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2009 (9) TMI 75 - AT - Income TaxExemption u/s 11 - simultaneous charitable and religious purposes - mixed trust - reading "or" as "and" - AO has denied the benefits on the ground that the assessees are societies/trusts established for carrying on activities of charitable as well as religious purposes - Whether, the construction of dome, chapel or convent, etc. amounts to religious purpose or it is simply an object of general public utility? - Third Member appointment - difference of opinion between the ld' JM and the ld' AM - AM held that when law has categorically provided in s. 11(1)(a) that the benefits are available to the assessees carrying on activities of charitable as well as religious nature, there is no provocation to read down the law and state that the benefits will be available only if the assessee is carrying on charitable purposes alone or carrying on religious purposes alone. Religious as well as charitable purposes are covered by the benefits provided u/s. 11(1)(a) as both of them are holy waters. JM did not agree with the proposed order of the AM. HELD THAT:- The word "or" has always separated religious and charitable purposes. The decisions to which I have referred have all along considered the provision relating to grant of exemption containing word "or". Therefore, rejection of claim of the assessee on account of word "or" is unjustified. We do not find that donation to a church or construction of a church is not a purpose which is not of general public utility. Therefore, the contention of the Department that expenditure on religious activities could not be given exemption cannot be accepted, particularly in the context of our polity. We are aware that most of the religious and charitable activities go together in this country. According to the AO, erection of chapels and convents was religious in nature. Accordingly purpose of the trust was held to be partly religious and partly charitable and exemption denied to the assessee. It is difficult to appreciate or agree with aforesaid conclusion. How erection of chapels and convents can be treated purely religious in nature and not charitable. No relevant facts have been brought on record to make out a case justifying denial of exemption under s. 11(1)(a). There is no finding that chapels and convents are to serve a particular community and the purpose would be hit by provisions of s. 13(1)(b). Besides as already recorded a religious purpose can be a charitable purpose and vice versa in India. Therefore, exemption could not be denied to a trust which is partly charitable and partly religious, in the light of above discussion. With utmost respect to the JM we to hold that on facts, JM was not justified in taking a different view than one taken in Calicut Islamic Cultural Society [2008 (7) TMI 621 - ITAT COCHIN]. He was at liberty to make out a case for review of the aforesaid decision and for reference and consideration of the issue by a Larger Bench of the Tribunal. This course JM has not followed - we can only say that disregarding of the directions of Hon'ble Supreme Court is not only illegal, but is destructive of the reputation of the institution. I, therefore, disagree with the learned JM on this aspect of the issue. Two trusts in question are partly charitable or religious trusts established after 1st April, 1962 - There is no statutory provision to support proposition of law, stated by the learned JM. The learned JM, like the Revenue authorities, misconstrued the legal implication of the word "or" in s. 11 (1)(a). JM further referred to provisions of s. 13(1)(b) to hold that exemption of a public charitable trust is forfeited if any part of the income is for the benefit of any particular religious community or caste; scheduled castes, backward classes, scheduled tribes or women being exception. What learned JM had stated is the language of part of s. 13. However, no facts are stated, no case is made out, how provisions of s. 13(1)(b) are applicable in this case. At any rate, I have elaborately discussed above that provision of s. 13 has no application in this case and a trust which is partly religious and partly charitable, is entitled to exemption under s. 11(1)(a) of the IT Act. Thus we are inclined to hold that both assessees are entitled to exemption u/ s. 11(1)(a). For all the above reasons, we agree with the view taken by the AM. The case may now be put up before the regular Bench for disposal of appeals.
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