TMI Blog2014 (9) TMI 81X X X X Extracts X X X X X X X X Extracts X X X X ..... tion vis-à-vis the anonymous donation. The objects of ameliorating their miseries, providing night shelter, self-help capability, knowledge distribution of food medicines etc coupled with solace in the name of God cannot be outrightly rejected and merely because the assessee is not limiting itself to disbursing food medicine, providing shelter etc and is also giving lectures on spirituality was not the kind of assessee contemplated under section 115BBC who was to be visited by the rigours of the said section. Lectures/discourses on the teachings of the prevalent and predominant religions of the country are claimed to have been given as would be found from the written submissions extracted in the impugned order which have also been reproduced from the impugned order in the present proceedings - during these lectures voluntary donations by the attendees have been made which constitutes the anonymous donations - the voluntary donations exigible to tax on the understanding that the assessee trust was not fulfilling the requirements of a public religious trust - the objects of the trust and the context in which spiritual lectures espousing the philosophy i.e. the spirituality of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the time of hearing of the appeals. 2. The relevant facts of the case as appearing from the assessment order are that the assessee returned NIL income by way of its return filed on 29.09.2009 accompanied by Audit Report in Form No-10B alongwith Balance Sheet, Income and Expenditure Account etc. The same was processed u/s 143(1) and subsequently selected for scrutiny by notice u/s 143(2) and 142(1) etc. The facts of the assessee s case are discussed by the Assessing Officer in the following manner :- The assessee was accorded Registration u/s 12A vide letter No.DIT(E) 2005- 06/B-1080/04/207 dated 20.05.2005 issued by the Department. During the year, the assessee was mainly involved in imparting of spiritual education through the lectures/samagam delivered by Brahamrishi Shree Kumar Swami Ji and in distribution of medicines and cloths to the needy and destitute. Thus, the assessee is falling within the scope of general public utility. In the relevant period 2008-09, the assessee is in receipt of ₹ 5,28,84,204/- by way of Donations. The assessee was asked to file the details with regard to name, address of the persons from whom donations has received and mode of re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1961. Since the assessee has furnished inaccurate particulars of its income, Penalty proceedings u/s 271(1)(c) are being initiated separately. 3. Aggrieved by this the assessee went in appeal before the First Appellate Authority. Before whom the following submissions were made:- 2. Facts That the assessee Trust was set up on 30th December, 2002 to carry out various charitable/ spiritual/ religious objects as set out in the Trust Deed. The Trust during the year under appeal was mainly involved in the following activities: a. Imparting of spiritual education to the poor and masses of all castes, religion and creed for upliftment of mankind. b Helping in organising Samagams with blessings of Brahamrishi Shree Kumar Swamiji wherein He delivers cosmic grace by his presence for physical, mental. financial, family and psychological problems of poor and masses of all castes, religion and creed. He has been uncovering such divine secrets at such Samagams, which have changed the life of millions of people. Numerous poor people suffering from pain, deadly diseases, problems and celestial faults have got new life by just their physical presence at such Samagams when modern scienc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hey formed regiments of monk-warriors who, to this day, preserve the traditional martial arts of India in addition to their spiritual practices. So in addition to being a way to organize the orders at a local level they have historically also served as paramilitary regiments with the Mahamandaleshwaras as generals, as it were, of these regiments. Since major part of the activities actually carried out by the assessee trust during the year under consideration were of religious/ spiritual nature, no recognition u/s 80G was obtained by the trust. 4. Not convinced with the explanation the CIT(A) confirmed the action of the AO. 5. Aggrieved by this the assessee is in appeal before the Tribunal. 6. Ld. AR referring to the facts of the case submitted that the assessee trust is covered within the exception carved out in sub-section (2) of section 115BBC of the Income Tax Act, 1961. Reliance was placed upon various orders and decisions of different Tribunals and Courts, on the basis of which it was contended that the assessee Trust is a charitable and religious trust accordingly provisions of section 115BBC are not applicable. It was submitted that the CIT(A) considering the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e weeded out from it. The following submissions extracted from the synopsis filed were heavily relied upon:- Income of wholly charitable or religious trusts or institutions or partly charitable or religious trusts or institutions is exempt under the Income-tax Act subject to fulfillment of certain conditions. In order to tax unaccounted money being contributed to these institutions by way of anonymous donations, it is proposed to insert a new section 115BBC so as to provide that any income by way of anonymous donations of the entities referred to in that section shall be included in the total income and taxed at the rate of 30 per cent. Anonymous donations received by the following entities shall be covered by the new section:- a) any trust or institution referred to in section 11; b) any university or other educational institution referred to in section 10(23C) (iiiad) and (vi); c) any hospital or other institution referred to in section 10(23C) (iiiae) and (via); d) any fund or institution referred to in section 10(23C) (iv) e) any trust or institution referred to in section 10(23C) (v) The following anonymous donations shall not be covered:- a) Donations ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was made to pages 5-41 which contain the copy of the trust deed which include at pages 5 to 8 in clause 5 the objects of the Trust. Specific attention was invited to sub-clause (i), (vii), (viii), (xi), (xii), (xiv), (xvii) etc. of the same so as to contend that the trust was incorporated for charitable purposes and advancement of general public utility. These sub-clauses are extracted hereunder for readyreference:- i). To establish, promote, set-up, run, maintain assist finance, support and/or help in setting up and/or maintaining and/or running schools, and other institutions orphanages, widow home, poor houses or other establishments of relief and/or help to the poor, old and infirm people. vii) To arrange, establish, manage and supervise orphanages, old age homes, night shelters, Hospitals, Dharmshala, NariNiketan and Mahila Ashram etc. viii). To like spiritual lecture to mental disturbed person and spiritual lecture to all kinds of human beings. xi). To do all other activities for the interest of the human beings to help in physical, mentally and financially. xii). To give provide and/ or render food, medicine and other help and/or assistance in any shape or fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taxation under the Act. Sections 12A and 12AA detail the procedural requirements for making an application to claim exemption under Section 11 12 by the assessee and the grant or rejection of such application by the Commissioner. A conjoint reading of Section 11, 12, 12A and 12AA makes it clear that registration under Sections 12A and 12AA is a condition precedent for availing benefit under sections 11 and 12. Unless an institution is registered under the aforesaid provisions, it cannot claim the benefit of Sections 11 and 12. Section 13 enlists the circumstances wherein the exemption would not be available to a religious or charitable trust otherwise falling under section 11 or 12 and therefore, requires to be read in conjunction with the provisions of Sections 11 and 12 towards determination of eligibility of a trust to claim exemption under the aforesaid provisions. 7.1. The Hon ble Apex Court it was submitted in para 17 of the said judgement considered the objects of the trust in the facts of that case. It was submitted that this discussion has a significant impact in the facts of the present case when its objects are considered as the discussion of the Hon ble Court wou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lly in appeal has to be differentiated from the question where a finding of fact is only assailed has to be considered carefully. Briefly carrying us through the intervening paras of the said judgement the Ld. AR submitted that after referring to various decisions relied before the Apex Court in para 26 their Lordships came to the conclusion that determination of nature of trust whether it is wholly religious or wholly charitable or whether both charitable and religious under the Act is not a question of fact and requires examination of legal effects of the proven facts and documents and for that implications of the objects of the trust as contained in the trust deed need be considered. It was emphasized that their Lordships held that it is only the objects of a trust in the trust deed which would govern its right of exemption u/s 11 or 12 of the Act. For the said purpose it was contended their Lordships held it is only the objects in the back drop of fiscal jurisprudence which would illuminate the purpose behind creation or establishment of the trust for either religious or charitable or both religious and charitable purposes. In these circumstances it was submitted it has been he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lost sight of that the supreme goal of all religions is philanthropy which could be manifested in various forms. It is held that gifts for religions purposes are prima facie gifts for charitable purposes. (Schoales v. Schoales [1930] 2 Ch. 75 (CA); White v. White (1893) 2 Ch. 41 (CA)). 7.5. Ld. AR placed further heavy reliance on the following observation of the Court in support of the facts of the present case:- 35. Unlike the phrase charitable purpose , religious purpose is not defined under the Act. According to lexicographers, the term religious would mean of or relating to religion. (Merriam Webster Dictionary, Macmillan English Dictionary). The Shorter Oxford English Dictionary defines the term as follows:- Devoted to religion, exhibiting the spiritual or practical effects of religion, following the requirements of religion; pious, godly, devout. In kanga, Palkhivala and Vyas, Law and Practice of Income Tax, Vol. 1, Ed. 9th (at p. 544) religious purposes are indicated to include the advancement, support or propagation of a religion and tenets. Thus a religious purpose would be one relating to a particular religion and broadly would encompass objects relati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d common opinion amongst the community to which the parties interested belong to. Therefore, it is pertinent to analyse whether the customary law would restrict the charitable disposition of the intended activities in the objects. 7.8. In the said background referring to para 39 of the said judgement and the discussion thereon it was submitted the objects of the trust which included activities like providing food on religious days of the community and establishment of Madarsa or institutions for dissemination of religious education and rendering assistance to needy and poor for religious activities, it was pointed out has been held to reflect the essence of charity and benefit of which was not limited to the members of the community itself as neither religious tenets nor objects limited the benefit to the members of that community only. Considering all these facts it was submitted their Lordships had held that the activities of the trust were both religious and charitable as they were not meant exclusively for a particular community. 