TMI Blog2021 (8) TMI 763X X X X Extracts X X X X X X X X Extracts X X X X ..... apply for registration u/s 12AA of the Act. As the predominant purpose and object of the Assessee are to manage the property, do charitable activities by way of imparting / running educational institutions, organizing lunger, medical camp, hospital etc.; therefore, the activities of the Assessee could not be termed as being done only for the benefit of particular community/ religion hence the Assessee was entitled to the benefit of 80G (5) and would not be religious activities as the its total expenditure incurred on the religious activities was less than 5% during these years. As mentioned herein above even religious activities of Sikh as an individual or as community are meant to extend benefits to the needy human being irrespective caste, creed and religion, which is clear from the Sikhs Maryada (Sikh RehatMaryada, 1945). The Sangat and Pangats are open to all. As every philanthropic or charitable work cannot continue without the contribution from the members of the community/ society , with a view to give impetus to charitable work by the SGPC, it was provided in Sikhs RehatMaryada, which is equally applicable to all Sikhs( Amritdhari or Sahj Dhari both) , to regard ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dthereto, the SGPC is a body created under the Sikh Gurdwara Act, 1925 which was enacted for administration of Sikh Gurdwaras. The Assessee S.G.P.C.' never made a claim for registration under section 12AA of the I.T. Act, 1961 since the income has been claimed to be exempt undersection 10(23BBA) of the IT.Act, 1961. 2.2 Based upon above factual matrix, it was argued that the SGPC is engaged' in number of charitable activities. It has been submitted that ithas established and/ or aided number of educational institutions, hospitals, lungars and sarais, whose objectives are not only to cater to ,distinction of caste, colour and creed. In support of their contention, they have provided a list of such institutions and the detail of expenditure incurred by them after getting aid from the SG PC. It was further submitted by them that the SGPC was also maintaining books of account. It was thus argued that S.G.P.C. is entitled to get relief u/s. 80G(S) of the Income-tax Act, 1961. 3.1 I have considered the facts brought on record by the institution. I have also perused the provisions of section 80G of the IT.Act,1961 arid the judicial pronouncements. Though there is no dou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the Ld. AR that the Assessee was denied for the registration u/s 80G because the Assessee is allegedly benefitting the particular religious community. The CIT has not rejected the Assessee's charitable activity by running the schools, colleges, medical colleges, nursing colleges, lungar halls, etc. He had submitted that CIT himself in paragraph 2.2 of his Order (SUPRA) had acknowledged that the Assessee is running hospitals, lungars, Sarai etc. The main emphasis of the CIT was that the Assessee was managing the property belonging to religious communities as per the objects and reasons of the Sikh Gurdwara Act, 1925 and SGPC was created solely for the welfare and management of Sikh Shrine as Gurdwara. In paragraph 3.3, the CIT had admitted that There is no doubt about its other activities relating to educational andhealth relating fields. , however, CIT has wrongly held that the dominant object of the Assessee is religious activities and therefore, it is in conflict with the Section 80G(5) (iii) of the Act. 4. Feeling aggrieved by the Order passed by the CIT-1, Amritsar, the Assessee, appeals before us. 5. The Ld. AR for the Assessee had drawn our attention to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sections of The Sikh Gurdwaras Act, 1925 has held that the objects of SGPC are religious in nature and the said institution is established for the benefit of Sikh Religious Community only. Therefore, the application was rejected by the ld. CIT. The Assessee is a Statuary Body (Board) created under Sikh Gurdwaras Act, 1925 , the income of which is exempt u/s 10(23BBA). During the course of proceedings, detail of charitable expenditure was placed before the Ld. CIT and it is worthwhile to mention here that para in paragraph 2.2, 3.1 3.3 of the impugned Order, the ld CIT has not doubted the charitable activities/works carried out by SGPC in various fields which are provided to the public at large without discrimination of religion, caste, creed, color, sex, race etc. 1. Nomenclature of SGPC: a. SGPC is a Statuary Board created under Sikh Gurdwaras Act, 1925 . SGPC and in terms of the mandate of section 42 of Sikh Gurdwaras Act, 1925 , it is a body corporate, having perpetual succession and a common seal. This provision also mandates, that the SGPC can be sued in its name, and likewise, it can sue others. Under section 107 of Sikh Gurdwaras Act, 1925 , t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... place of worship. Committees of Sikh Gurdwaras are responsible for all the religious activities/work and not the Board (i.e., SGPC). It is the duty of the Board (SGPC) to ensure that every Committees of Sikh Gurdwara deal with property and income of the Gurudwara managed by it in accordance with provisions of The Sikh Gurudwaras Act, 1925 . For the purpose of administration of Committees of Sikh Gurdwaras , the Board (SGPC), exercises general supridence over all committees of Gurudwaras and charges 10% of the income of the Gurudwaras. 