT THE LD. COMMISSIONER HAS WRONGLY NOTED THE AMOUNT O F RS. 91,054/- SPENT FOR RELIGIOUS PURPOSES. HE HAS REFERRED TO INCOME A ND EXPENDITURE AMOUNT ENDING 31 ST MARCH, 2008, ( P.B. 50) IN WHICH THE AMOUNTS SPENT ON TEMPLE SEWA WAS MENTIONED AT RS.9054/- AND ALSO SUBMITTED THAT RECTIFICATION APPLICATION TO THAT EFFECT WAS ALSO FILED BEFORE TH E LD. COMMISSIONER. 5. THE LEARNED COUNSEL FOR THE ASSESSEE REFERRED TO PR OVISIONS OF SECTION 80G(5-B), WHICH IS INSERTED BY FINANCE ACT, 1999, WITH EFFECT FROM 1.4.2000 AND PROVIDES :- [(5B) NOTWITHSTANDING ANYTHING CONTAINED IN CLAUSE (II) OF SUB-SECTION (5) AND - 5 - 5 EXPLANATION 3, AN INSTITUTION OR FUND WHICH INCURS EXPENDITURE, DURING ANY PREVIOUS YEAR, WHICH IS OF A RELIGIOUS NATURE FOR AN AMOUNT NOT EXCEEDING FIVE PER CENT OF ITS TOTAL INCOME IN THAT PREVIOUS YEAR SHALL BE DEEMED TO BE AN INSTITUTION OR FUND TO WHICH THE PROVISIONS OF THIS SECTION APPLY.] AND SUBMITTED THAT SINCE THE AMOUNT SPENT FOR ALLEG ED RELIGIOUS ACTIVITIES WAS LESS THAN 5 %, THEREFORE, EXPLANATION 3 AND SUB CLA USE (II) OF SECTION 80G(5) WOULD NOT APPLY AND ASSESSEE IS ENTITLED FOR APPROV AL U/S 80G(5) OF THE INCOME-TAX ACT, 1961. HE ALSO RELIED UPON THE DECIS ION OF HONBLE RAJASTHAN HIGH COURT AS IS ALSO RELIED UPON BY THE LD. COMMISSIONER IN THE CASE OF SRI MARUDHAR KESARI STHANAKWASI JAIN YADGAR SAMITI TRUST VS. UNION OF INDIA AND ANOTHER, (2005) 273 ITR 475, IN WHICH THE HONBLE - 6 - 6 RAJASHTAN HIGH COURT CONSIDERING THE PROVISIONS OF SECTION 80G(5)(5B) OF THE INCOME-TAX ACT, 1961, HELD AS UNDER :- THE AFORESAID PROVISION IS A NON OBSTANTE CLAUSE A ND OVERRIDES EXPLANATION 3 AND DECLARES THAT TO THE EXTENT ANY INSTITUTION OR FUND INCURS NOT EXCEEDING FIVE PER CENT. OF ITS TOTAL INCOME FOR RELIGIOUS PURPOSES, IT DOES FALL WITHIN THE AMBIT OF SECTION 80G AND IT SHALL BE DEEMED TO BE AN INSTITUTION TO WHIC H SECTION 80G APPLY. TO SUCH INSTITUTIONS THE RESTRIC TION OF EXPLANATION 3 WILL NOT BE ATTRACTED. THUS, THE POSITION WITH EFFECT FROM APRIL 1, 2000, WOULD BE T HAT NOTWITHSTANDING ONE OR MORE CLAUSES OF THE TRUST DE ED BEING WHOLLY OR SUBSTANTIALLY RELIGIOUS, IF THE INC OME- EXPENDITURE RATIO IN RESPECT OF THE EXPENSES INCURR ED ON SUCH PURPOSES FALLS WITHIN THE AMBIT OF SUB-SECT ION (5B), IT SHALL STILL BE TREATED TO BE AN INSTITUTIO N TO - 7 - 7 