M/s Apang Sevashram, V. The CIT,

ITA 456/IND/2008

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 1531 (ITAT-INDORE)
• Duration Of Justice: 11 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-10-2009
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 21-10-2009
• Assessment Year: misc
• Appeal Filed On: 06-11-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: APARNA KARAN
• Assessee Lawyers: M MANI; AMRITLAL JAIN
• Keywords: Charitable institution; Opportunity of being heard
• Section: 11

Judgement Text

PAGE 1 OF 5 IN THE INCOME TAX APPELATE TRIBUNAL, INDORE BENCH, INDORE BEFORE SHRI JOGINDER SINGH, JM AND SHRI V.K. GUPTA, AM ITA NO.456/IND/2008 UNDER SECTION 80G(5) APANG SEVASHRAM (PAN AAATA 1560 D) C/O SHRI AMRITLAL H. JAIN, CA 2, DHANWANTARI MARG, INDIRA PRIYADARSHINI SQUARE, FREEGANJ, UJJAIN 456 010 ..APPELLANT V/S. CIT, UJJAIN ..RESPONDENT ASSESSEE BY : S/SHRI M.MANI & AMRITLAL JAIN DEPARTMENT BY : SMT. APARNA KARAN, SR.DR ORDER PER JOGINDER SINGH, JM THIS APPEAL IS BY THE ASSESSEE AGAINST THE ORDER OF LD. CIT-UJJAIN DATED 26.9.2008 ON THE GROUND THAT THE LD. FIRST APPELLAT E AUTHORITY ERRED IN ANNULLING THE ASSESSMENT ON THE FOLLOWING GROUNDS: 01. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE, THE LD. CIT, UJJAIN ERRED IN NOT GRANTING THE RENEWAL OF APPROVAL U/S 80G(5)(VI) FOR AY 2008-09 AND ONWAR DS TO THE ASSESSEE TRUST, BY WRONGLY CONCLUDING THAT THE ASSESSEE TRUST HAS INCURRED EXPENDITURE OF A RELIGI OUS NATURE FOR AN AMOUNT EXCEEDING 5% OF ITS GROSS RECE IPTS FOR THE AY 2005-06 TO 2007-08, AND AS SUCH IT IS NO T ENTITLED FOR ABOVE APPROVAL IN VIEW OF THE PROVISIO NS OF SEC. 80G(5B), IGNORING THAT: (A) THE ALLEGED EXPENDITURE/DONATION (PROPOSED) OF RS.25,000/- FOR PROPOSED REPAIRING OF SHIV MANDIR PAGE 2 OF 5 AND HANUMAN TEMPLE VIDE RESOLUTION DATED 6.4.2008 WAS MERELY A PLANNING FOR THE FUTURE WHEREAS, FOR APPLICABILITY OF PROVISIONS OF SEC. 80G(5B), THERE MUST BE AN ACTUAL EXPENDITURE ; AND (B) AS PER PROVISIONS OF SEC. 80G(5B) OF THE ACT, THAT WHETHER THE ALLEGED RELIGIOUS EXPENDITURE IS IN EXC ESS OF 5% OF TOTAL INCOME IS TO BE DETERMINED WITH REFERENCE TO THE TOTAL INCOME OF THE PREVIOUS YEAR IN WHICH THE EXPENDITURE IS ACTUALLY INCURRED AND NOT WITH REFERENCE TO THE GROSS RECEIPTS OF EARLIER YEA RS (I.E. AYS 2005-06 TO 2007-08) ; AND (C) THE ABOVE PLANNING FOR PROPOSED REPAIRING MAY OR MAY NOT MATERIALIZE ACTUALLY OR THE AMOUNT OF ALLEG ED RELIGIOUS EXPENDITURE IN ANY FUTURE YEAR MAY NOT EXCEED 5% OF THE TOTAL INCOME OF THAT PREVIOUS YEAR , AS THE ABOVE PROPOSED WORK HAS TO BE DONE IN PEACH MEALS AS PER THE AVAILABILITY OF THE FUNDS IN FUTUR E ; AND (D) THE TRUST DEED OF THE ASSESSEE DO NOT CONTAIN ANY RELIGIOUS OBJECTS, THE SHIV MANDIR AND HANUMAN MANDIR ARE EXISTING IN THE PREMISES OF THE ASSESSEE TRUST SINCE INCEPTION AND ARE MERELY THE PART OF IT S BUILDING AND THE REPAIRING OF THESE PARTS IS PROPOS ED TO BE DONE MERELY FOR PRESERVING THE ATTACHED OTHER PARTS OF THE TRUST BUILDING AND NOT FOR PROMOTION O F ANY RELIGIOUS ACTIVITY. 