SHRI SHRUTHIPARAMPARA GURUKULAM,BANGALORE vs. ITO, WARD-3, EXEMPTIONS, BANGALORE

The beneficiaries of the Trust are members of general public irrespective of race, religion, caste, community, creed or gender. [para 2.1 of Trust deed]. The assessee applied for the provisional registration under section 12A and 80G for recognition as a Charitable trust on 25.12.2021. Order of provisional registration under section 12A dated 1.1.2022 and order of provisional approval under section 80G dated 1.1.2022 was granted by the PCIT/CIT. The assessee applied for regular registration under section 12A and 80G for recognition as a Charitable trust on 31.3.2022. The ITO, Exemptions, Ward 3, Bangalore vide letter dated 12.7.2022 asked for various details, information and documents. These documents were electronically filed on 30.7.2022 and physically filed on 1.8.2022. The CIT (Exemptions) vide letter dated 14.7.2022 called for various documents and they were electronically filed on 30.7.2022 and physically filed on 1.8.2022. A detailed note on activities of the Trust since inception along with evidences in the form of brochures, photos etc was filed as Annexure 5 to above documents filed with the ITO, Exemptions, Ward 3, Bangalore and CIT (Exemptions) on 30.7.2022 and 1.8.2022. Similarly, explanation as to how the objects and activities of the Trust are covered within the meaning of definition of ‘Charitable purpose’ under section 2(15) of the Income tax Act, 1961 (‘the Act’) was filed on Annexure 6 to above documents filed with the ITO, Exemptions, Ward 3, Bangalore and CIT (Exemptions) on 30.7.2022 and 1.8.2022. Note explaining as to how the objects of the assessee are charitable, not religious, with supporting case laws and therefore the assessee is eligible for regular registration under section 12AB and regular approval under section 80G as a Charitable trust was electronically filed on 3.9.2022 and physically filed on 5.9.2022. The learned CIT (Exemptions) heard the matter and passed the order of registration under section 12A(1)(ac)(iii) on 29.9.2022 registering the assessee as RELIGIOUS and not as CHARITABLE for the reasons mentioned in another order dated 29.9.2022 rejecting the application for approval under section 80G.

Aggrieved by the two orders dated 29.9.2022 wherein (i) the appellant Trust was registered as RELIGIOUS and not as CHARITABLE and (ii) approval under section 80G was rejected, the appellant has filed two separate appeals viz., and ITA No 1083/B/2022 before the Hon’ble ITAT, Bangalore bench.

Section 80G applies only to charitable trusts or institutions. It does not apply to religious trusts or institutions whereas scheme of exemption u/s 12A applies to both charitable as well as religious trusts. Section 80G of the Income Tax Act’1961 provides that any donation to a charitable institution or funds approved under the said section shall be entitled to deduction of the sum so donated, while computing the total income in the hands of an assessee who is the donor of such donation. It provides deduction in respect of donations to certain funds, charitable institutions, etc. The recipient of money or the donee gives a receipt of donation, based on which the donor is entitled to claim a deduction, provided the donee institution is approved under section 80G of the Income Tax Act’1961. One of the Conditions to be satisfied to get approval under Section 80G (5) is that the Institution should be established in India for Charitable purpose and institution should not be for the benefit of any particular religious community or caste. It was therefore important for the assessee get itself recognized as a “Charitable Institution” rather than “Religious Institution”. In fact, if it is concluded that the assessee is a charitable institution then registration to the assessee u/s.12A of the Act has to be allowed treating the assessee as Charitable Institution and consequently the approval u/s.80G of the Act has also to be allowed. Therefore, the short question that needs to be decided is as to whether the assessee can be regarded as a Charitable Institution or Religious Institution.

We have heard the rival submissions. The learned Counsel for the assessee submitted that the approval by the PCIT under section 80G requires fulfilment of all the conditions laid down in clauses (i) to (v) of section 80G(5). These conditions are as under: (i) The income of the Trust is not liable to inclusion in its total income under section 11, 12, 10(23AA), 10(23C) as the case may be. (ii) The instrument under which the institution or fund is constituted does not, or the rules governing the institution or fund do not, contain any provision for the transfer or 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 particular religious community or caste; (iv) the institution or fund maintains regular accounts of its receipts and expenditure;

In the present case, the learned CIT(E) has held that the asessee is engaged in a religious activity of teaching Vedas, a Hindu religious scripture, to Hindu students and hence the whole purpose of the trust is of religious nature as per Explanation 3 to section 80G. It is therefore concluded that the appellant Trust is not eligible for approval under section 80G. In coming to the above conclusion, the learned CIT(E) has relied on certain decisions which are distinguishable / not applicable to the facts of the present case.