2. SGPC is a Statuary Body: a. Object Preamble of The Sikh Gurudwaras Act, 1925 provide for the better administration of certain Sikh Gurdwaras - b. As mentioned above, SGPC is a Statuary Board created under the Sikh Gurdwaras Act, 1925 . It has been formed as a body corporate for the better administration of Gurdwaras. SGPC receives Annual contribution from Gurdwaras and channelises this money into charitable activities. It is pertinent to mention here that no provision of Sikh Gurdwaras Act, 1925 provides that SGPC (Board) has been formed only for the benefit of the Sikh community nor does any provisio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Aid, Aid for Historical Buildings, Cancer Aid, Aid for Natural Calamities like Earthquakes/Droughts, Aid for Social Awareness like drugs, dowry etc. b. Further, it is a publicly known fact that the aforesaid charitable activities are provided to the public at large without discrimination of religion, caste, creed, color, sex, race etc. It also publicly known fact that even the employment in the aforesaid institutions run by SGPC is given regardless of religion, caste, creed, color, sex, race etc. In the past, efforts made by SGPC at the time of independence by making refugee camps have been publicly lauded. The humanitarian services rendered by the SGPC especially, the services of langar (cooked food from community kitchen) and arrangements of free medical aid and free oxygen during the current COVID-19 pandemic without discrimination of religion, caste, creed, color, sex, race etc have also been publicly applauded. c. During the course of proceedings detail of charitable expenditure was placed before the Ld. CIT and it is worthwhile to mention here that para in paragraph 2.2, 3.1 3.3 of the impugned Order, the ld CIT has not doubted the charitable activities/work ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... titution has in its instrument any provision for the transfer or application at anytime for the whole or any part of the income or asset for any purpose other than a charitable purpose, it cannot avail of the benefit under this section, charitable purpose does not include any purpose, the whole or substantially the whole of which, is of a religious nature. Many institutions which are carrying out charitable work are often inspired by the tenets of religion. In order to allow them to show respect to this aspect without depriving them of the benefit of this section, it is proposed to amend the provisions of section 80G so as to provide that in case such institution or fund spend not more than five per cent of its income during the relevant previous year for religious purpose, the benefit of this section will not be denied to them. The proposed amendment will take effect from the 1st day of April,2000 and apply in relation to assessment year 2000-2001 and subsequent years . d. It is worthwhile to mention that the decision of Hon ble Supreme Court in the case of Upper Ganges Sugar Mills Ltd. v/s CIT (1997) 227 ITR 578 (SC) was passed on 4th August, 1997 i.e. m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the I.T. Act,1961. Copy of Order in the case of Chief Khalsa Diwan dated 24.04.2009 placed on record along filed Written Submissions in the Hon ble Court on 29.07.2010. 5. Case Laws: In this regard reliance is placed on the following decisions: a. CIT vs. M/s Dawoodi Bohara Jamat 364 ITR 31 (SC) b. CIT v. Christian Medical College (2015) 374 ITR 17 (P H) c. Sri MarudharKesariSthanakwasi Jain Yadgar Samiti Trust V/s Union of India (2005) 273 ITR 475 (Raj.) d. MishrilalGordhanlal Batra charitable trust v/s Union of India (2008) 307 ITR 221(RAJ.). e. Umaid Charitable trust v/s Union of India (2008) 307 ITR 226 (RAJ.) f. Commissioner Of Income-Tax vs Social Service Centre (2001) 250 ITR 39 (AP) g. Tirumala Tirupathi Devasthanam vs CCIT (2001) 251 ITR 849 (AP) 6. Registration u/s 12AA: An issue raised by the Revenue during the course of argument. a. In this regard, it is pertinent to mention that as per paragraph 2.3 of Order of Ld CIT, the only issue in the present case of was of application of section of 80G(5)(iii) read with Explanation 3 to section 80G. b. It is humbly submitted that Hon ble Tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der, Revenue is barred from raising such an issue during the appellate proceedings. 