7.9. Relying upon the findings and the discussion on religious and charitable purposes as considered by the Apex Court in the aforesaid decisio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ired. In this background it was emphasized that the Lordship held that it is only proven facts which are required to be considered. For ready-reference we extract the relevant portion hereunder:- 20. It is often that the question of law and fact are intricately entwined, sometimes to the extent of blurring the domains in which they ought to be considered and therefore, require cautious consideration. The question where the legal effect of proven facts is intrinsically in appeal has to be differentiated from the question where a finding of fact is only assailed. 8.3. In the facts of the present case it was submitted that merely having photographs which showed that some lecture/discourse has been addressed and some of persons have attended the same does not prove that the assessee is engaged in the charitable activities for which it was constituted as such the judgement of the Apex Court does not apply at all. Referring to the objects of the trust specific attention was invited to clause 5(i); 5(vi); 5(xiv). It was submitted that mere mention of these activities would not make them charitable as the assessee is required to demonstrate that these activities of general public ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The Ld.AR in reply submitted that the arguments of the Ld. Sr. DR have to be in the context of the finding recorded by the AO or the CIT(A) and the Ld. Sr. DR cannot completely re-argue the case and attempt to improve the case of the AO ignoring the fact that the AO has observed that he is satisfied that the assessee is falling within the scope of general public utility as would be borne out from unnumbered para 2 of the assessment order. Accordingly it was argued the assessee is not required to prove at this stage to the satisfaction of the Ld. DR that the assessee trust is engaged in charitable activity the only issue for consideration is that is the assessee s grievance justified on facts that the anonymous donation as considered in sec.115BC is not attracted. Accordingly the arguments of the Ld. Sr. DR, it was stated are mischievous and raking an issue which does not arise. It was his stand that the Sr. DR cannot go beyond what the AO himself has agreed and the Ld. Sr. DR was precluded from saying so. It was also his submission that no document has been placed on record by the Sr. DR to contend that the activities are not charitable. The AO has categorically held that the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r Bench of the Apex Court, the same deserves to be followed. 10. We have heard the rival submissions and perused the material available on record alongwith the case law relied upon. It is seen that the short question which falls for our consideration is that whether in the facts and circumstances of the case has section 115BBC been rightly involved by the tax authorities or not. For the said purpose it is necessary to extract the relevant provision as it stands on the statute hereunder:- 115BBC. (1) Where the total income of an assessee, being a person in receipt of income on behalf of any university or other educational institution referred to in sub-clause (iiiad) or sub-clause (vi) or any hospital or other institution referred to in sub-clause (iiiae) or sub-clause (via) or any fund or institution referred to in sub-clause (iv) or any trust or institution referred to in sub-clause (v) of clause (23C) of section 10 or any trust or institution referred to in section 11, includes any income by way of any anonymous donation, the income-tax payable shall be the aggregate of- [(i) the amount of income tax calculated at the rate of thirty per cent on the aggregate of anonymou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the assessee is falling within the scope of general public utility. Reverting again to the facts on record it is seen from the copy of the Trust Deed available on record which is at pages 5 to 41 of the paper book filed. A perusal of the same shows that the aim of the trust has been set out at page 4 of the same (paper book page 7). The same reads as under:- 1. Whereas the founder is desirous of creating on endowment by setting a part and establishing a fund for the public Charitable objects, and purpose in India, thereinafter expressed. 10.4. The aims and objects of the trust which are required to be considered are set out in clause 5 of the trust deed and the same are reproduced hereunder for readyreference :- i) To establish, promote, set-up, run, maintain assist finance, support and/or help in setting up and/ or maintaining and/or running schools, and other institutions orphanages, widow home, poor houses or other establishments for relief and/ or help to the poor, old and infirm people. ii) To give promote and/or render help and assistance in cash or kind to poor and/or destitute people widows etc. iii) To give, provide and/ or render help and assista ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... viding medical treatment to all human diseases with all scientific and technical and tests of all kinds. xvi) To open fund, establish, promote, set-up, run maintain assist, finance, support and/or help in the setting up and/ or maintaining, boarding houses, libraries, reading rooms and other training and vocational institutions. xvii) To promote, organize, administer, establish support, maintain and/ or grant and the person institution or society or organization what is every having for the objects or charitable purpose and to incur expenditure in connection therewith. (emphasis provided in the present proceedings) 10.5. On a consideration of the above, we find that the tax authorities have completely mis-directed themselves in considering the issue. It is seen that whereas the AO holds that the assessee falls within the scope of general public utility ignores his own finding while deciding the question of anonymous donations and contradicts himself and holds that the assessee is a trust set up for imparting education in the spiritual field and thus concludes that it is not a public religious trust as such the rigours of section 115BBC are attracted in full force qua ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eligious trusts of institutions, i.e. Mixed purpose trusts of institutions shall be taxed only if it is for any university or other educational institution or any hospital or other medical institution run by them. Anonymous donation to wholly religious trusts or institutions will not be taxed. (emphasis provided by the Bench) 25.3. Anonymous donation has been defined in the new section to mean any voluntary contribution referred to in section 2(24)(iia) of the Act, where a person receiving such contribution does not maintain a record of the identity indicating the name and address of the person making such contribution and such other particulars as may be prescribed. 