COMMISSIONER OF INCOME TAX vs. SAMASTA BRAHMA SAMAJ

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ITR/197/1983HC GujaratGJHC24011666198330 August 1996Author: HONOURABLE MR. JUSTICE N.J.PANDYA,HONOURABLE MR. JUSTICE S.D.PANDIT4 pages
AI SummaryAllowed

What did the High Court hold?

The High Court held that the objects of the Trust, as enumerated in its deed, clearly demonstrate that it was created solely to assist the Brahmin Community. These objects include providing books, loans, and scholarships to deserving students of the Brahmin community, offering medical aid to needy members of the Brahmin community, organizing training classes for home industries to provide economic avenues for the Brahmin community, organizing lectures and classes for religious and spiritual training amongst the Brahmin community, procuring employment for the youths of the Brahma Samaj, and undertaking other activities for the social progress of the members of the Brahma Samaj. The Court found that these objectives are not for the benefit of the community at large but specifically for a particular religious community or caste. Therefore, the Trust falls within the meaning of Section 13(1)(b) of the Income-Tax Act, 1961, and cannot claim exemption under Section 11. The Court accepted the reference and decided the questions in favour of the Revenue.

What were the facts?

The assessee, Samasta Brahma Samaj, is a Trust established in 1971 and registered under the Bombay Public Trust Act, 1950, and Section 12A(a) of the Income-Tax Act, 1961. The Trust claimed exemption under Section 11 of the Act, asserting it was not created for the benefit of any specific religion or caste, thus not falling under the denial of exemption under Section 13(1)(b). The Income-Tax Officer initially accepted this contention. However, the Income-Tax Appellate Tribunal (ITAT) did not accept the claim, leading to an assessment of Rs. 13,540/-. The assessee appealed to the Appellate Assistant Commissioner (AAC), who allowed the appeal. The Revenue's subsequent appeal to the ITAT was dismissed. Consequently, the Revenue has filed this reference before the High Court.

What were the issues?

1. Whether, on the facts and in the circumstances of the case and from the evidence on record, the Tribunal was right in law in holding that the assessee trust does not fall under the expression 'religious community or caste'? (Question of law) 2. Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the provisions of Sec. 13(1)(b) are not applicable and the Trust was eligible for exemption under Sec.11 of the Act? (Question of law) Assessee's contentions: The assessee contended that the Trust was not created for the benefit of any religion or caste and therefore, should not be denied the benefit of Section 13(1)(b) of the Income-Tax Act. Revenue's contentions: The Revenue contended that the objects of the Trust clearly indicate it was established for the benefit of a particular religious community and caste, thus attracting the provisions of Section 13(1)(b) and disentitling it from exemption under Section 11.

Which sections of the Income-tax Act were involved?

Section 256,Section 12A,Section 13(1)(b),Section 11

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

INCOME TAX REFERENCE No 197 of 1983

For Approval and Signature:

Hon'ble MR.JUSTICE N.J.PANDYA and HONOURABLE MR.JUSTICE S.D.PANDIT ============================================================ 1. Whether Reporters of Local Papers may be allowed to see the judgements?

2.

To be referred to the Reporter or not?

3.

Whether Their Lordships wish to see the fair copy of the judgement?

4.

Whether this case involves a substantial question of law as to the interpretation of the Constitution of India, 1950 of any Order made thereunder?

5.

Whether it is to be circulated to the Civil Judge?

-------------------------------------------------------------- COMMISSIONER OF INCOME TAX Versus SAMASTA BRAHMA SAMAJ -------------------------------------------------------------- Appearance: Mr. Mihir Thakore, Sr.Counsel with MR MANISH R BHATT for Petitioner Respondent No. 1 served. --------------------------------------------------------------

CORAM : MR.JUSTICE N.J.PANDYA and MR.JUSTICE S.D.PANDIT Date of decision: 30/08/96

ORAL JUDGEMENT (Per S.D.Pandit,J.)

