Spirit & Truth Foundation, Guntur, Guntur V. CIT(Exemptions), Hyd, Hyderabad

MA 51/HYD/2016

• Counselvise Citation: [2016] 123 COUNSELVISE.COM (IT) 5426 (ITAT-HYDERABAD)
• Duration Of Justice: 30 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 21-09-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2015-2016
• Appeal Filed On: 22-08-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MINI CHANDRAN
• Keywords: Rectification of order; Charitable institution
• Section: 12; 12A; 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B, HYDERABAD BEFORE SMT P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER M.A. NO. 51/HYD/2016 (IN ITA NO. 861/HYD/2015 ASSESSMENT YEAR: 2015-16) SPIRIT AND TRUTH FOUNDATION, GUNTUR DISTRICT. PAN AALAS 4867 M VS. COMMISSIONER OF INCOME-TAX, (EXEMPTIONS), HYDERABAD. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI K. CHENNUBOTLU REVENUE BY : SMT. MINICHANDRAN DATE OF HEARING 09-09-2016 DATE OF PRONOUNCEMENT 28-09-2016 O R D E R PER S. RIFAUR RAHMAN, A.M.: THIS MISCELLANEOUS APPLICATION IS FILED BY ASSESSE E SEEKING RECTIFICATION OF MISTAKE CREPT INTO THE ORDER OF TH E TRIBUNAL IN ITA NO. 861/HYD/2015 DATED 29/06/2016. 2. IN THE M.A. THE ASSESSEE STATED AS FOLLOWS: 1. VIDE ORDER IN ITA NO. CITED ABOVE, THE HON'BLE I NCOME TAX APPELLATE TRIBUNAL WAS PLEASED TO ALLOW THE APPEAL BY GRANTING THE REGISTRATION U/S 12A OF THE INCOME TAX ACT. 2. THE HON'BLE TRIBUNAL WAS PLEASED TO APPRECIATE T HE CONTENTION RAISED ON BEHALF OF THE APPELLANT AND WAS PLEASED T O PASS A REASONED ORDER WITH A SPECIFIC FINDING THAT 'THE OB JECTS ARE 2 M.A.NO. 51/H/16 SPIRIT AND TRUTH FOUNDATION, GUNTUR CLEARLY DISTINGUISHABLE AND BENEFICIAL TO OVERALL C OMMUNITIES AND NOT RESTRICTED TO A PARTICULAR COMMUNITY', BUT AT T HE END OF THE POINT NO. 10 AND AT POINT NO. 11 AN OBSERVATION WAS MADE AS UNDER: POINT NO. 10 LD. DR RELIED ON.. THE RELEVANCE IS THAT THE RELIGIOUS ACTIVITIES CAN BE IDENTIFIED AND EXCLUDED FROM EXEMPTION'. POINT NO.11. 'AS EXPLAINED ABOVE, CIT(A) SHOULD BE CONSIDERING O NLY THE CHARITABLE SIDE OF THE INSTITUTION AND GRANT THE RE GISTRATION. OF COURSE, HE CHOOSES OR EXPECTS THE TRUST WILL MISUSE THE REGISTRATION, HE IS AT ABSOLUTE LIBERTY TO GRANT CO NDITIONAL REGISTRATION BY IMPOSING CONDITIONS LIKE, IT IS ELI GIBLE TO CLAIM THE EXEMPTION ONLY ON CHARITABLE ACTIVITIES, SEPARATE B OOKS TO BE MAINTAINED, BOTH BOOKS BE SUBJECT TO AUDIT ETC.' THE ABOVE FINDINGS ARRIVED AT BY THE HON'BLE TRIBUN AL, THE APPELLANT WOULD BE PREJUDICED BY THE PARTICULAR OBS ERVATION AND HENCE THE HON'BLE TRIBUNAL MAY BE PLEASED TO RECONS IDER THE FINDINGS AT THE END OF THE POINT NO.10 AND POINT NO .11 IN THE INTEREST OF JUSTICE. 