It was submitted that Hinduism is a way of life and not a religion. In this regard reliance was placed on observations of the Hon’ble Madras High Court in the case of T. T. Kuppuswamy Chettiayar & others Vs. State of Tamil Nadu (1987) 100 LW 1031 to the effect that there is no religion by name “Hindu” and that the name “Hindu” was given by the British Authorities while dispensing justice with reference to the inheritance, partition, marriage and other personal laws of the inhabitants of this nation who are not Muslims, Christians, Buddhists, Jains. Reference was made to decision of Hon’ble Supreme Court in the case of Dr. Ramesh Yeshwant Prabhoo Vs. Shri Prabhakar Kashinath Kunte and others 1996 AIR 1113 (SC) wherein the Constitutional Bench held that Hindutva is understood as a way of life or a state of mind and it is not to be equated with, or understood as religious Hindu fundamentalism. Reliance was placed on the following decisions, wherein various Benches of ITAT have held that Hinduism is a way of life and cannot be equated with religious institution: Shiv Mandir Devsttan Panch Committee Sanstan Vs. CIT (2012) 27 Taxmann.com 100 (Nagpur Trib). M/s. Sri Channamallikarjuna Trust Committee Gangavathi Vs. CIT(E) order dated 4.5.2022 and Vaidik Bhakti Sadan Asram Vs. CIT (2010) 5 ITR (Trib) 590 (Delhi). The decisions relied upon by the CIT(E) were also distinguished.

The learned DR relied on the order of the CIT(E) wherein, the CIT(E) has held that teaching of Veda and spread of Vedic education is of religious nature. In support of the said conclusion, the CIT(E) relied on the decision in the case of Kasyapa Veda Research Foundation Vs. CIT [2011] 12 taxmann.com 286 (Cochin) wherein it was held that (i) Vedas are essentially religious scriptures and more so Hindu religious scriptures. (ii) Assessee is teaching Vedas a Hindu religious scripture. After listing the names of students undergoing Vedic education, the CIT(E) proceeded to observe that all the students were from Hindu religion only. It was held that assessee’s submission that it is not expressed for the benefit of any particular religious community cannot be accepted. He relied on the order of the CIT(E) wherein he held that teaching of Vedas is a religious purpose and therefore Explanation 3 to section 80G which excludes any purpose ‘the whole or substantially the whole of which is a religious nature’ from charitable purpose is attracted.

He also relied on the decisions in Shiv Ratan Rathi Foundation v CIT [2012] 20 taxmann.com 221 (Jaipur) and Upper Ganges Sugar Mills Ltd v CIT [1997] 93 Taxman 645 (SC). He also relied on the decision of CIT(E) whereby he distinguished decisions relied on by the assessee on the ground that they were rendered prior to the decision of the Supreme Court in the case of Upper Ganges Sugar Mills Ltd v CIT [1997] 93 Taxman 645 (SC) and hence not applicable to the facts of the case. He submitted that various decisions relied on by the assessee were rendered without having the benefit of the above decision of the Supreme Court. According to him, Apex Court’s decision has sealed the discussion on the issue, by holding that ‘to establish, maintain and grant aid to public places of worship and prayer halls’ was an entirely religious purpose. He submitted that the ratio laid down by the Hon’ble Supreme Court is squarely applicable to the present case, since teaching of Vedas involves offering worship and prayer to God.

