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2017 (11) TMI 630 - AT - Income TaxDenying approval u/s 80G(5)(vi) - CIT(E) stated that atleast 3 of 5 purposes for which the assessee had been established had religious contours, which was in contravention to the provisions of section 80G(5)(iii) of the Act and was also hit by Explanation-3 to sub-section (5) of section 80G, which precludes purposes of religious nature from the coverage of charitable purpose and also the assessee trust was spending meagre amount on its charitable activities - Held that:- Propagating and inculcating religious feelings, brotherhood and nationalism among Aggarwal community only aim at bringing together members of the Agarwal community and developing feeling of nationalism amongst them which benefits the society at large and cannot be said to be either benefiting Aggarwal community only nor being in the nature of religious purpose. As for the object of celebration of Agarsain Jayanti , it definitely does not have a religious contour and the Ld.Counsel for the assessee has emphasized that the celebrations involve the public at large therefore we fail to understand as to how the said object is for the benefit of a particular community only. Moreover only one object out of several objects cannot give a religious or communal colour to the assessee society. The rest of the objects aimed at developing the moral fabric of the society, help poor and needy children in their education and running charitable dispensaries and hospitals for the public at large are all charitable activities for the benefit of the general public. Also on perusing the financial statements of the assessee society for the preceding three years i.e. year ending on 31-03-13,31-03-14 & 31-03-15 that all expenditures incurred are only in the context of running its chariable dispensary by way of purchasing medicines, paying staff salary and incurring misc. expenses only. No expenditure explicitly benefitting the Aggarwal community has been incurred by the assessee. Therefore we find no merit in the contention of the Revenue that the objects of the assessee society had religious contours and were benefitting a particular community only. Further the contention of the Revenue that the assessee was spending only a small portion of its receipts on the stated charitable activities is again we find factually incorrect. The said finding, we find, has been arrived at after excluding the spend on salary, which as per the Ld.CIT(E) is not a charitable activity. But considering the fact that the assessee is carrying out number of charitable activities as stated in its objects which includes running the charitable dispensaries and hospitals for the public in general, the manning of the said dispensaries by adequate personnel and also the requirement of staff for managing the affairs of the society are basic and essential expenditure which are to be considered to have been incurred in the course of carrying out its charitable activities alone and, therefore, staff salary paid on account of the same cannot be treated as being expenses not related to the charitable activity of the assessee concern. Thus the expenses incurred on staff salary are also to be treated as part of charitable activities carried out by the assessee and considering the same, therefore, the quantum of expenditure incurred by the assessee on its activities takes a quantum jump and thus the findings of Ld.CIT(E) that the assessee has incurred meagre income on its stated charitable expenses gets negated. - Decided in favour of assessee.
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