3. AS PER SECTION 11 OF THE INCOME TAX ACT, A SOCIE TY CAN BE WHOLLY CHARITABLE OR WHOLLY RELIGIOUS OR A COMBINAT ION OF BOTH CHARITABLE AND RELIGIOUS. 4. THE HON'BLE BENCH HAS OBSERVED IN POINT NO.10 AS UNDER: ' LD. DR RELIED WHEREAS, IN THE PRESENT CASE, THE OBJECTS ARE CLEARLY DISTINGUISHABLE AND BENEFICIAL TO OVERALL COMMUNITIES AND NOT RESTRICTED TO A PARTICULAR COMMUNITY. THE RELEVANCE IS 3 M.A.NO. 51/H/16 SPIRIT AND TRUTH FOUNDATION, GUNTUR THAT THE RELIGIOUS ACTIVITIES CAN BE IDENTIFIED AN D EXCLUDED FROM EXEMPTION.' WHEN THE OBJECTS ARE CLEARLY DISTINGUISHABLE AND BE NEFICIAL TO OVERALL COMMUNITIES AND NOT RESTRICTED TO A PARTICU LAR COMMUNITY, THE QUESTION OF IDENTIFYING AND EXCLUDING THE RELIG IOUS ACTIVITIES FROM EXEMPTION WILL NOT ARISE. THE HON'BLE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH 'B' IN THE CASE OF REHOBOTH MISSION, HYDERABAD VS DIREC TOR OF INCOME TAX (EXEMP.) HYDERABAD IN ITA NO.352/HYD/201 0 HELD THAT A SOCIETY CAN HAVE MIXED OBJECTS OF CHARITABLE AND RELIGIOUS AND THE SOCIETY IS ELIGIBLE FOR REGISTRATION U/S 12 A OF THE INCOME TAX ACT FOR WHOLE OF ITS ACTIVITIES. SECTION 13 (1) (B) READS AS UNDER: (1) NOTHING CONTAINED IN SECTION 11 (OR SECTION 12) SHALL OPERATE SO AS TO EXCLUDE FROM THE TOTAL INCOME OF THE PREVI OUS YEAR OF THE PERSON IN RECEIPT THEREOF- (A) . (B) IN THE CASE OF A TRUST FOR CHARITABLE PURPOSES OR A CHARITABLE INSTITUTION CREATED OR ESTABLISHED AFTER THE COMMEN CEMENT OF THIS ACT, ANY INCOME THEREOF IF THE TRUST OR INSTITUTION IS CREATED OR ESTABLISHED FOR THE BENEFIT OF ANY PARTICULAR RELIG IOUS COMMUNITY OR CASTE;' AS SEEN FROM THE ABOVE, SECTION 13(1)(B) APPLIES IN THE CASE OF A TRUST FOR CHARITABLE PURPOSES OR A CHARITABLE INSTI TUTION, WHEREAS THE APPELLANT SOCIETY IS NOT A CHARITABLE SOCIETY B UT IT IS A CHARITABLE RELIGIOUS SOCIETY I.E., A SOCIETY HAVING BOTH CHARITABLE OBJECTS AND RELIGIOUS OBJECTS. FURTHER S ECTION 13 (1) (B) APPLIES IF THE CHARITABLE SOCIETY IS CREATED OR ESTABLISHED FOR THE BENEFIT OF ANY PARTICULAR RELIGIOUS COMMUNITY O R CASTE. WHEREAS IN THE CASE OF APPELLANT SOCIETY, TH E HON'BLE 4 M.A.NO. 51/H/16 SPIRIT AND TRUTH FOUNDATION, GUNTUR BENCH ITSELF HAS OBSERVED IN POINT NO. 10 AS 'WHERE AS IN THE PRESENT CASE, THE OBJECTS ARE CLEARLY DISTINGUISHAB LE AND BENEFICIAL TO OVERALL COMMUNITIES AND NOT RESTRICTE D TO A PARTICULAR COMMUNITY.' WHEN SUCH IS THE SITUATION, HOW THE RELIGIOUS ACTIV ITIES ARE EXCLUDED FROM EXEMPTION. 5. AS PER THE PROVISIONS OF SECTION 11 A CHARITABLE RELIGIOUS SOCIETY IS ELIGIBLE FOR REGISTRATION U/S 12A OF THE INCOME TAX ACT PROVIDED THE BENEFICIARIES ARE NOT RESTRICTED TO A PARTICULAR COMMUNITY. AS STATED ABOVE, THE HON'BLE BENCH ITSEL F CATEGORICALLY SAID THAT THE OBJECTS ARE CLEARLY DIS TINGUISHABLE AND BENEFICIAL TO OVERALL COMMUNITIES AND NOT RESTRICTE D TO A PARTICULAR COMMUNITY'. FROM THIS POINT OF VIEW THER E IS DISAGREEMENT IN POINT NO.1O WHICH NEEDS TO BE RECON SIDERED. 