9. On the basis of above, it was submitted that the Assessee is entitled to registration u/s 80G(5) of the Income Tax Act and the appeal of the Assessee is required to be allowed. 10. On the other hand, the Ld. DR relied upon the Order passed by the CIT and submitted that though some of the activities are charitable, the religious activities cannot be segregated from the main activities, and on account of the various religious activities, the dominant purpose of the Assessee is religious and therefore, religious Act is meant for benefitting the religious community and therefore, the Assessee cannot be granted the registration u/s 80G(5) of the Income Tax Act. 11. We have heard the rival contentions of the parties and perused the material available on record, and have also gone through two written submissions filed by the Assessee in support of its claim. 12. The Assessee has not applied for registration u/s 12AA of the Income Tax Act, as mentioned by the Lower Authorities in paragraph 2.1, as the Assessee is claiming the exemption u/s 10(23) BBA of the Income Tax Act, 1961. Furt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ution or fund is constituted- does not, or the rules governing the institution or fund do not, contain any provision for the transfer of application at any time of the whole or any part of the income or assets of the institution or fund for any purpose other than a charitable purpose; iii) The institution or fund is not expressed to be for the benefit of any particularreligious community or caste. iv) . v) . vi) .. vii) . 5A .. 5B Notwithstanding anything contained in clause (ii) of sub-section (5) and Explanation 3, an institution or fund which incurs expenditure, during any previous year, which is of a religious nature for an amount not exceeding five percent of its total income in that previous year shall be deemed to be an institution or fund to which the provisions of this section apply. Explanation 3:- In this Section Charitable purpose does not include any purpose the whole or substantially the whole of which is of a religious nature. 14. From the perusal of the Order impugned before us, it is clear that the Assessee is not violating any of the conditions mentioned in Clauses(a), (b), (c) of sub-section (i) of 80 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... seal and shall by such name sue and be sued. 85.(1) The Board shall be the Committee of Management for the Gurdwaras known as :- (i) The Sri Akal Takhat Sahib at Amritsar and Sri Takhat Keshgarh Sahib, Anandpur; (ii) The Darbar Sahib, Baba Atal Sahib and all other Notified Sikh Gurdwaras other than Sri Akal Takhat Sahib, situated within the Municipal boundaries of Amritsar; (iii) Sri Darbar Sahib and all other Notified Sikh Gurdwaras within the limits of Municipal area of Tarn Taran; (iv) All the Notified Sikh Gurdwaras at Anandpur and the gurdwaras connected therewith other than the Sri Takhat KeshgarhSahib; (v) The Notified Sikh Gurdwaras at Muktsar; (vi) Gurdwara Dukhniwaran Sahib PadshahiNaumi along with Gurdwara Moti Bagh (including Gurdwara Sudha Sar) Khel Sahib, Patiala; (vii) Gurdwara Fatehgarh Sahib (Shahidi Asthan Baba Fateh Singh Ji and Baba Jorawar Singh Ji) along with GurdwraJotisarup, Burj Mata Gujri and Shahid Ganj situated in HarnamNagar; (viii) [Gurdwara PadshahiNaumi at Dhamtan along with Bunga Dhamtanian near Railway Station, Patiala;] (ix) Gurdwara Guru Teg Bahadur Sahib in Jind with Gurdwaras KharakBhuraPadsh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and income of a Notified Sikh Gurdwara shall be used, in the first place, for the maintenance or improvement of the gurdwara; for the maintenance of religious worship and the performance and conduct of religious and charitable duties, ceremonies and observances connected therewith; for the payment of allowances or salaries of dependents, officers and servants thereof; for the fulfilment of the objects of the endowments thereof; for the maintenance of the langar; for such religious, charitable or educational purposes as the Committee may consider necessary in connection therewith or for the discharge of any obligations legally incurred. (2) When after providing for the purposes specified in sub-section (1) there remains or appears likely to remain any surplus sum or any income not required for any such purposes, the Committee may, by resolution passed by not less than two-third of its members propose to allocate a part of the whole of such surplus sum or income to a particular religious, educational or