WHICH THE PROVISIONS OF SECTION 80G WOULD APPLY AND THE DONATIONS TO WHICH WOULD QUALITY FOR DEDUCTION. SINCE, THIS PETITION RELATES T THE ASSESSMENT YEAR S 1994-95 TO 1997-98 BEFORE THE INSERTION OF SUB-SECT ION (5B) IN SECTION 80G WITH EFFECT FROM APRIL, 2000 AN D IT DOES NOT HAVE RETROSPECTIVE EFFECT, THE PETITIONER IS NOT ENTITLED TO ANY RELIEF FOR THE ASSESSMENT YEARS IN QUESTION. THIS PETITION FAILS AND IS HEREBY DISMISSED . 6. THE LEARNED COUNSEL FOR THE ASSESSEE, THEREFORE, PR AYED THAT CONTINUATION OF APPROVAL U/S 80G(5)(VI) OF THE ACT, MAY BE GRANTED TO THE ASSESSEE. 7. ON THE OTHER HAND, THE LD. DEPARTMENTAL REPRESENTAT IVE STRONGLY RELIED UPON THE IMPUGNED ORDER AND SUBMITTED THAT C ERTAIN OBJECTS OF THE ASSESSEE TRUST WERE RELIGIOUS IN NATURE AND EVEN IF THE AMOUNT HAS BEEN FOR RELIGIOUS ACTIVITIES WAS BELOW 5 %, BUT SOME OF THE OBJECTS ARE OF RELIGIOUS - 8 - 8 NATURE, THEREFORE, THE LD. CIT WAS JUSTIFIED IN REF USING TO GRANT REFUSAL TO THE ASSESSEE U/S 80G(5)(VI) OF THE INCOME-TAX ACT, 1961 . THE LD. DEPARTMENTAL REPRESENTATIVE FURTHER SUBMITTED THAT EVEN IF APPRO VAL IS GRANTED IN EARLIER YEARS IS NO GROUND FOR CONTINUATION OF APPROVAL UND ER THE ABOVE PROVISIONS AND RELIED UPON THE DECISION OF HONBLE ANDHRA PRAD ESH HIGH COURT IN THE CASE OF AARSHA VIJNANA TRUST V. V.P. SHARMA, I.R.S. , DIRECTOR OF INCOME-TAX (EXEMPTIONS) & OTHERS, (2007) 295 ITR 437. 8. I HAVE HEARD THE LD. REPRESENTATIVES OF BOTH THE PARTIES, PERUSED THE FINDINGS OF THE AUTHORITY BELOW AND MATERIAL AV AILABLE ON RECORD. 9. IT IS SETTLED LAW THAT EVEN IF PRINCIPLE OF RES JUD ICATA DOES NOT APPLY TO THE INCOME TAX PROCEEDINGS, BUT INCOME TAX AUTHO RITIES SHALL HAVE TO FOLLOW THE PRINCIPLE OF CONSISTENCY WHILE ARRIVING AT THE DECISION IN THE MATTER ON THE SAME SET OF FACTS. I AM FORTIFIED IN MY VIEW BY THE DECISION OF THE HONBLE MADHYA PRADESH HIGH COURT IN THE CASE O F GODAVARI CORPORATION LIMITED, 156 ITR 835, AS WELL AS DECISI ON OF THE HON'BLE SUPREME COURT IN THE CASE OF RADHA SWAMY SATSANG (S UPRA) RELIED UPON BY THE LEARNED COUNSEL FOR THE ASSESSEE. IT IS NOT IN DISPUTE THAT THE OBJECTS AND ACTIVITIES OF THE ASSESSEE TRUST ARE SAME ON WHICH THE LD. COMMISSIONER HAS - 9 - 9 ALREADY GRANTED REGISTRATION U/S 12AA OF THE INCOME -TAX ACT, 1961, AS WELL AS APPROVAL/CONTINUATION U/S 80G(5)(VI) OF