25.4. Consequential amendments have been made in section 10(23C) and section 13 to provide that any income by way of any anonymous donation which is taxable under section 115BBC shall be included in the total income of the assessee. 25.5. Applicability-from assessment year 2007-08 onwards. 5.1. Furthermore, section 2(24)(iia) has also defined voluntary contribution which reads as under:- Voluntary contributions received by a trust created wholly or partly for charitable or religious purposes of by a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tended by the Legislature. Hence the expression religion has to be appropriately construed in the context of the document i.e. the Trust Deed in the present case. Before we proceed to consider the Trust Deed, it also needs to be kept in mind that it is a well accepted principle of interpretation that the nomenclature adopted by the parties in any document is not conclusive to indicate the real nature of the document or the intention it actually records. It is the duty of the Court to see and examine what in truth is the essential and factual nature of the document. This Rule relating to inconclusiveness of the nomenclature adopted is more relevant in interpretation of document then on law and Court is never found or concluded by language which may have been used in the document. Hence in order to determine whether the expression spiritual used in the Trust Deed conveyed its real nature and meaning it must follow that it is the Trust Deed itself and its form and content which is to be examined and considered alongwith the expression spiritual as understood in its popular senseuti loquitor vulgus so as to be in accord with the real intention of the parties as appearing from the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, drought, epidemics etc. A perusal of the above enumerated list when taken in the contest of extreme devastating tragedies and the needs of destitute; old age; infirm etc needs no specific treatise to bring out the potential importance and benefits of spiritual lecture to the target group of mentally disturbed, destitute due to calamities, natural or man-made, age, orphaned, widowed etc. The potential benefit and succor to these target groups by way of some philosophy or imparting of belief that there is some power beyond all this which is watching out for them cannot either be under-estimated or over-emphasized and has to be considered in the proper perspective. The fact that these arguments/philosophy on the touchstone of science may fail and to some of us non-believers maybe only rhetoric is not a relevant consideration as what cannot be cured has to be endured, for a person on his last breath is no reason to callously subscribe to the philosophy that such a person should be deprived of the psychological comfort of believing that somewhere in the universe there may have been a greater purpose in going through the painful experience. The issue is not what we believe but what st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e conspectus of facts, circumstances and position of law, we hold that the Revenue has incorrectly applied section 115BBC to the facts of the assessee s case. 10.10. In order to come to the said conclusion, we have relied upon the observation and findings of the Apex Court in the case of CIT, Ujjain vs Dawoodi Bohara Jamat and the ratio decidendi laid down therein which holds that it is the objects of the trust which are required to be seen and the standards to be applied for considering the same are those of the customary law and common opinion amongst the community to which the parties interested belong to. The present trust as it s very name suggests is formed by the community which has never looked down upon any other religion and over the times has constantly maintained and upheld the diverse and at times contradictory individual beliefs and practices of its followers with the attitude of live and let live as it is not a static religion but a living religion, a way of life. The religion of the community by its very practices, philosophy and tenets has celebrated and revered the importance of not only human life but also animal life and vegetation life so much so that even t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is a well-accepted fact and the donor of the alms by almost all religions are exhorted ideally to remain unidentified. Mythology may not live up to the exacting standards of history as we understand but cannot be outrightly rejected as fairy tales or imagination as mythology can be described as history which has been carried through by word of mouth and also has a very important role in understanding history of people and nations. Thus not only mythology supports this general belief of an ideal donor who remains unidentified but even various religious written texts and treaties also idealise a donor who remains unidentified. The statute it is seen does not bar this in the case of wholly religious purposes trust or in the case of wholly religious and charitable purposes trust .unless the other condition of section 115BBC(2)(b) are fulfilled with which we are not concerned in the facts of the present case. 10.13. For the sake of completeness, we also would deem it appropriate to address the decisions relied upon by the Ld. Sr. DR. Considering the same, we are pained to note that they have been cited carelessly without considering it necessary even to address how the facts are par ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