The Income-Tax Appellate Tribunal of Ahmedabad has referred following questions under Section 256 of the Income-Tax Act, 1961 to this Court:

1.

"Whether, on the facts and in the circumstances of the case and from the evidence on record, the Tribunal was right in law in holding that the assessee trust does not fall under the expression religious community or caste"?

2.

"Whether, on the facts and in the circumstances of the case, the Tribuanl was right in law in holding that the provisions of Sec. 13 (1) (b) are not applicable and the Trust was eligible for exemption under Sec.11 of the Act?

The assessee is a Trust created in the year 1971 and it was registered under the Bombay Public Trust Act, 1950. It was also registered under Sec. 12 A (a) of the Income-Tax Act and the assessee claimed before the Income-tax Officer that the Trust was not created for the benefit of any religion or caste and therefore, the assessee should not be denied the benefit of Sec . 13 (1) (b) of the Income-Tax Act. The said contention of the assesee was accepted by the Income-tax Officer, but the appellate Tribunal did not accept their claim. Consequently , the assessment was computed at Rs.13,540/-. The assessee took up the matter before the A.A.C., who was pleased to allow the said appeal and the appeal preferred by the Department against the said decison of the appellate Assistant Commissioner before the Tribunal was dismissed and hence, the Department has passed the Reference in question.

2.

Before going into these questions, it is necessary to see the provisions of Sec. 13 (1) (b) of the Income-tax Act 1961. Sec. 13 (1) (b) reads as under:

Section 13 : Nothing contained in Section 11 or Section 12 shall operate so as to exclude the total income of the previous year of the person in receipt thereof__

(b) In the case of a trust for charitable purpose or a charitable institution created or established afterthe commencement of this Act, any income thereof if the turst or institution is created or established for the benefit of any particular religious community or caste."

Along with the above Section, the provisions of the Trust Deed of the assessee will have also to be taken into consideration. The Objects of the Trust are enumerated as under:

(a) To help the deserving students of the Brahmin community including of all its sub-caste and x reginal affillation with books, loans, scholarships, etc. in the field of eduction within the limitations fo fudns available with Brahma Samaj.

(b) To help the deserving and needy members of the Brahmin Community at large with medical aid of all kinds, including of actual finance, implements or drungs.

(c) to organise training classes for home industries like the preparation of differnt kinds of condimanta, papad sewing , knitting and embroidery wroks etc . In order to provide avenue of economic income to the members of the Brahmin community.

(d) To organise lectures classes, camps, seminars etc. of eminent scholars for the religios and spirituals training amongst the Brahmin community. This also includes the arrangement for the publication, activity in the regard.

(e) To organise a corps of volunteers for the service activities of the Brahma Samaj.

(f) To make efforts to procure gainful employment for the youths of the Brahma Samaj.

(g) To undertake any other activities for the social progress of the members of the Brahma Samaj as may be acceded upon from time time by the executive committed of this institution.

If the above objects of the Trust are taken into consideration, it would be quite clear that the Trust is created only in order to help the Brahmin Community as such. It is not a Trust which is created for the benefit of the community at large, but a particular religion or a caste and consequently, the same falls within the meaning of Sec. 13 (1) (b) which says if an institute is created or established for the benefit of any particular Religious community or caste, then the said Insitute cannot claim exemption under Sec. 11 of the Income-tax Act. Therefore, in view of the specific objects

mentioned in the Trust Deed, it is quite obvious that the Institute in question is created and established for the benefit of a particular religious community and caste and consequently is covered by the provisions of Sec. 13 (1) (b). Therefore, we are of the opinion, that the learned Assistant Appellate Commissioner as well as the learned Judicial Member of the Income-tax Tribunal were not justified in holding that the Trust in question is not hit by the provisions of Sec. 13 (1) (b) of the said Act and that the said Trust is exempted under Sec. 11 of the Income-tax Act, 1961. 3. Thus, we accept the reference and decide the questions in favour of the Revenue. We accordingly answer the Reference and direct the parties to bear their respective costs.

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