TMI Blog2011 (4) TMI 564X X X X Extracts X X X X X X X X Extracts X X X X ..... APPEAL NO. 409(COCH.) OF 2009 - - - Dated:- 29-4-2011 - N. VIJAYAKUMARAN, SANJAY ARORA, JJ. C.B.M. Warrier for the Appellant. T.J. Vincent for the Respondent. ORDER Sanjay Arora, Accountant Member. This is an Appeal by the Assessee-Applicant challenging the denial of approval sought under section 80G(5)(vi) of the Income-tax Act, 1961 ('the Act' hereinafter) by the Commissioner of Income-tax, Calicut ('CIT' or 'the competent authority' for short) vide his Order dated 22-5-2009. 2.1 Opening the arguments on behalf of the appellant, it was submitted by the ld. AR, its counsel, that the assessee is a Society, constituted and registered under the Societies Registration Act, 1860, bearing Registration No. 54/1964 dated 29-12-1964. The principal activity of the Society is running of educational institutions, orphanages, etc. Accordingly, its entire income is, since assessment year 2002-03, exempt under section 10(23C)(iv) of the Act; its latest assessment under section 143(3) of the Act being for assessment year 2008-09, accepting the returned income at Nil (PB pg. 1). It is being granted approval under section 80G of the Act (erstwhile section 88) by the comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny conflict or disagreement qua the law in the matter in the instant case, i.e., with reference to the respective cases of the opposing parties. The benefit of section 80G of the Act is not available for religious trust/institution (also refer Explanation 3 to section 80G). The assessee, however, contends that it is not undertaking any religious activity, but only charitable activities, which are not directed toward any particular community, religious or otherwise, but are available to all sections of the society, without any preference to any religion or caste. The Revenue's finding; the matter being factual, is however de hors any basis or material on record, so as to be of any consequence, with the assessee being admittedly entitled to the exemption under section 10(23C)(iv). 3.2 The issue at large is whether section 80G(5)(iii) is attracted or applicable, being the basis of which the approval stands denied in the instant case. The provision makes no reference to the actual activities, the language employed, to which we must give full play and due deference while interpreting, is: 'expressed to be for the benefit of ..' . The legislative intent, as expressed in the statute, is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be said to be expressed to be for its benefit. In other words, is such an intention to be expressed by all the clauses before it could be said that the same is expressed to be for the benefit of a particular religious community. That to our mind would be a pedantic approach. The finding as to the character of the trust could only be with reference to the relevant document, read as a whole, and not with reference to some of its provisions alone. Again, as the issue, i.e., the dominant character of the institution, is primarily qualitative in nature, it is not the numerical strength of the opposing provisions in its charter, i.e., if so, that would hold the field or be decisive of the matter. The institution could validly engage in only one of the several charitable activities set out in its charter, and which may bear a disqualification, i.e., insofar as the Act is concerned, which though would not stand to be considered in defining the character of the trust in view of it being not on a stand alone basis but forming part of a number of other charitable objects. As indeed is the case in the present case, with only two, i.e., clause 4(a) 4(b), of the total twenty sub-clauses in cl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any religious instruction or religious worship in such a religious institution would be only voluntary. Article 29 provides for protection of cultural and educational rights, even as it clarifies that educational institutions maintained by or out of the funds provided by the State shall not restrict admission to any citizen on grounds of religion, race, caste or language. Article 30 gives the right to all minorities (linguistic or religious) to establish and administer educational institutions of their choice. In a sense, Articles 26 to 30 are operative provisions for the proper effectuation of the fundamental right to religious freedom guaranteed by Article 25. 3.6 The educational institutions set-up and being administered by the appellant-society are, therefore, under Article 30. The words 'of their choice' therein are important. They denote complete freedom of choice, i.e., not only with regard to the manner in which the educational institution is to be run/managed, but as to its character as well; the whole premise of the Article/s being promotion of minority interest, whether construed with reference to language or religion, with the only restriction being toward imparting o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g would mean (for example) that even a minimal intake of (say) students (as, say, 2 per cent or 5 per cent) from other than the dominant group would enable it to claim of the institution being not, either expressly or practically, solely for the benefit of a particular religious community. If the Legislature intended so, nothing prevented it to include the said words in the qualifying condition, which would operate to relax the rigour of the same. The benefit/s that is being extended or possible to be, however, must be real and not imaginary or illusory. Any preference, say, by way of providing for a quota, management discretion, etc. accorded to the members of the public drawn on the basis of religious affiliation; be it for employment as faculty/staff therein, admission to the students, grant of loans or scholarships for study, etc., would amount to a benefit in terms of the qualifying provision. Here it may also be relevant to clarify that the fact that the educational institutions being set-up and administered by the assessee-society, or any of them, is aided by the State, which precludes discrimination qua admission on any ground [Article 29(2)], would not by itself operate to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... another related aspect. It could be argued that the society is admittedly entitled to exemption under section 10(23C)(iv) of the Act, so that its objects are charitable in character. There is no disputing the same; education is by itself a 'charitable purpose', and public charity has not necessarily to inure for the benefit of all mankind. It would be sufficient if it is so for a recognisable and identifiable cross-section of the public, irrespective of the said cross-section being identified by a bond of religious community or cast. The character of the appellant-society as a public charitable trust is, therefore, not in dispute. However, vide sections 13(1)(b) and 80G(5)(iii), the Act draws an exception to such institutions, i.e., for the benefit there-under, as a matter of public policy, where the beneficiary group is identified along the lines of religion or caste, making further exception, though, for scheduled castes, scheduled tribes, backward classes, etc. 4. Decision: In view of the foregoing analysis, and the given facts and circumstances, we conclude as under, which comprise a whole, to be read cumulatively: (a) that the appellant-society is formed for the educa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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