TMI Blog2016 (4) TMI 160X X X X Extracts X X X X X X X X Extracts X X X X ..... taxing the Petty Charities. The Legislature intended to tax the unaccounted money or black money which was brought in the books of charitable trusts in bulk and this law was not meant for taxing the small and general charities collected by the Genuine Charitable Trusts. As contended, the concept and importance of charity, against the backdrop of the Indian Society, has been in existence from time memorial in all religions, without exception. The assessee, in this regard, has cited Zakaat from Islam, Dasvand from Sikhisim and the recognition of this concept from Manu-Samriti, the original magnum opus on the Indian social system. That this concept has continued to be accepted and practiced in India all along down the ages, and thus it is firmly entrenched in our society, cannot be questioned. . Accordingly, we hold that the ld. CIT(A) has correctly deleted the addition for both the assessment years under consideration. - Decided in favour of assessee - ITA Nos. 212 & 431(Asr)/2014 - - - Dated:- 25-2-2016 - SH. A.D. JAIN, JUDICIAL MEMBER AND SH. T.S. KAPOOR, ACCOUNTANT MEMBER For The Appellant by: Smt. Ratinder Kaur, DR For The Respondent by: Sh. Salil Kapoor, Advocate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e AO proposed to tax the anonymous donations in accordance with the provisions of Section 115BBC(1), as against the assessee s version that the same being cash received through golak, did not partake the character of the anonymous donations covered u/s 115BBC(2) of the Act. Accordingly, the AO brought to tax the above difference of ₹ 1,16,89,535/- by invoking the provisions of section 115BBC(3) of the Act, as the quantity of amount received was beyond the ambit of anonymous donations. 4. Before the ld. CIT(A), the assessee filed written submissions, the gist whereof has been extracted by the CIT(A) in his order for the assessment year 2010-11, as follows: 5.1 As mentioned by the assessee, a Godly Man Bhagat Puran Singh Ji had started helping the homeless, disabled, handicapped, crippled, insane, mentally retarded, young or old persons, suffering from incurable disesases, after migration of 1947 and many others got motivated and attracted by his efforts and thus the Appellant Society came in to existence with the sole object of helping such persons and it was allotted a shelter outside city of Amritsar by the Municipal Corporation, Amritsar with the approval of the Pun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ar de ditta hai. Is lazmi bhaicharak bandhan (tax) da naam dasvand hai. Dasvand har sikh nu dena farz dasseya hai. Satguran ne amritdhari Sing layee taan khas taur te hidayat kiti hai. HINDUISM-Some Quotations In Chapter 9 of Menu-Samriti which is the source and foundation of 5.2.4 Hindu Law, it is laid down in Sanskrit. Saruesham Api Tu Nyayam Datu Shaktya Manishina Grasachhadan Mat Yantam Patito Hay Dadat Bhavet. Hindi Translation Which means Bhudhiman Manushaya ka Kartavaya hai ki Viklangon ka aayu prayant yathashakti bhojanuastra aadi aniuarya roop se dena hi nyayochit hai, aisa kartavaya paalan na karne wala paapi kahlayega. Another Shalok Par ye vishastirant shreshnama - Riqved - 7. 7.6 Hindi Translation Manushaya sewa karte huye sansar- saagar ko paar kar haate hai. Sewa Dharama Param Gehna - Need Shatak by Bhartari Hari Hindi Translation 5.3. Hon ble the Supreme Court, while dealing with the religious or charitable purposes it is observed by the Supreme Court in the case of Ramchandra Shukla v. Shree Mahadeoji, AIR 1970 SC 458, that there is no line of demarcation in the Hindu system between religion and charity. Indee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... what is religious or charitable purpose it is observed by the Supreme Court in the case of Ramchandra Shukla v. Shree Mahadeoji, AIR 1970 SC 458, that there is no line of demarcation in the Hindu system between religion and charity. Indeed, charity is regarded as part of religion. While discussing this aspect, the Supreme Court has further observed as under (at page 464): 5. Hindu piety found expression in gifts to idols to religious institutions and for all purposes considered meritorious in the Hindu social and religious system. Therefore, although courts in India have for a long time adopted the technical meaning of charitable trusts and charitable purposes which the courts in England have placed upon the term charity in the status of Elizabeth, and, therefore, all purposes which according to English law are charitable will be charitable under Hindu law. The Hindu concept of charity is so comprehensive that there are other purposes in addition which are recognized as charitable purposes. Hence, what are purely religious purposes and what religious purposes will be charitable purposes must be decided as observed by Mukherjea in Hindu Law Religious