charitable purpose [or any purpose which promotes social welfare] and may, if the Board in writing sanctions such proposal, act in accordance therewith, provided that any p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wo-thirds of the members present in the meeting; provided that the meeting is attended by not less than one-half of the total members constituting the Committee, utilize or allocate a part or the whole of such surplus sum or income of any particular gurdwara under its management to a particular religious, educational, charitable or industrial purpose : Provided further that an allocation so made to devote to such purpose income accruing during a period of more than three years may at any time not sooner than three years after the allocation was made be rescinded or varied by a subsequent resolution of the Committee passed in the like manner.] [106-A. Utilization of surplus income. - Any surplus sum or any income of a notified Sikh Gurdwara not required immediately for purposes mentioned in sub-section (1) of Section 106 may be placed to the credit of the Committee in such Bank as approved, generally by the Board in general meeting or be invested in one or more Government securities or National Saving Certificates or in purchasing immovable property for Gurdwaras under its management.] 107. Annual contribution to Board. - (1) Every Committee shall pay annually to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mmittees. - Subject to the provisions of this Act, a committee shall have full powers of control over the office-holders and dependents of, and all properties and income of whatever description belonging to the gurdwara or gurdwaras under its management and of enforcing the proper observance of all ceremonies and religious observances in connection with such gurdwara or gurdwaras and of taking all such measures as may be necessary to ensure the proper management of the gurdwara or gurdwaras and the efficient administration of the property, income and endowments thereof . 17. From the reading of the above said relevant provisions of the Act of 1925, the Board was constituted under Section 42 of the Act, 1925, and the Committees were constituted u/s 85 and 86 of the Act. Section 85(1) of the Act provides that the Board shall be the Committee of Management for the Gurdwaras mentioned in the said section; however, for the remaining Gurdwaras,separate committees other than the Board are formed provided under section 86 of the Act. Section 94A also providesincorporation and perpetual succession of the Committee of management of Gurdwara. 18. Powers and duties of the boards ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a (Appreciation of Sikh Rehat) Attending company of holy Sangat 7. Amrit Chhakna (Initiation of Amrit Pahul and stay away from taboos) 8. Sarbat Da Bhala (Well-being of all) 9. SevaSambhal (Selfless service for welfare of humanity) 10. Sacha Achar (Keeping good moral character in life) 11. Bhana Manana (Surrender before Will of God) 12. Believe in One God, Sri Guru GranthSahib and teachings of ten Gurus 13. Practicing the principles of both Bani and Bana (Norm andForm) 14. No commission of Kurehts 15. Adopt and practice compassion, honesty, generosity, patience, perseverence and humility 16. Non observance of blind rites, rituals and superstitions. No worship of idols and images 24. Sikhism laid much emphasis on Pangat and Sangat , which were set up First Guru, to weed out inequality on account of caste, creed, religion or sex. Similarly, DEG and Tegh the kettle to supply food to the needy the sword to smite the oppressor is also essential part of Sikhism. It is interesting to note that four doors of famous Gurdwaras (including Darbar sahib/ golden Temple), are opening out in four difference directions tosigni ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w caste. While doling out the KarhahPrashad, no discrimination should be made on considerations of caste or ancestry or being regarded, by some, as untouchable, of persons within the congregation. In Article XVI of Chapter X, it is provided as under :- j ) A Sikh must not take hemp (cannabis), opium, liquor, tobacco, in short, any intoxicant. His only routine intake should be food. k. Piercing of nose or ears for wearing ornaments is forbidden for Sikh men and women. l) A Sikh should not kill his daughter; nor should he maintain any relationship with a killer of daughter. m) The true Sikh of the Guru shall make an honest living by lawful work. n) A Sikh shall regard a poor person's mouth as the Guru's cash offerings box . o) A Sikh shall not steal, form dubious associations or engage in gambling. p) He who regards another man's daughter as his own daughter, regards another man's wife as his mother, has coition with his own wife alone, he alone is a truly disciplined Sikh of the Guru. A Sikh woman shall likewise keep within the confines of conjugal rectitude. In Article XXI of Chapter XII, it is provided as under :- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relevant for electoral college and election to the committee/ Board. However, the voluntary services given by the Assessee were open and meant for the whole humanity. 29. 80 G(5)(iii), provided that the institution or fund is not expressed to be for the benefit of any particular religious community or caste. In our understanding the benefit of any particular religious community . 30. This depends on how funds were used by the Institution/ trust and not on the phraseology used in the formation document of such institution, the undoubtedly, language used in the document, is required to be understood and interpreted in the light of the activities of the institution. No benefit can be extended solely based on the language used in the trust/ society/ formation document, it is the substance, i.e, for what purposes, the funds were actually used ( whether funds were used solely and exclusively for the benefit of the particular religious community or not). 31. Undoubtedly, the Lower Authorities while rejecting the application for registration of the Assessee U/s 80G (5)(iii) of the Act had wrongly swayed with the preamble of the Assessee as well as the various other c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ir by the Committee of Gurudwaras. Managing the properties of the Gurdwaras is a function akin to functions performed by various Municipal Authorities, Shrine Boards, Devasthanam Board, Wakf Board, ASI, and other development bodies. 35. The SGPC is undoubtedly running various Schools, Cancer Hospitals, General Hospitals, shelter Homes, Sarai, Lunger ( community Kitchen ), flood relief camps, , Pandemic relief campsetc. All these activities are the being done by the Assessee for the benefit of the all communities/religions, these activities are undoubtedly philanthropic in nature and are being done irrespective of cast ,creed, religion sikhs etc. It is also pertinent to mention here that the teaching, administrative and even the other staff in the institutions run by the Assessee had been giving employment on the basis of professional qualification regardless of religion, caste, creed, color, sex, race etc. 36. The admissions in the educational institutions are also given on merit and not on the basis of religion, caste, creed, color, sex, race etc. For example, the admissions in the Medical College are done solely on the basis of merit list made in NEET (National Eligibil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Aid for Education 1,92,56,552.00 0.00 20000000.00 4,83,33,518.00 Aid for Historical Building 50,19,247.24 79,10,434.50 8160302.47 42,14,782.26 Salary Office Exp. 7,27,17,732.00 8,67,06,385.11 97629965.84 10,94,78,247.00 TOTAL(B) 9,69,93,531.24 9,46,16,819.61 12,57,90,268.31 16,20,26,547.26 DM Aidfor Natural Calamity 28,53,114.00 75,59,482.00 12536115.00 9833379.00 Aidfor SocialAwareness 5,70,21,474.00 76,14,822.00 18077590.00 7940694.00 Teaching Education 15,20,01,613.60 219750729.70 273974975.42 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,62,747.95 GRANDTOTAL[A+B+C] 71,80,70,285.56 56,47,69,960.80 39. As the predominant purpose and object of the Assessee are to manage the property, do charitable activities by way of imparting / running educational institutions, organizing lunger, medical camp, hospital etc.; therefore, the activities of the Assessee could not be termed as being done only for the benefit of particular community/ religion hence the Assessee was entitled to the benefit of 80G (5) and would not be religious activities as the its total expenditure incurred on the religious activities was less than 5% during these years. 40. As mentioned herein above even religious activities of Sikh as an individual or as community are meant to extend benefits to the needy human being irrespective caste, creed and religion, which is clear from the Sikhs Maryada (Sikh RehatMaryada, 1945) (supra). The Sangat and Pangats are open to all. 41. As every philanthropic or charitable work cannot continue without the contribution from the members of the community/ society , ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 Act. The above conclusion was legally flawed. It was contrary to the decision of the Supreme Court in Dawoodi Bohra Jamat ( supra ) which held that even where the trust or society has both religious and charitable objects, 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 . In that case it was factually found 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 Act. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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