UPPER GANGES SUGAR MILLS LTD. ETC. vs. COMMISSIONER OF INCOME TAX, CALCUTTA

CIVIL APPEAL No. 3104/1985Supreme Court1997 INSC 59204 August 1997Bench: 2 JudgesAuthor: S.P. BHARUCHA, V.N. KHARE GANGES SUGAR MILLS LTD. ETC. A6 pages
AI SummaryDismissed

What were the facts?

The assessee, Upper Ganges Sugar Mills Ltd., claimed a deduction under Section 80G of the Income Tax Act, 1961, for a donation of Rs. 25,000 made to the Vishwa Mangal Trust for the assessment year 1973-74. The Income Tax Officer initially allowed the claim but later reopened the assessment under Section 147(b) and disallowed it. The Appellate Assistant Commissioner upheld the disallowance. The Income Tax Appellate Tribunal allowed the assessee's appeal. However, on a reference, the High Court reversed the Tribunal's decision, holding that the Trust's purpose was religious in nature, thus disqualifying the donation for deduction under Section 80G. The assessee appealed this High Court order.

What did the Supreme Court hold?

The Supreme Court dismissed the appeal. The Court held that Section 80G of the Income Tax Act, 1961, applies to donations to institutions established for a charitable purpose, but this purpose does not include any purpose where the whole or substantially the whole is of a religious nature. Explanation 3 to Section 80G clarifies this. The Court found that clause 2(h) of the Vishwa Mangal Trust Deed, which permits the trustees to support prayer halls and places of worship, clearly sets out a purpose that is wholly or substantially of a religious nature. Therefore, the Trust and the donation made to it fall outside the scope of Section 80G, and the assessee is not entitled to the deduction. The High Court's decision was upheld.

What were the issues?

1. Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was justified in holding that the assessee was entitled to the relief under section 80G on the donations paid to Vishwa Mangal Trust? Assessee's contentions: The assessee argued that the Trust was not established wholly or substantially for a religious purpose. They also contended that the object of supporting prayer halls and places of worship (clause 2(h) of the Trust Deed) should not be considered a religious object, especially since the trustees were not empowered to set up places of worship for a particular community or religion. Revenue's contentions: The revenue contended that the Trust's purpose, or at least one of its substantial purposes, was religious in nature, as evidenced by clause 2(h) of the Trust Deed, which allowed for the establishment, maintenance, and aid to public places of worship and prayer halls. This, according to the revenue, brought the Trust outside the scope of Section 80G.

Which sections of the Income-tax Act were involved?

Section 80G,Section 147(b),Section 2(15)

AI-generated summary — verify with the full judgment below

UPPER GANGES SUGAR MILLS LTD. ETC. A v. COMMISSIONER OF INCOME TAX, CALCUTTA AUGUST 4, 1997 [S.P .. BHARUCHA AND V.N. KHARE, JJ.] B Income Tax Act1 1961 ·' Section BOG-Charitable Trost-Donation by assessee-Deduction claimed-c-Allowed by Income Tax Officer-Assessment reopened-'-Clai/11 disallowed-'-'-Appeal allowed by Tribunaf--On reference High Court reversed the order of Tribunal holding that the Trust was of a C reiigio~s nai.ur~~zd, if ~n~ of the objects of the institution is wholly or substalllially of a religi~us~ai.ure the donation falls outside the scope of s.BOG-Assessee not entitled to claim deduction.

Words & Phrases-"Chalitable purpose''---Meaning of in the context of S.BOG of Income Tax Act. D The appellant-assessee had made a donation to the Vishwa Mangal Trust. His claim for deduction under section SOG was allowed by the In- come Tax Officer. The assessment was then reopened under section 147(b) of the Income Tax Act and the claim of the assessee was disallowed.

Assessee's appeal before the Appellate Assistant Commissioner was dis- missed; appeal before the Income Tax Appellate Tribunal was allowed. On reference, High Court reversed the view of th

The order continues below.

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