We have carefully considered the rival submissions. It is not in dispute that the beneficiaries of the assessee-trust are members of general public irrespective of race, religion, caste, community, creed or gender (refer para 2.1 of the trust deed). The word `Veda’ means `knowledge’ and is derived from the Sanskrit word `vid’, which means `to know’. The word `Veda’ signifies highest sacred, eternal and divine knowledge as well as the texts embodying that knowledge. The significance of the Veda is manifold. It has been universally acknowledged that the Veda is the earliest available literature of humanity. The Veda contains the highest spiritual knowledge (Para vidya) as well as the knowledge of the world (Apara vidya). Thus, apart from philosophy, we find here descriptions of various aspects of the different subjects such as sciences, medicine, political science, psychology, agriculture, poetry, art, music etc. The Veda is unique in its purity and sanctity. The text of the Veda is preserved in its pure and original form without any alteration or interpolation even after thousands of years. The Veda is the unadulterated treasure house of true knowledge. So much so that even UNESCO declared it as part of the Intangible cultural heritage of humanity. Despite being oldest, the Vedas have been preserved in their true form up till now. Even Max Muller, a renowned European scholar, has admitted that, the text of the Vedas has been handed down to us with such accuracy and care that there is hardly any change in the words, or there is any uncertain aspect in the whole of Vedas. The credit for this goes to Vedic seers (Rishis) who devised means of protecting and preserving the text of Vedas letter by letter, with all their accessories. Vedic mantras have accents (Swara) which preserve its original form of word- construction. It cannot be said that Vedas are confined to a particular set of people or people belonging to a particular religion. It is for spiritual up-liftment of mankind.

After the formation of the Trust, the assessee conducted various workshop to disseminate the knowledge of Vedas. General public irrespective of caste, creed, gender or "religion were invited to witness the said events and to know the significance and importance of Vedas. The Vedic Scholars were identified and felicitated irrespective of their caste, creed or religion. The assessee-trust has given financial assistance to various people, irrespective of caste, creed or religion, involved in Indian Heritage Education. Trust conducts teaching of Vedas by various scholars to students, working people, retired persons etc. irrespective of caste, creed, religion. The trust has conducted the vedic classes by going to the houses of all interested people irrespective of caste, creed, gender or religion and has taught them the importance of Vedas. During Covid, the trust provided financial assistance to the poor Vedic scholars and distributed food kit, cloths, medicines for the needy. All the expenses to carry out the above charitable objectives are met out of donations received. No fees or honorarium or money is charged by the trust or by any Trustees for conducting the vedic classes, chanting or for any programmes. All trustees work selflessly for achieving the charitable objects of the Trust.

Explanation 3 to section 80G states that "charitable purpose" does not include any purpose the whole or substantially the whole of which is of a religious nature. In the present case, the learned CIT(E) has held that the assessee is engaged in a religious activity of teaching Vedas, a Hindu religious scripture, to Hindu students and hence the whole purpose of the trust is of religious nature as per Explanation 3 to section 80G. It is therefore concluded that the assessee Trust is not eligible for approval under section 80G. In coming to the above conclusion, the learned CIT(E) has relied on certain judicial pronouncement, which we shall deal later. It is settled principle that Hinduism is a way of life and not a religion. The Hon’ble Madras High Court in TT Kuppuswamy Chettiar and others v State of Tamil Nadu (1987) 100 LW 1031 held as under:-

The Tribunal in Shiv Mandir Devsttan Panch Committee Sanstan Vs. CIT [2012] 27 taxmann.com 100 (Nagpur Trib) referring to the above decisions held that worship of Lord Shiva, Hanumanji, Goddess Durga and maintaining of temple cannot be regarded as for the advancement support or propagation of a particular religion and granted the approval under section 80G of the I.T.Act. In the case of M/s. Shiv Mandir Devasttan Panch Committee Sanstan (supra) The assessee trust was set up with the object of “worship of Lord Shiva, Hanumanji, Goddess Durga and maintaining of temple” and “to celebrate festivals like Shivratri, Hanuman Jayanti, Ganesh Uttasav, Makar Sankranti”. It applied for a certificate under section 80G. S. 80G (5) provides that the trust should be established for a “charitable purpose”. Explanation 3 to s. 80G provides that “charitable purpose” does not include a purpose which is of a “religious nature”. S. 80G(5)(iii) also stipulates that the trust should not be expressed to be for the benefit of any particular religious community or caste. The CIT rejected the application on the ground that the assessee was set up for “religious” purposes. On appeal by the assessee to the Tribunal, the Tribunal held reversing the order of CIT that the objects of the assessee are not for advancement, support or propagation of a particular religion. Worshipping Lord Shiva, Hanumanji, Goddess Durga and maintaining the temple is not advancement, support or propagation of a particular religion. Lord Shiva, Hanumanji & Goddess Durga do not represent any particular religion. They are merely regarded to be the super power of the universe. Further, there is no religion like “Hinduism”. The word “Hindu” is not defined in any of the texts nor in judge made law. The word was given by British administrators to inhabitants of India, who were not Christians, Muslims, Parsis or Jews. Hinduism is a way of life. It consists of a number of communities having different gods who are being worshipped in a different manner, different rituals, different ethical codes. The worship of God is not essential for a person who has adopted Hinduism way of life. Therefore, expenses incurred for worshipping of Lord Shiva, Hanuman, Goddess Durga and for maintenance of temple cannot be regarded to be for religious purpose. In holding so, the Tribunal referred to the decisions in the case of Commissioner of Hindu Religious and Charitable Endowments Vs. Sri Lakshmindra Thirtha Swamiar 1954 SCJ 335 & T. T. Kuppuswamy Chettiar Vs. State of Tamil Nadu (1987) 100 LW 1031.