2. THAT NO OPPORTUNITY HAS BEEN GRANTED TO THE ASSESSEE TRUST BEFORE REJECTING THE ABOVE APPROVAL ON THE BASIS OF ABOVE SEC. 80G(5B). 2. DURING HEARING OF THE APPEAL, WE HAVE HEARD SHRI M.MANI & AMRITLAL JAIN, LD. COUNSEL FOR ASSESSEE AND MRS. APARNA KARA N, LD. SR. DR. THOUGH THE ASSESSEE HAS TAKEN VARIOUS GROUNDS BUT DURING HEARI NG OF THIS APPEAL MAINLY STRESSED THAT PROPER OPPORTUNITY WAS NOT PROVIDED T O THE ASSESSEE BEFORE REJECTING THE CLAIMED APPROVAL U/S 80G(5B) OF THE A CT. BY FURTHER POINTING OUT THAT THE TRUST DEED DO NOT CONTAIN ANY RELIGIOUS OB JECTS AND TEMPLES ARE MERELY EXISTING AT THE PREMISES OF THE ASSESSEE SIN CE INCEPTION. IT WAS PAGE 3 OF 5 PLEADED THAT PROPER OPPORTUNITY MAY BE PROVIDED SO THAT THE FACTS CAN BE PRESENTED AND APPRECIATED. ON THE OTHER HAND, THE L D. SR. DR THOUGH DEFENDED THE IMPUGNED ORDER BY CONTENDING THAT THE LETTER OF THE ASSESSEE DATED 14.3.2008 WAS DULY CONSIDERED BY THE LD. CIT BUT HAD NO OBJECTION IF OPPORTUNITY IS PROVIDED TO THE ASSESSEE AGAIN. 3. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PER USED THE MATERIAL AVAILABLE ON THE FILE. BRIEF FACTS ARE THAT THE APA NG SEVASHRAM WAS CLAIMED TO BE ESTABLISHED IN 1929 FOR THE BENEFIT OF PHYSICALL Y HANDICAPPED PERSONS. THE ASHRAM IS RUNNING ITS OWN KITCHEN AND PROVIDING BRE AKFAST, LUNCH & DINNER AND ALL FACILITIES ARE CLAIMED TO BE PROVIDED FREE OF C OST. AS PER THE IMPUGNED ORDER, SPECIAL ROOMS ARE AVAILABLE FOR PRATHISHTHIT DAMPATTIES. THE ASSESSING OFFICER WAS ASKED TO EXPLAIN THE ACCOUNTS TO WHOM T HESE ROOMS WERE GIVEN AND ANY RENT WAS CHARGED. THE ASSESSEE VIDE LETTER DATED 24.7.2008 CLAIMED THAT IT WAS INADVERTENTLY MENTIONED THAT ROOMS ARE PROVIDED BUT THERE WAS A PROPOSAL FOR CONSTRUCTING SEPARATE ROOMS FOR DISABL ED COUPLES WHICH COULD NOT BE MATERIALISED FOR WHICH THE MINUTES BOOK WAS PROD UCED. ON EXAMINATION OF MINUTES BOOK, IT WAS FOUND BY THE REVENUE THAT FOR FY 2007-08, AN AMOUNT OF RS.25,000 WAS GIVEN FOR REPAIR OF SHIV MANDIR & HAN UMAN TEMPLE. AS PER THE IMPUGNED ORDER, THE EXPENDITURE INCURRED FOR REPAIR ING OF THE TEMPLES IS MORE THAN 5% OF THE GROSS RECEIPTS OF THE ASSESSEE AS SH OWED IN THE RETURN FILED FOR AY 2005-06 TO 2007-08. THE APPROVAL WAS DENIED ON THE PLEA THAT SINCE THE EXPENDITURE ON RELIGIOUS NATURE EXCEEDED 5% OF THE TOTAL INCOME IN THE PAGE 4 OF 5 PREVIOUS YEAR. IT IS AN ADMITTED FACT THAT THE ASSE SSEE APPLIED FOR RENEWAL OF APPROVAL U/S 80G(5) ON 2.4.2008 AND FOR EARLIER PER IOD LIKE APPROVAL WAS GRANTED BY THE LD. COMMISSIONER VIDE ORDER FNO.CITU JNTECH80G(38)2005- 2006/2707 DATED 20.7.2005 FOR THE PERIOD W.E.F. 1.4 .2005 TO 31.3.2008. IF THE IMPUGNED ORDER IS ANALYSED, ONE CLEAR FACT IS OOZIN G OUT THAT THE IMPUGNED ORDER WAS PASSED ON THE BASIS OF LETTER DATED 14.3. 