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Commissioner of Income Tax- (Exemptions) Versus M/s. Indian Society of the Church of Jesus Christ of Latter Day Saints

2017 (9) TMI 532 - DELHI HIGH COURT

Exemption u/s 11 - religious purpose / charitable purpose - AO / CIT(A) observed that the Assessee was not using its funds for public benefit but rather for the benefit of specified persons under Section 13(3) - Held That:- The CIT (A) had proceeded on the basis that although the Assessee Society was for both religious and charitable purposes, since it was for the benefit of only one religious community the provision of Section 13 (1) (b) would apply to deny it exemption under Section 11 of the .....

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that "the activities of the trust though both charitable and religious are not exclusively meant for a particular religious community" and, therefore Section 13 (1) (b) was not attracted. In the present case too, the factual finding of the ITAT is likewise. It has been found that the activities of the Assessee Society, though both religious and charitable, were not exclusively meant for one particular religious community. It was, therefore, rightly not denied exemption under Section 11 of the Ac .....

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Tax Appellate Tribunal ( ITAT ) in ITA No. 2239/Del/2016 for the Assessment Year ( AY ) 2012-13. 2. The question urged by the Revenue is whether it could be said that the Assessee-Society is a charitable society established for the benefit of any particular religious community or caste thereby in violation of Section 13 (1) (b) of the Act? 3. It is the case of the Revenue that the Respondent-Society ( Assessee ) was carrying out activities directed towards the benefit of a particular community a .....

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ed in the register maintained in the office of Commissioner of Income Tax, Delhi-VI under Section 12A (a) of the Act. 5. The main object of the Assessee-Society is to undertake the dissemination of useful religious knowledge in conformity with the purposes of the Church of Jesus Christ of Latter-Day Saints, to assist in promulgation of worship in the Indian Union, to establish places of worship in the Indian Union, to promote, sustain and carry out programmes and activities of the Church, which .....

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rch or an affiliated entity thereof to disburse, collect, and service loans to students who qualify for low interest loans under the Perpetual Education Fund ( PEF ) or International Education Fund ( IEF ) programs of the Church, or (ii) if necessary to administer such programs and conduct all such activities in the name of the Society, subject in all cases to compliance with applicable laws 6. The factual finding returned by the ITAT by the impugned order dated 7th October 2016 is that the Asse .....

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ership Skills. 7. The further factual finding rendered by the ITAT is that the above activities are for the benefit of the public at large and not for the benefit of any particular religious community or caste. 8. It requires to be noted that no question of law has been urged or ground taken by the Revenue in the present appeal that the above factual findings of the ITAT are perverse and unsupported by the documents placed on record by the Assessee. 9. In the assessment order dated 27th February .....

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s granted registration under Section 12A (a) of the Act and that the said registration continues. However, the AO was of the view that said registration does not give blanket exemption to any entity. The AO noted that the expense incurred by the Assessee included donations for general public utility. However, on the ground that it constituted "a very small part of the total expenditure" the AO held that the Assessee was not using its funds for public benefit but rather for the benefit .....

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eal before the Commissioner of Income Tax (Appeals) [ CIT(A) ]. The attention of the CIT(A) was drawn to the decision of the Supreme Court in Commissioner of Income Tax v. Dawoodi Bohra Jamat [2014] 364 ITR 31 (SC) which held on facts that the bar under Section 13 (1) (b) of the Act would not be applicable since the activities of the organization in that case served both religious and charitable purposes. The CIT (A) in the present case, however, decided not to apply the ratio of the Dawoodi Boh .....

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) of the Act would be attracted and it could not be granted exemption under Section 11 of the Act. 11. The ITAT has, in the impugned order, pointed out that neither the AO nor the CIT(A) undertook any factual examination in arriving at the above conclusions. The ITAT noted that the documents filed before the ITAT by the Assessee provided the names and designations of the persons managing and carrying on the activities of the Society. It showed that priests are not managing the affairs of the soc .....

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) where the Supreme Court observed as under: In our considered view, determination of nature of trust as wholly religious or wholly charitable or both charitable and religious under the Act is not a question of fact. It is but a question which requires examination of legal effects of the proven facts and documents, that is, the legal implication of the objects of the respondent trust as contained in the trust deed. It is only the objects of a trust as declared in the trust deed which would gover .....

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le purpose and religious purpose , the Supreme Court analysed the facts and found that the objects of the trust exhibit the dual tenor of religious and charitable purposes and activities . Thereafter, the Supreme Court went on to analyse Section 13 (1) (b) of the Act and observed as under: From the phraseology in clause (b) of section 13(1), it could be inferred that the Legislature intended to include only the trusts established for charitable purpose. That, however, does not mean that if a tru .....

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is not for the benefit of a particular religious community or caste. That is to say, it needs to be examined whether such religious-charitable activity carried on by the trust only benefits a certain particular religious community or class or serves across the communities and for society at large [Sole Trustee, Loka Shikshana Trust c. CIT (1975) 101 ITR 234 (SC)]. The section of community sought to be benefited must be either sufficiently defined or identifiable by a common quality of a public o .....

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e activities of the trust though both charitable and religious are not exclusively meant for a particular religious community. The objects, as explained in the preceding paragraph, do not channel the benefits to any community if not the Dawoodi Bohra Community and thus, would not fall under the provisions of section 13(1)(b) of the Act. In that view of the matter, we are of the considered opinion that the respondent-trust is a charitable and religious trust which does not benefit any specific re .....

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