TMI Blog2018 (4) TMI 789X X X X Extracts X X X X X X X X Extracts X X X X ..... als have been filed by Revenue as well as assessee against order dated 22/12/14 and 14/09/15 passed by Ld.CIT(A)-40 for assessment year 2010-11 and 2011-12 on the following grounds of appeal: Assessment year 2010-11 ITA No. 1387/Del/2015 1. On the facts and in the circumstances of the case and in law, the Ld.CIT(A) has erred in allowing the benefit of exemption to the assessee given the activities of the assessee are primarily of religious nature and in clear violation of section 3(1)(b) of the I.T.Act. 2. On the facts and in the circumstances of the case and in law, the Ld.CIT(A) has erred in allowing the expenditure of ₹ 13,86,39,904/- to the assessee, which was assessed as the income of assessee. 3. The appellant craves leave to add, alter, amend any ground of appeal raised above at the time of hearing. CO No. 297/Del/2015 1. That the learned Commissioner of Income Tax (Appeals) has erred in not holding that the objects and the activities of Indian Society of the Church of Jesus Christ of Latter -day Saints ( the Society ) are for the benefit of the general public at large, and that it has not been created or established for the benefit of any pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ects and activities. 2. Brief facts of the case are as under: Assessee was registered in 1982 under the Societies Registration Act and was granted a Certificate of Registration by Ld.CIT, under section 12 A of the Income Tax Act, 1961(for short the Act , unless otherwise specified). The assessee was also granted benefit of exemption under section 11 of the Act for all assessment years, preceding to assessment year 2009-10. For years under consideration, society was denied exemption on the ground that it is a charitable organization, and its activities are not for benefit of general public at large, but for the benefit of a particular religious community, and therefore Ld.AO was of the opinion that assessee is not entitled to claim exemption under section 13 (1) (B) of the Act. 3. Aggrieved by order of Ld.AO, assessee preferred appeal before Ld. CIT (A), and order passed by Ld. AO was reversed. 4. Aggrieved by order of Ld.CIT (A), revenue is in appeal before us for both the assessment years. In Cross Objection, assessee supports order of Ld. CIT (A). 5. Ld. DR supported the observations of Ld. AO. 6. Ld. Counsel submitted that Assessing Officer disallowed the cl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contained in clause 13(1 )(b) and 13(1)( c), clause 13(1)( b) applies to societies engaged in charitable purposes whereas clause 13(1)( c) applies to societies engaged in charitable as well as religious activities, The case laws relied upon by Ld AR with the proposition that clause 13(1)(b) is applicable only to charitable institution also help the assessee. For example the Hon'ble Gujarat High Court in the case of CIT v. Chandra Charitable Trust reported at 294 ITR 86 held as under:- The question that should be the principle adopted and whether Jainism is a life style or religion would loose much of its importance in view of the judgment of this Court in the matter of CIT v. Barkate Saifiyah Society (1995) 213 ITR 492. If Jainism is accepted to be a religion and from- the convents of the trust deed it can be spelt out that not only to propagate Jainism, or help and assist maintenance of the temple, sadhus, sadhvis, shraviks and shravks yet other goals are set in the trust deed, then the trust would become a charitable trust so also a religious trust or it can be addressed as a charitable religious trust and if that be so section 13(1 )(b) would not be applicable, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... given uncontrolled discretion to spend the whole of the trust funds for any of the non- charitable purposes of the trust whereas in the present case no such un- controlled discretion to spend for non charitable purposes is available and as per article 10 of MOA the income of the society is to be applied solely towards the promotion of objects of society. The copy of article 10 is placed at paper book page 15. Therefore, keeping in view all the facts and circumstances, we find that the provisions of sec. 13(1 )(b) are not applicable to the assessee. As regards disallowance of expenditure of ~.8,74,33,077/- we find that action of Ld CIT(A) in confirming the action of Assessing Officer is not justified at all as the expenses were incurred for the fulfillment of the objects of the society and moreover for the purpose of disallowing claim u/s 11 the income as understood in the commercial sense has to be considered and not the gross receipts. The case law reported at 201 ITR 564 relates to the Hindustan Welfare Trust v. Director of Income Tax exemption and in that case the Hon'ble Calcutta High Court held-as under: The income from property held for trust has to be arrived ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uch charitable purposes is not for the benefit of a particular religious community or caste. The relev ant para nos. 38, 39, 40, 49 and 50 of the said decision of Hon ble Supreme Court in the case of C1T Vs Dawoodi Boharma Jamat (2014) 4 ITR 31 are being reproduced herein: 38. Unquestionably, objects (c) and (f) which provide for the activities completely religious in nature and restricted to the specific community of the respondent-trust are objects with religions purpose only. However, in respect to the other objects, in our view the fact that the said objects trace their source to the Holy Quran and resolve to abide by the path of godliness shown by Allah would not be sufficient to conclude that the entire purpose and activities of the trust would be purely religious in color. The objects reflect the intent of the trust as observance of the tenets of Islam, but do not restrict the activities of the trust to religious obligations only and for the benefit of the members of the community. The Privy Council Trustees of The Tribune In re [1939] 71TR 415 has held that in judging whether a certain purpose is of public benefit or not, the Courts must in general apply the standard ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ional purposes. The Madarsa as a Mohammedan institution of teaching does not confine instruction to only dissipation of religious teachings but also distributes to the holistic education of an individual. Therefore, it cannot be said that the object (d) would embody a restrictive purpose of religious activities only. Similarly, assistance by the respondent-trust to the needy and poor for religious activities would not divest the trust of its altruist character. 49. In the present case, the objects of the respondent-trust are based on religious tenets under Quran according to religious faith of Islam. We have already noticed that the perusal of the objects and purposes of the respondent-trust would clearly demonstrate that the 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 paragraphs, 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(l)(b) of the Act. 50. In that view of the matter, we are of the considered opinion that the respondent-trust is d charitable and reli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee society was throughout granted exemption since its inception till Assessment Year 2008-09 and for the first time in the Assessment Year 2009-10, the AO held that in view of section 13(1)(b) of the Act, assessee is not eligible for grant of exemption. He held that the assessee is a trust created for charitable purposes but has been established for benefit of a particular religious community. 11.4. Under the above facts and circumstances, we respectfully following the ratio laid down by Hon ble Supreme Court in the above discussed cases, hold that the authorities below were not justified in holding and upholding the assessee society as not eligible for the claimed exemption u/s 11 of the Act. While setting aside the orders of authorities below in this regard, we direct the AO to grant the claimed exemption to assessee society. The issue raised in the above grounds is thus decided in favour of assessee society and in result grounds are allowed. 6.1. Ld.Counsel submitted that Hon ble Jurisdictional High Court in assessee s own case in ITA No. 319/2017 vide order dated 07/09/17 has upheld the order of this Tribunal for Assessment Year 2012-13. Hon ble High Court commenti ..... X X X X Extracts X X X X X X X X Extracts X X X X
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