and Charitable Tru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n fact, that apparently wide discretion of the Mullaji Saheb is bound down by the two factors, namely, that this is a wakf, a dedication by a Mussalman of property for purposes which, according to the notion of Mussalmans, are pious, religious or charitable, and secondly, it must be used for Dawat purposes, that is, for purposes which go to benefit the Dawoodi Bohra community. With these two limitations operating on him, even the apparently wide discretion conferred upon the Mullaji Sahab as Dai-ul- Mutlak for the time being is confined within the four corners of these two overriding factors and in view of these two overriding factors it must be held, that the properties in question settled by the two deeds of January 12,1937, were settled upon trust for charitable or religious objects and were, therefore, entitled to exemption under section 11(1 )(a) of the Act of 1961. We must take it clear that the real controversy between the parties is regarding exemption u/s 1 l(l)(a) of the act of 1961 and not whether the trusts are wholly religious or wholly charitable. Even if the trusts are partly religious and partly charitable, so long as no part of the income or corpus can be utilized ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The purposes may have both the elements, charity as well as religious. 4. While dealing with what is religious or charitable purpose it is observed by the Supreme Court in the case of Ramchandra Shukla v. Shree Mahadeoji, AIR 1970 SC 458, that there is no line of demarcation in the Hindu system between religion and charity. Indeed, charity is regarded as part of religion. While discussing this aspect, the Supreme Court has further observed as under (at page 464): 5. Hindu piety found expression in gifts to idols to religious institutions and for all purposes considered meritorious in the Hindu social and religious system. Therefore, although courts in India have for a long time adopted the technical meaning of charitable trusts and charitable purposes which the courts in England have placed upon the term charity in the status of Elizabeth, and, therefore, all purposes which according to English law are charitable will be charitable under Hindu law. The Hindu concept of charity is so comprehensive that there are other purposes in addition which are recognized as charitable purposes. Hence, what are purely religious purposes and what religious purposes will be ch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nefit of the Dawoodi Bohra community. Though the words of clauses 6,7 and 8 are very wide in terms, in fact, that apparently wide discretion of the Mullaji Saheb is bound down by the two factors, namely, that this is a wakf, a dedication by a Mussalman of property for purposes which, according to the notion of Mussalmans, are pious, religious or charitable, and secondly, it must be used for Dawat purposes, that is, for purposes which go to benefit the Dawoodi Bohra community. With these two limitations operating on him, even the apparently wide discretion conferred upon the Mullaji Sahab as Dai-ul- Mutlak for the time being is confined within the four corners of these two overriding factors and in view of these two overriding factors it must be held, that the properties in question settled by the two deeds of January 12,1937, were settled upon trust for charitable or religious objects and were, therefore, entitled to exemption under section 11(1 )(a) of the Act of 1961. We must take it clear that the real controversy between the parties is regarding exemption u/s 1 l(l)(a) of the act of 1961 and not whether the trusts are wholly religious or wholly charitable. Even if the trusts ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rovisions of section 115BBC(2)(b), ignoring the fact that the assessee is registered as a charitable trust and not as a religious and charitable trust. 7. The ld. counsel for the assessee, on the other hand, submitted that the amounts in question, deposited in the golaks installed in front of the Gurudwara, amounted to religious charity, which comes under the provisions of section 115BBC(2)(b) of the I.T. Act, 1961 and they cannot be said to be anonymous donations; that charity is different from donation and in the present case, the amounts received represent charity and not donation. It has been submitted that in the earlier years, no such addition has been made by the Department and the facts in the year under consideration have not undergone any change from the said earlier years. 8. Having heard the rival contentions in the light of the material placed on record, it is seen that the ld. CIT(A) deleted the addition, relying on the decision of the Hon ble Gujarat High Court in the case of CIT vs. Barkate Saifiyah Society , 213 ITR 493 (Guj.) No decision to the contrary has been cited. 9. The ld. CIT(A) also relied on the decision of the Hon ble Supreme Court in the case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee preferred an appeal before the Fist Appellate Authority (FAA). After considering the submissions of the assessee, FAA held that the AO had nowhere said that the activity of the appellant trust was not for charitable purpose, that AO had also not said that the trust had anywhere indulged in any other activity, which was not covered by object of appellant trust, that the AO has mainly relied upon the provisions of Section 115BBC of the Act introduced on statute by Finance Act, 2006 w.e.f. 01-04- 2007, that the AO had misunderstood the intention of the law, while applying the provisions of Section 115BBC of the Act, that the said provision had not been brought on statute with the intention to check donations of meager amount of ₹ 10/- to ₹ 150/-, that the AO was not justified in invoking the provision of Section 115BBC of the Act, for taxing anonymous donations, which itself was not permitted as per Section 115BBC(2) of the Act, that appellant trust hold the registration u/s. 12A of the Act in continuation and that the amount of ₹ 84,36,407/- had been utilised by appellant trust for the cause of appellant trust only, that entire receipt was utilised by appellant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rpose of the trust was confined only to a particular religious community, the same would attract the provisions of section 13(1 )(b) and, therefore, prayer made for registration of the trust was declined. The Tribunal after going through the objects of the assessee-trust came to the conclusion that the assessee was a public religious trust as the objects of the trust were wholly religious in nature and thus, the provisions of section 13(l)(b) which were otherwise applicable in case of charitable trust would not be applicable. The Tribunal therefore, held that the assessee was entitled to claim registration under sections 12A and 12AA. The High Court primarily, was of the view that the decision of the Tribunal was rendered purely on the factual matrix of the case and, therefore, it would be improper to disturb the finding of fact so arrived by the Tribunal. Secondly, the court concluded that the provisions of section 13(1 )(b) would not be applicable to the assessee trust as the trust was not created or established for the benefit of any particular religious community or caste. Consequently, the revenue's appeal w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the thirsty would find mention as religious activity in sacred texts and at the same time would qualify as a charitable activity. 37. The Tribunal has analysed the objects of the trust in the light of the holy scriptures and Quran and recorded its satisfaction as follows: 16...The objects of the assessee-trust reproduced above clearly refer to the religion and are | supported by reference made to different pages of Holy Quran. The learned Counsel for the assessee referred to the true copies of several pages of Holy Quran written by two of the authors referred to above in which giving of food in days of hunger or orphan is considered as highly religious ' ceremony. Reference is also made that who will give to the people or poor then Allah will give them in return and, i.e., who will give loan then Allah will give double to them. Likewise, for helping the needy people for religious activities and to carry out religious activities or spend for good, spending wealth in the way of Allah, bestowing mercy, teaching were considered to be highly religious activities. On going through several true pages of Holy Quran written by the authors referred to above, we are satisfie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... law would restrict the charitable disposition of the intended activities in the objects. 39. The provision of food to the public on religious days of the community as per object (a) and (b), the establishment of Madarsa and organizations for dissemination of religious education under object (d) and rendering assistance to the needy and poor for religious activities under object (e) would reflect the essence of charity. The objects (a) and (b) provide for arrangement for nyaz and majlis (lunch and dinner) on the religious occasion of the birth anniversary and Urs Mubarak of Awliya-e-Quiram (SA) and the Saints of the Dawoodji Bohra community and for arrangement of lunch and dinner on religious occasions and auspicious days of the Dawoodi Bohra community, respectively. Nyaz refers to the food a person makes and offers to others on any particular occasion on the occasion of the death of a saint and Majhlis implies a place of gathering or meeting. The activity of providing for food on certain specific occasions and other religious and auspicious events of the Dawoodi Bohra community do not restrict the benefit to the members of the community .-Neither the religious tenets nor the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd erroneously considered to be a bar to the assessee in claiming that the rigours of sec. 115BBC were not attracted. The said conclusion has been arrived at by the tax authorities on considering the anonymous donations in the facts of the present case in the light of the newly inserted section 115BBC and the aforesaid Circular No.14 of the CBDT which explained the same. On considering the objects of the trust we are of the view that in the facts of the present case the tax authorities have proceeded on a very narrow and incorrect understanding in holding that the assessee trust was engaged in spreading spirituality and since section115BBC only exempts religious trust, a trust allegedly imparting spiritual knowledge was consequently not contemplated as an exception by the Legislature as much as it consequently is barred to claim exemption vis- -vis the anonymous donation. 10.8. We have extracted the objects of the trust and on a careful consideration of the same, we hold that the conclusions drawn by the tax authorities are incorrect on facts and law. It is seen that only in clause (viii) of the objects of the trust, it is set out that the trust imparts spiritual lectures to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section. 10.9. We also hold on a consideration of the terms religion ; religious spirituality and spiritual , that in the context of the present case, no lengthy deliberations on the aforesaid terms is necessary. Suffice it to say that to our understanding the concept of religion divorced from spiritualism may be possible as it may be possible for religion to exist in a purely ritualistic manner but spiritualism divorced from religion is impossible to be visualized and conceived. In the facts of the present case 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. It has been stated that during these lectures voluntary donations by the attendees have been made which constitutes the anonymous donations. The department it is seen has considered these voluntary donations exigible to tax on the understanding that the assessee trust was not fulfilling the requirements of a public religious trust. We have seen and discussed at length and come ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tely misplaced and consequently we find ourselves unable to uphold the same. 10.11.While coming to the said conclusion the objects of the trust have been considered vis- -vis the relevant provision alongwith the Circular No.-14 and the observations and ratio decidendi of the Apex Court in Cit, Ujjain vs M/s Dawoodi Bohara Jamat and considering the rival stand of the parties in the context of the above on the facts of the present case, we hold that the claim of the assessee deserves to be allowed. 10.12.Before parting, we would briefly address the arguments of the Ld. Sr. DR namely that the trust should demonstrate by activities how the funds have been applied. It is seen that the said issue has not been raised by the AO whose order under consideration has been passed u/s 143(3). There is nothing on record to show that the said order was not passed after duly considering the relevant facts consequently in the facts of the present case, it is not an issue for our consideration. Moreover nothing has been placed before us by the Ld. Sr. Dr to show that the assessment order on which she is relying has been passed by the AO without considering the relevant facts. In the cours ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... titute of Mining and Mines Surveying vs CIT 208 ITR 608 (Patna) again has no relevance to the present proceedings as charging of a specified fee by the institution from the students appearing at some specified examination was held to be not constituting an act of advancement of general public utility as such could not be said to be a charitable activity. The ratio of the said decision has no relevance to the present proceedings. Same is the position of the decision of the Chennai Bench of the Tribunal which held in Professional Education and Research Foundation vs. DIR(E) 20 Taxman.com 47 (Chennai) that when education is carried on commercial lines it cannot claim the status of a charitable institution. None of these decisions help the Revenue in any manner whatsoever. The reliance placed upon the CIT, Ujjain vs Dawoodi Bohra Jamat by the Ld. Sr. DR in as much as proven facts be considered in fact goes against the arguments of the Ld. Sr. DR as the proven facts on record are that the AO holds that the assessee is covered within the scope of general public utility and qua the application of funds the AO has not found the assessee's activities wanting vis- -vis the claimed obje ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ounts of the all the amount of charity received through GOLAKS. The name and address of the place of GOLAKS from where the cash is received is duly recorded in the account-books. This cash is heated as CHARITY not as anonymous donations as treated by your good-self. On the GOLAK itself is written DAAN-PATRA (means CHARITY-BOX). When a person puts corns and very small amount in the GOLAK, he/she cannot mention his/her identity with the cash put in the GOLAKS. 