6. FURTHER THE QUESTION OF APPLICABILITY OR OTHERWI SE OF SECTION 13 (1) (B) ARISES ONLY AT THE TIME OF APPLYING THE INC OME AND CLAIMING EXEMPTION OF ITS INCOME U/S 11 OF THE INCO ME TAX ACT. TO ALLOW THE EXEMPTION CLAIM OR NOT U/S 11 COMES ON LY AFTER THE SOCIETY IS GRANTED REGISTRATION U/S12A OF THE INCOM E TAX ACT. HENCE IT IS VERY MUCH PRELIMINARY TO INVOKE THE PRO VISIONS OF SECTION 13 (1) (B) OF THE INCOME TAX ACT AT THE TIM E OF CONSIDERING THE ELIGIBILITY OF REGISTRATION U/S 12A OF THE INCOME TAX ACT. 3. IN THE LIGHT OF THE ABOVE EXPLANATION AND PROVIS IONS OF THE LAW, LD. AR SUBMITTED THAT THE BENCH MAY RECONSIDER ITS OBSERVATIONS AND NECESSARY ORDER MAY BE PASSED IN THE INTEREST OF JU STICE. 4. THE LD. DR, ON THE OTHER HAND, RELIED UPON THE O RDER OF THE ITAT AND SUBMITTED THAT THE TRUST IS PURELY A RELIGIOUS TRUST AND TO SUBSTANTIATE THE SAME, SHE FILED COPY OF THE HISTOR Y FROM INTERNET. 5 M.A.NO. 51/H/16 SPIRIT AND TRUTH FOUNDATION, GUNTUR 5. CONSIDERED THE SUBMISSIONS OF BOTH THE COUNSELS. PARA 11 OF THE ORDER PASSED ON 29/06/2016(SUPRA) MAY BE READ A S UNDER: 11. AS EXPLAINED ABOVE, THE SOCIETY ADMITS IT HAS MIXED OBJECTS OF BOTH CHARITY AND RELIGIOUS IN NATURE. AS DISCUSSED IN PARA 7 ABOVE, THE SOCIETY IS ELIGIBLE FOR REGISTR ATION EVEN WHEN THERE ARE MIXED OBJECTS. CIT(E) IS DIRECTED TO GRAN T REGISTRATION. HOWEVER, WE MAKE IT CLEAR THAT EXEMPTION U/S 11 CAN NOT BE APPLIED TO THE RELIGIOUS ACTIVITIES AND AO IS FREE TO EXAMINE THIS ASPECT IN THE COURSE OF ASSESSMENT. 6. IN THE RESULT, M.A. FILED BY THE ASSESSEE IS ALL OWED AS ABOVE. PRONOUNCED IN THE OPEN COURT ON 28 TH SEPTEMBER, 2016 SD/- SD/- (P. MADHAVI DEVI) (S. RIFAUR RAH MAN) JUDICIAL MEMBER A CCOUNTANT MEMBER HYDERABAD, DATED: 28 TH SEPTEMBER, 2016 KV COPY TO:- 1) SPIRIT AND TRUTH FOUNDATION, 3-159-1, KARAMPUDI (V) KARAMPUDI MANDAL, GUNTUR DIST., AP 522 614 2) CIT(E), 3 RD FLOOR, AAYAKAR BHAVAN, BASHEERBAGH, HYD. 3) CIT - I, HYDERABAD 4) ITO (EXEMPTIONS), WARD GUNTUR. 5) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDE RABAD. 6) GUARD FILE 6 M.A.NO. 51/H/16 SPIRIT AND TRUTH FOUNDATION, GUNTUR S.NO. DESCRIPTION DATE INTLS 1. DRAFT DICTATED ON SR.P.S./P.S 2. DRAFT PLACED BEFORE AUTHOR SR.P.S/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5 APPROVED DRAFT COMES TO THE SR.P.S./PS SR.P.S./ P.S 6. KEPT FOR PRONOUNCEMENT ON SR. P.S./P.S. 7. FILE SENT TO THE BENCH CLERK SR.P.S./P.S 8 DATE ON WHICH FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER