ACIT, Sambalpur V. The Catholic Diocese of Sambalpur, Sambalpur

ITA 49/CTK/2014

• Counselvise Citation: 4922114 RSA 2014
• Duration Of Justice: 1 year(s) 8 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-11-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 04-11-2015
• Assessment Year: 2010-2011
• Appeal Filed On: 10-02-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K D LATH
• Assessee Lawyers: SUVENDU DUTTA
• Keywords: Gift; Charitable institution
• Section: 2; 142(1)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL CUTTACK BENCH, CUTTACK . , & , BEFORE S/SHRI B. RAMAKOTAIAH, ACCOUNTA NT MEMBER & PARTHA SARATHI CHAUDHURY, JUDICIAL MEMBER ! ./ ITA NO.49/CTK/2014 ( ' ' ' ' #$ #$ #$ #$ / ASSESSMENT YEAR :2010-2011) ACIT, CIRCLE - 2(1), SAMBALPUR VS. M/S. THE CATHOLIC DIOCESE OF SAMBALPUR, AINTHAPALI, SAMBALPUR ! ./ %& ! ./PAN/GIR NO. AAAAT 0862 G ( ' /APPELLANT ) .. ( ()' / RESPONDENT ) '+ - - - - /ASSESSEE BY : SHRI SUVENDU DUTTA %# - - - - /REVENUE BY : SHRI K.D.LATH '#. + / DATE OF HEARING : 4 TH NOV. 2015 /$ + /DATE OF PRONOUNCEMENT 5 TH NOV. 2015 0 0 0 0 / O R D E R PER PARTHA SARATHI CHAUDHURY, JM THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINS T THE ORDER OF THE LD CIT(A)- II, BHUBANESWAR DATED 12.11.2013 FOR THE ASSESSME NT YEAR 2010-2011. THE ONLY SOLITARY ISSUE RAISED BY THE REVENUE IS AS UNDER: ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD CIT(A) ERRED IN TREATING THE ASSESSEE SOCIETY AS CHARITABLE TRUST A ND IT DOES NOT FALL WITHIN THE PURVIEW OF THE PROVISIONS OF SECTION 13( 1)(B) OF THE I.T.ACT, 1961. 2. THE BRIEF FACTS AS EMERGED FROM THE IMPUGNED ORD ER ARE THAT THE ASSESSEE TRUST FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2010-2011 ON 23.9.2010 SHOWING TOTAL INCOME OF RS.NIL. THE ASSESSEE DERIVES INCOM E FROM RENT, DONATION, DIVIDEND AND INTEREST, ETC. THE RETURN WAS PROCESSED U/S.143(1) ON 21.6.2011 CREATING A REFUND /DEMAND OF RS.85,340/-. THE CASE WAS SELECTED FOR SCRUTINY UNDER CASS. ACCORDINGLY, ITA NO.49/CTK/2014 ASSESSMENT YEAR :2010-2011 2 NOTICES U/S.143(2) & 142(1) OF THE I.T.ACT, WERE IS SUED AND DULY SERVED ON THE ASSESSEE. THEREAFTER, THE ASSESSMENT WAS COMPLETED BY THE AO U/S.143(3) OF THE ACT, WHEREIN, THE AO ARRIVED AT A TOTAL INCOME OF RS.3,6 0,44,940/-. BEFORE THE AO, THE ASSESSEE STATED THAT NOWHERE IN ITS OBJECT CLAUSE S ATISFIES THAT THE TRUST IS CREATED FOR THE BENEFIT OF ANY PARTICULAR RELIGIOUS COMMUNITY. RATHER, IN ITS OBJECT CLAUSE, INCLUDES VARIOUS OBJECTS LIKE, CHARITY, SPIRITUAL AND CORPOR AL, TO DO ALL THINGS NECESSARY FOR THE EDUCATION OF YOUTH, THE PURSUIT OF SCIENCE AND THE GENERAL DIFFUSION OF