7. That the Charity/Donation given by the people is meant for the service of the PINGLA persons (DISABLED/HANDICAPPED PERSONS). 8. In the end, it is submitted that this is a PUBLIC CHARITABLE. SOCIETY which works for the welfare of the persons who actually deserve, irrespective of any particular religion, caste, creed or colour. It is therefore submitted that the society does not attract the provisions of section 115BBC of the Income Tax Act, 1961. 9. That with the humble submission of the hue facts, it is prayed that the assessment in the case may kindly be completed. Thanking you in Anticipation. Yours faithfully, Sd/- 26/02/2013 (Dr. Inderjit Kaur) 19. As per its Memorandu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the following office bearers:- 1 Dr. Inderjit Kaur, Dhurl Gate,Sangrur. Patron President 2 Joginder Singn, DSP (Retd.), - H. No.105, Dashmesh Nagar, Patiala. Vice President 3 Ar. Mukhtar Singh Architect Town Planner D-577, Ranjit Avenue, Amritsar Hon'ble Secretary 4 Dr. Jagdeepak Singh 20 Doctors' Colony, Member 20. So far as regards the activities of the assessee, the details therof are as follows: DETAILS OF MULTIFARIOUS ACTIVITIES OF P1NGALWARA ARE ENUMERATED AS UNDER. Welfare: a. Looking after 1614 inmates which include destitute children, sick, disabled, mentally challenged and old men and women. These inmates are accommodated in branches of Pingalwara at Amritsar, Pandori, Goindwal, Jalandhar, Sangrur and Palsora (Chandigarh). b. Free medicines to the poor and needy people. c. Free help (Tricycles etc) to the handicapped. d. Medical and material aid to the vic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y for the specific purposes and distributed relief among the needy and the affected people, also motivated the people in general and the youth in particular to come forward to give relief and solace to the people in distress. b) During the disastrous earthquake in Latur (Maharashtra) in 1993, took truck load of food stuff, clothes, blankets, and medicines and distributed among the distressed and needy. c) Distributed food stuff, clothes and blankets to J K border residents who had vacated their homes on account of across the border shelling and terrorism. d) Blood Donation Camps are organized every year at the Pingalwara on Bhagat Puran Singh ji Barsi Celebration Day and donated to the Govt. Hospital, Amritsar and Sri Guru Ram DassCharitable Hospital, Amritsar. 110 units of blood was collected during the camp in August 2011. e) A Gaushala at Manawala Branch housing more than 100 cows. f) Cremation of unclaimed dead bodies. g) Donation of eyes of unclaimed dead bodies. h) Distribution of ration, clothes and blankets to flood victim in Jalandhar and Kapurthala Districts during 2008. i) Free Ration to poor needy families. Other ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rust or institution. (3) For the purpose of this section, anonymous donation means any voluntary contribution referred to in sub-clause (iia) of clause (24) of section 2, 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. 22. This section was inserted in the Income Tax Act by Finance Act, 2006 and sub clauses (i) (ii) of sub-section (1) were substituted w.e.f. 01.04.2010. The object of bringing this law in the Statute Book w.e.f. 01.04.2006 is well explained in the Memorandum explaining the provisions of the Finance Bill, 2006, reported in 281 ITR (St.) Page 148 and (St.) Page 185. For sake of convenience, it is reproduced as under: 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 religious trusts or institutions is exempt under the Income Tax Act subject to fulfillment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... other medical institution run by them. Anonymous donation to wholly religious trusts or institutions will not be taxed. 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 maybe 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. 26. Moreover, as contended, the concept and importance of charity, against the backdrop of the Indian Society, has been in existence from time memorial in all religions, without exception. The assessee, in this regard, has cited Zakaat from Islam, Dasvand from Sikhisim and the recognition of this concept from Manu-Samriti, the original magnum opus on the Indian social system. That this concept has continued to be accepted and practiced in India all along down the ages, and thu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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