The ITAT Bangalore bench in M/s Sri Channamallikarjuna Trust Committee Gangavathi Vs. CIT (E) – (order dated 4.5.2022) explained the difference between charitable purpose and religious purpose and held as under:- “13. In sections 11, 12 & 13, a distinction has been drawn between 'charitable purpose' and 'religious purposes', but there is no definition of the term 'religious purpose' in the Act. Generally interpreted, it would encompass within its fold all institutions or funds, which are for the advancement, support or propagation of a religion and its tenets. How religion is to be understood in the context of the Act, has been examined in the case of Dawoodi Bhora Jamat (supra). If the benefit of religious endowments too ensures for the benefit of the public, then the religious trusts/endowments too will be entitled to the exemption provided by section 11 of the Act. A religious trust could be 'public' or 'private'. Section 13(1)(a) bars exemption to any private religious trust, which does not enure for the benefit of the public. Section 80G(5)(iii) makes a distinction in cases of institutions or funds, which are for the benefit of any particular religious community or caste - say for Hindus, Muslims, Christians or for Brahmins, etc. Donors to such trusts are debarred from claiming benefit of deduction from income for donations made to such trusts. Conversely, it follows that for donations made to religious bodies, which do not fall in the category mentioned in section 80G(5)(iii), benefit of deduction under section 80G can be claimed. Thus, it could be said that a public religious trust, not meant for the benefit of a particular community, caste or section, will be entitled to claim exemption on its income in the same way as a public charitable trust.

We are of the view that the objects and purposes of the Assessee are both charitable and religious, the Assessee does not exist exclusively for the benefit of a particular religious community. The objects do not channel the benefits to any community and thus, would not fall as an institution existing solely for religious purpose. In that view of the matter, we are of the view that the Assessee is a charitable and religious trust which does not benefit any specific religious community and therefore, it cannot be held that it exists solely for religious purpose. It cannot be characterised as religious object especially when it does not make a distinction between caste, creed, race, religion, etc.

In the light of the aforesaid discussion, we are satisfied that the plea of the Assessee to recognize it as existing for “Charitable Purpose” deserves to be accepted and is accepted. We accordingly allow the plea of the Assessee and direct that the registration be allowed treating the Assessee as existing for “Charitable purpose”.

In Vaidik Bhakti Sadan Asram v CIT [2010] 5 ITR (Trib) 590 (Delhi), the Tribunal held that propagation of vedic thoughts and philosophy cannot be attributed to any religion as the same are more concerned with the lifestyle of the human beings. The relevant observations are as under:-

In view of the above judicial pronouncements of the Hon’ble Supreme Court, Hon’ble High Court and various Benches of Income Tax Appellate Tribunal (including the Bangalore Bench), there is no merit in the impugned finding of the CIT(E) that teaching Vedas is a religious activity and therefore not eligible for approval under section 80G of the I.T.Act.

As regards the case law relied on by the CIT(E), we find that in the case of Upper Ganges Sugar Mills Ltd Vs. CIT (supra), one of the objects of the Trust deed was ‘to establish, maintain and to grant and / or aid to public places of worship and prayer halls’. The Hon’ble Apex Court considering the said object, held as under:-

In the present case, objects of the assessee-Trust are reproduced in the earlier part of this order. The assessee Trust does not have any object ‘to establish, maintain and to grant and / or aid to public places of worship and prayer halls’ and hence the judgment of the Hon’ble Apex Court in the case of Upper Ganges Sugar Mills Ltd. Vs. CIT (supra) is inapplicable to the facts of the present case. The impugned conclusion of the learned CIT(E) that teaching of Vedas involve offering worship and prayer to God is not correct and bereft of any reason. The assessee only teaches the students how to recite the Vedas. There is a particular method of pronunciation of Vedas with Swaras attached to it. The recitation and pronunciation of Vedas is what is taught by the assessee-Trust. It is like teaching any other Sanskrit literature. The teaching of Vedas does not involve offering worship and prayer to God as held by the CIT(E). There is no object or activity of worship or prayer to God as contended by the CIT(E). The CIT(E) is also not an authority to conclude what teaching of Vedas involve. Hence, the decision of the Supreme Court in Upper Ganges Sugar Mills Ltd Vs. CIT (supra) is not applicable to the facts of the present case.

The ITAT Jaipur in Shiv Ratan Rathi Foundation Vs. CIT [2012] 20 taxmann.com 221 (JP) followed the decision of the Supreme Court in Upper Ganges and held that organising ‘Bhagavat Katha’ is a religious activity and therefore Trust would not be granted the approval under section 80G. In the present case as explained above, the Supreme Court decision in Upper Ganges is not applicable and also the assessee-Trust does not have any object of organising ‘Bhagavat Katha’. It is only teaching how to pronounce and recite the Vedas, a Sanskrit literature. Thus, the above decision is not applicable to the present case.

The Hon’ble High Court of Rajasthan in Umaid Charitable Trust Vs. UOI (supra) distinguished the judgment of the Hon’ble Supreme Court in Upper Ganges(supra) and held as under:-

In the above judgment, it was held by the Hon’ble Rajasthan High Court that approval under section 80G cannot be refused if one particular expenditure was made for repair and renovation of Lord Vishnu’s temple and that too by way of contribution to another trust. Relevant observations are as under:-

The CIT(E) has relied on Kasyapa Veda Research Foundation v CIT [2011] 12 taxmann.com 286 (Cochin) to hold that Vedas are religious scriptures and Vedic Study is a study of Hindu religion or religious instruction. The said decision is distinguishable in view of various decisions as discussed hereinabove which holds that Hinduism itself is not a religion or community. The constitution bench decisions of the Supreme Court were not brought on record in the above decision and hence it is distinguishable. Without prejudice, the Tribunal in the above decision noted that universal appeal of Vedas and allowed registration in the status of charitable and religious Trust by holding as under:-

Moreover, the assessee-trust has carried on other charitable activities in the nature of relief of poor. The Vedic Scholars were identified and felicitated irrespective of their caste, creed or religion. The Trust has given financial assistance to various people, irrespective of caste, creed or religion, involved in Indian Heritage Education. During Covid, many were in financial difficulty and the Trust provided financial assistance and distributed food kit, clothes, medicines for the needy Vedic scholars irrespective of their caste, religion or gender. All the expenses were met out of voluntary contributions or donations. The Income and expenditure account for AY 2021-22 are placed on record at page 86, 87 of paper book], and for AY 2022-23, ledger account for expenses incurred in achieving the objects like donation to veda pathashalas, veda pundits, medical assistance etc [Page 94 to 99 of paper book] and invoices, vouchers, brochures and photos [page 127 to 157 of paper book] demonstrates the charitable activities carried on by the assessee Trust. Thus, the activities carried on by the assessee-Trust are CHARITABLE in the nature of education, relief of poor and not RELIGIOUS as concluded by the CIT(E). In view of the above, the impugned findings of the CIT(E) that the assessee-trust is registered as RELIGIOUS is quashed and the assessee is allowed registration under section 12A of the Act as charitable trust. Consequently, the approval under section 80G of the Act is to be granted. It is ordered accordingly.

In the result, the appeals filed by the assessee-trust are allowed.