SOCIAL, MORAL, RELIGIOUS AND SECULAR KNOWLEDGE AND TO PROVIDE CHUR CHES, CHAPEL, COLLEGE, SCHOOLS, AND TRAINING INSTITUTIONS AND OTHER RELATED EDUCATIONAL AND CHARITABLE INSTITUTIONS IN INDIA. DURING THE SCRUTINY ASSESSMENT, THE AO OBSERVED THA T THE ASSESSEE SOCIETY HAS APPLIED ITS FUND FOR THE BENEFIT OF A PARTICULAR RELIGIOUS COMMUNITY I.E. CHRISTIAN COMMUNITY. IT IS EXPLAINED BY THE ASSESSEE SOCIETY THAT IN JYOTI BHAWAN MINOR SEMINARY WHICH IS A STUDY HOUSE-CUM-HOSTEL WHERE STUDENTS ARE TRAINED T O BECOME FUTURE PRIESTS. STUDENTS HAVE TWO YEARS OF COLLEGE STUDY AND ONE YEAR OF REL IGIOUS STUDY AND GO FOR FURTHER RELIGIOUS STUDY. THE WHOLE MANAGEMENT OF RELIGIOUS STUDY IS CONTROLLED BY THE CATHOLIC DIOCESE OF SAMBALPUR. THE AO STATED THAT THE ASSES SEE SOCIETY CONDUCTS RELIGIOUS FUNCTIONS WHERE BISHOP OF DIOCESE GOES ON PASTORAL TOUR TO ALL THE CENTERS TWICE IN A YEAR ON DIFFERENT OCCASIONS SUCH AS ORDINATION OF T HE PRIEST, JUBILEE CELEBRATION OF THE PRIEST. THE AO FURTHER OBSERVED THAT ON PERUSAL OF CERTIFICATE OF FOREIGN INWARD REMITTANCE ISSUED BY THE BANK, IT IS SEEN THAT THE PURPOSE OF REMITTANCE AS STATED BY REMITTER ARE AS UNDER - 1. EXTENSION OF THE CHURCH BUILDING. 2. ROOF CONSTRUCTION OF CHURCH. 3. DIGGING OF BOREWELL. 4. CHAPEL GIFT FOR FATHER. 5. MASSES AID AND GIFT FOR FATHER. 6. RELIEF AND REHABILITATION. 7. EXTENSION AND RENOVATION OF CHURCH. ITA NO.49/CTK/2014 ASSESSMENT YEAR :2010-2011 3 THE AO, THEREBY DEDUCED THAT INCOME OF THE TRUST IS ULTIMATELY BEING USED FOR THE BENEFIT OF A PARTICULAR COMMUNITY I.E. CHRISTIAN CO MMUNITY AND DOES NOT FOR THE BENEFIT OF PUBLIC AND THEREBY, THE AO APPLIED PROVISIONS OF SECTION 13(1)(B) AND DECIDED THAT THE ASSESSEE IS NOT CHARITABLE ORGANIZATION AND ASS ESSED ITS TOTAL RECEIPT AS ASSOCIATION OF PERSON (AOP). THE AO RELIED ON VARIOUS DECISION S WHILE ARRIVING AT HIS CONCLUSION: I) CIT VS. MAHESWARI AGRAWAL MARWARI PANCHAYAT(1982) 1 36 ITR 556 (MP) II) CIT VS. BARKATE SAIFIYAH SOCIETY(1995) 213 ITR 492 (GUJ) III) CIT VS. CHANDRA CHARITABLE TRUST(2006) 156 TAXMAN 1 9(GUJ) IV) GHULAM MOHIDIN TRUST VS CIT(2001) 114 TAXMANN 543 ( J&K) BEING AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSE E CARRIED THE MATTER IN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY. 3. BEFORE THE LD CIT(A), THE ASSESSEE SUBMITTED A W RITTEN SUBMISSION AND THE LD CIT(A) SEND THE WRITTEN SUBMISSION TO THE AO FOR CO MMENTS AND THE REPORT U/S.250(4) OF THE I.T.ACT, 1961. THE REMAND REPORT OF THE AO PROVIDED CERTAIN OBSERVATIONS AS UNDER: I) THE OBJECTS OF THE SOCIETY CAN BE SAID THAT THE ASSESSEE SOCIETY IS ESTABLISHED WITH PURPOSE OF BOTH CHARITABLE AND REL IGIOUS. II) THE