THE INCO ME-TAX ACT, 1961, FOR THE SEVERAL YEARS AS NOTED ABOVE. THE LAST APPROVAL IS GRANTED FOR THE PERIOD 1.4.2006 TO 31.3.2009( P.B.8). I FIND CONTENTION OF THE LEARNED COUNSEL FOR THE ASSESSEE TO BE CORRECT THAT THE AMOUNT SPENT WA S RS. 9054/- AS AGAINST THE FIGURE OF RS. 91,054/- MENTIONED BY THE LD. COMMIS SIONER IN THE IMPUGNED ORDER ( P.B. 50), WHICH AMOUNT IS STATED TO HAVE BE EN SPENT FOR RELIGIOUS PURPOSES. SUB SECTION(5B) OF SECTION 80G AS NOTED A BOVE WAS INSERTED IN THE STATUTE WITH EFFECT FROM 1.4.2000 AND, THEREFO RE, APPLIES TO THE PRESENT CASE. SINCE THE ALLEGED AMOUNT SPENT BY THE ASSESSE E FOR RELIGIOUS PURPOSES WAS LESS THAN 5% OF THE TOTAL AMOUNT SPENT BY THE A SSESSEE FOR CHAIRTABLE PURPOSES FOR THE WELFARE OF THE PUBLIC, THE APPROVA L U/S 80G(5) COULD NOT HAVE BEEN REFUSED TO THE ASSESSEE, BECAUSE IT IS TR EATED AS A NON-OBSTANTE CLAUSE, WHICH OVERRIDES EXPLANATION 3 TO SECTION 80 G(5) OF THE INCOME-TAX ACT, 1961. I MAY ALSO NOTE THAT THE LD. COMMISSIONE R WAS NOT JUSTIFIED IN HOLDING THAT SOME OF THE OBJECTS OF THE ASSESSEE WE RE RELIGIOUS IN NATURE AS NOTED IN THE IMPUGNED ORDER. THE FACILITIES PROVIDE D FOR STUDY OF UPNISHAD, VEDAS, JYOTISH AND AYURVED ARE NOT RELIGIOUS IN NAT URE. THESE ARE THE - 10 - 10 TEACHINGS PROVIDED FOR THE BENEFIT OF PUBLIC AT LAR GE AND CANNOT BE MEANT FOR ANY PARTICULAR RELIGION. THE LD. COMMISSIONER WAS, THEREFORE, NOT JUSTIFIED IN HOLDING THAT SOME OF THE OBJECTS OF THE ASSESSEE WE RE RELIGIOUS IN NATURE. CONSIDERING THE FACTS AND CIRCUMSTANCES NOTED ABOVE IN THE LIGHT OF THE PROVISIONS OF SECTION 80G(5B) AND DECISION OF THE H ONBLE RAJASTHAN HIGH COURT IN THE CASE OF SRI MARUDHAR KESARI STHANAKWA SI JAIN YADGAR SAMITI TRUST VS. UNION OF INDIA AND ANOTHER (SUPRA), I AM OF THE VIEW THAT THE ASSESSEE IS ENTITLED FOR CONTINUATION OF APPROVAL U /S 80G(5)(VI) OF THE INCOME-TAX ACT, 1961. I, ACCORDINGLY, SET-ASIDE THE IMPUGNED ORDER AND DIRECT THE LD. COMMISSIONER TO GRANT CONTINUATION O R APPROVAL UNDER THE AFORESAID PROVISION TO THE ASSESSEE WITHIN ONE MONT H FROM THE DATE OF RECEIPT OF THE ORDER. - 11 - 11 10. AS A RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. THIS ORDER HAS BEEN PRONOUNCED IN THE OPEN COURT ON 17 TH SEPTEMBER, 2009. SD/- BHAVNESH SAINI JUDICIAL MEMBER DATED :17 TH SEPTEMBER, 2009. CPU* 14159