2008 MENTIONING THE HISTORY AND ACTIVITY OF THE ASSESSEE. EVEN FROM THE ORDER SHEET FILED IN THE FORM OF THE PAPER BOOK, THE REPRESENTATIVE OF THE A SSESSEE APPEARED ON VARIOUS OCCASIONS BEFORE THE LD. COMMISSIONER BUT D UE TO THIS OR THAT REASON, THE MATTER WAS ADJOURNED. THERE IS NO MENTION IN TH E ORDER WHETHER ANY INDEPENDENT INQUIRY WAS MADE BY THE LD. COMMISSIONE R. EVEN OTHERWISE, WHILE CONSIDERING THE RENEWAL THE LD. COMMISSIONER IS SUPPOSED TO SEE WHETHER THE ASSESSEE HAS DEVIATED FROM ITS OBJECTS OR NOT. NORMALLY IT IS TO BE SEEN WHETHER THE TRUST IS WHOLLY FOR CHARITABLE OR RELIGIOUS PURPOSES AND ALSO WHETHER INCOME RECEIVED BY IT IS LIABLE TO BE CONSI DERED U/S 11 BUT IS NOT SUPPOSED TO GO BEYOND. THE LD. COMMISSIONER REFUSED RENEWAL OF APPROVAL WITHOUT GOING INTO THE OBJECTS OF THE ASSESSEE AND ONLY ON THE OBSERVATION THAT THE ASSESSEE APPLIED MORE THAN 5% OF INCOME FO R RELIGIOUS PURPOSES WHEREAS THE CLAIM OF THE ASSESSEE IS THAT IT WAS AN INADVERTENT MISTAKE AND THE TEMPLES ARE MERELY PRESENT AT THE PREMISES OF T HE ASSESSEE AND ARE USED BY THE RESIDENTS/DISABLED PERSONS IN ORDER TO SATIS FY THEIR RELIGIOUS THINKING. THE LD. COMMISSIONER HAS NOT ANALYSED THE ISSUE WIT H THIS CLAIM OF THE PAGE 5 OF 5 ASSESSEE, CONSEQUENTLY, WE HAVE NO OPTION BUT TO RE MAND THE ISSUE BACK TO THE FILE OF THE LD. COMMISSIONER TO TAKE A FRESH DE CISION IN ACCORDANCE WITH LAW. OUR VIEW IS FORTIFIED BY DECISION IN N.N. DES AI CHARITABLE TRUST VS. CIT (246 ITR 452)(GUJ) AND SHRIRAM KRISHNA SEVASHRAM VS . CIT (252 ITR 177)(AP). EVEN OTHERWISE, ON THE SAME OBJECTS WHEN APPROVAL U/S 80G(5) WAS GRANTED TO THE ASSESSEE DIFFERENT YARDSTICKS SH OULD NOT BE ADOPTED FOR SUCH RENEWAL, AS WAS HELD BY THE HONBLE BOMBAY HIG H COURT IN TAX PRACTITIONER BENEVOLENT FUND (A PUBLIC CHARITABLE T RUST) VS. CIT (136 TAXMAN 282)(BOM), UNLESS AND UNTIL CONTRARY FACTS ARE BROU GHT ON RECORD. IN VIEW OF THESE FACTS AND JUDICIAL PRONOUNCEMENTS, THIS APPEA L IS REMANDED BACK TO THE FILE OF THE LD. COMMISSIONER FOR FRESH ADJUDICATION . NEEDLESS TO MENTION HERE THAT DUE OPPORTUNITY OF BEING HEARD BE PROVIDED TO THE ASSESSEE. THE ASSESSEE IS ALSO AT LIBERTY TO FURNISH EVIDENCE, IF ANY, TO SUBSTANTIATE ITS CLAIM. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FO R STATISTICAL PURPOSES ONLY. ORDER PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF LD. REPRESENTATIVES FROM BOTH SIDES ON THE CONCLUSION OF THE HEARING ON 21.10.2009. SD/- SD/- (V.K. GUPTA) (JOGINDER SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 21.10.2009 !VYAS! COPY TO: APPELLANT/RESPONDENT/CIT/ CIT(A)/DR