ASSESSEE SOCIETY APPLIED SUBSTANTIAL AMOUNT OF FUND TOWARDS DIFFERENT CHARITABLE ACTIVITIES VIZ; A) HEALTH CARE AND FAMILY WELFARE; B) HELP FOR THE POOR, THE AGED; C) SCHOOL & EDUCATION; D) STIPENDS AND SCHOLARSHIP; E) TREATMENT/REHABILITATION OF LEPERS F) VOCATIONAL TRAINING; G) DONATION GIVEN TO OTHER SOCIETIES; H) RELIEF FOR THE RIOT VICTIM; I) WELFARE OF THE ORPHANS, ETC. ITA NO.49/CTK/2014 ASSESSMENT YEAR :2010-2011 4 APART FROM THIS, THERE ARE OTHER HEADS OF EXPENSES, WHICH ARE APPLIED FOR MAINTENANCE OF PRIESTS & PREACHERS, FOR THE PURPOSE OF SEMINARS AND CONFERENCE AND FOR THE PURPOSE OF RELIGIOUS FUNCTIONS. FROM THESE HEADS OF EXPENS ES, THE AO IN HIS REMAND REPORT STATED THAT THE ASSESSEE SOCIETY HAS APPLIED ITS FU NDS BOTH FOR CHARITABLE AND RELIGIOUS PURPOSES. THE AO IN HIS INVESTIGATION WHILE FURNIS HING THE REMAND REPORT HAS ALSO FOUND OUT THAT THERE ARE SUBSTANTIAL AMOUNT OF FORE IGN DONATION RECEIVED BY THE TRUST, WHICH WAS IN THE FOLLOWING MANNER: I) EXTENTION OF THE CHURCH BUILDING : RS.18,72,025 /- II) ROOF CONSTRUCTION OF CHURCH : RS. 39,696/- III) DIGGING OF BOREWELL : RS. 1,02,729/- V) CHAPEL GIFT FOR FATHER : RS. 6,72,583/- VI) MASSES AID AND GIFT FOR FATHER : RS. 1,15,054/- VII) RELIEF AND REHABILITATION : RS.1,38,59,601/- VIII) EXTENTION AND RENOVATION OF CHURCH : RS. 3,84,559/- THE AO IN HIS REPORT, THEREFORE, STATED THAT SUBSTA NTIAL AMOUNT HAS BEEN SPENT FOR RELIEF AND REHABILITATION OF LEPERS BELONGING TO AL L CASTE, COMMUNITY AND RELIGIONS. THEREAFTER, THE LD CIT(A) IN HIS ORDER OBSERVED TH AT THE ASSESSEE SOCIETY HAS APPLIED ITS FUNDS BOTH CHARITABLE AND RELIGIOUS PURPOSES. FROM THE REMAND REPORT, IT IS EVIDENT THAT FOREIGN INWARD REMITTANCE OF RS.2,85,59,342/- OUT OF WHICH RS.1,38,39,601/- HAS BEEN DONATED FOR THE PURPOSE OF RELIEF AND REHABILI TATION OF THE PERSONS SUFFERING FROM LEPROSY. FROM THE WRITTEN SUBMISSION OF THE ASSES SEE, IT IS EVIDENT THAT 37 ODIA MEDIUM SCHOOLS HAVE BEEN OPENED, STUDENTS AND TEACH ERS ARE THERE IN 5 ENGLISH MEDIUM SCHOOLS, 300 FAMILIES LIVE IN VARIOUS LEPER S COLONIES, BOREWELLS HAVE BEEN DUG ITA NO.49/CTK/2014 ASSESSMENT YEAR :2010-2011 5 IN REMOTE VILLAGES, HEALTH CENTRES RUN IN VARIOUS V ILLAGES, AGRICULTURAL PROGRAMMES ARE ORGANIZED FOR IMPROVEMENT OF YIELD OF FARMERS, FINA NCIAL HELP IS PROVIDED TO POOR STUDENTS, ETC. THESE CHARITABLE ACTIVITIES ARE AVAI LABLE TO PERSONS FROM ALL CASTES, COMMUNITY, CREED OR RELIGION. THE LD CIT(A) OBSERVE D THAT AFTER PERUSAL OF REMAND REPORT, WHICH IS FACT FINDING IN NATURE, IT IS PROV ED THAT ASSESSEE HAS EXPENDED SUBSTANTIAL AMOUNT FOR THE BENEFIT OF PERSONS IRRES PECTIVE OF CASTES, COMMUNITIES OR RELIGION. IT IS ALSO ESTABLISHED THAT THE TRUST IS FOR CHARITABLE AND RELIGIOUS PURPOSES. THEREFORE, THE LD CIT(A) HELD THAT THE PROVISIONS O F SECTION 13(1)(B) ARE NOT APPLICABLE TO THE ASSESSEE THAT THE ASSESSEE IS ENTITLED FOR D EDUCTION U/S.11 OF THE ACT. BEING AGGRIEVED, THE REVENUE IS IN FURTHER APPEAL BEFORE US. 4. LD D.R. RELIED ON THE ORDER OF THE AO AND VARIOU S JUDICIAL PRONOUNCEMENTS AS PROVIDED IN STATEMENT OF FACTS AND LD A.R. ON THE O THER HAND RELIED ON THE ORDER OF THE LD CIT(A). 5. WE HAVE CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AND RELEVANT MATERIALS ON RECORD. THE ISSUE WHETHER TH E PARTICULAR TRUST IS WORKING ONLY FOR A PARTICULAR RELIGIOUS COMMUNITY OR IT IS WORKING F OR CHARITABLE AND RELIGIOUS PURPOSES IS ESSENTIAL A QUESTION OF FACT. THE FACT HAS BEEN IN VESTIGATED BY THE ASSESSING OFFICER AS IS EVIDENT FROM THE REMAND REPORT. FROM THE REPORT OF THE AO, IT IS CLEARLY FEASIBLE HOW THE FUNDS OF THE ASSESSEE SOCIETY ARE UTILIZED. WE SEE THAT MAJORITY FUNDS ARE UTILIZED FOR HELPING POOR WHO ARE SUFFERING FROM LEPROSY. W E ALSO FOUND OUT THAT THE FUNDS ARE UTILIZED FOR VARIOUS OTHER GENERAL ACTIVITIES AND S ERVICES TO THE PUBLIC AT LARGE IRRESPECTIVE OF THEIR CASTE, CREED OR RELIGION. TH E ASSESSEE IS HELPING THE SOCIETY TO TAKE CARE OF SOME OF THE FOLLOW CITIZENS WITHIN THE TARG ET GROUP, WHO ARE LESS PRIVILEGED, WHO ARE PHYSICALLY SUFFERING FROM DESEASE. THE ASSESSE E SOCIETY IS WORKING TOWARDS ITA NO.49/CTK/2014 ASSESSMENT YEAR :2010-2011 6 BETTERMENT OF HUMANITY AS A WHOLE. HENCE, WE CONCU R WITH THE FINDINGS OF THE LD CIT(A) THROUGH THE REMAND REPORT OF THE AO THAT THI S SOCIETY IS VERY MUCH ENTITLED TO GET EXEMPTION U/S.11 OF THE ACT SINCE THE SOCIETY I S DOING BOTH CHARITABLE AND RELIGIOUS WORK. WE, ACCORDINGLY, SUSTAIN THE ORDER OF THE LD CIT(A) PROVIDING EXEMPTION U/S.11 OF THE ACT TO THE ASSESSEE SOCIETY. WE ALSO FIRMLY HOLD THAT THE RIGORS OF SECTION 13(1)(B) IS NOT APPLICABLE IN THE CASE OF THE ASSES SEE. 6. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D. ORDER PRONOUNCED IN THE OPEN COURT ON 5 /11/20 15 SD/- SD/- . ,/B.RAMAKOTAIAH , PARTHA SARATHI CHAUDHURY /ACCOUNTANT MEMBER / JUDICIAL MEMBER CUTTACK; '! DATED 5 /11 /2015 B.K.PARIDA, SPS 0 0 0 0 (+ (+ (+ (+ 3$+ 3$+ 3$+ 3$+ / COPY OF THE ORDER FORWARDED TO : 0' 0' 0' 0' / BY ORDER, SR. PRIVATE SECRETARY, , / ITAT, CUTTACK 1. ' / THE APPELLANT : ACIT, CIRCLE-2(1), SAMBALPUR 2. ()' / THE RESPONDENT. M/S. THE CATHOLIC DIOCESE OF SAMBALPUR, AINTHAPALI, SAMBALPUR 3. 4 ( ) / THE CIT(A)II, BHUBANESWAR. 4. 4 / CIT , SAMBALPUR 5. #5 (+' , / DR, ITAT, CUTTACK 6. 7 8. / GUARD FILE. )+ (+ //TRUE COPY//