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Income Tax Appellate Tribunal, DELHI BENCH ‘B’, NEW DELHI
Before: Sh. Amit ShuklaDr. B. R. R. Kumar
Per Dr. B. R. R. Kumar, Accountant Member:
The present appeals have been filed by the revenue against the orders of ld. CIT(A)-40, New Delhi dated 02.01.2018.
Since, the issues involved in both the appeals are identical which were heard together.
In , following grounds have been raised by the revenue:
“1. On the facts and circumstances of the case and in law, ld. CIT(A) has erred in allowing the benefit of exemption to the assessee as the activities of the & 2361/Del/2018 2 Indian Society of Church assessee are primarily off religious nature and in clear violation of Section 13(1)(b) of the Income Tax Act, 1961.”
The relevant part as extracted from the order of the ld. CIT (A) is as below:
The assessee society is registered under section 12A as a charitable organization vide registration dated 23.10.1982. The main objects of the assessee society are to undertake the dissemination of useful religious knowledge in conformity with the purposes of the Church of Jesus Christ of Latter day Saints, to assist in the promulgation of worship in the Indian Union, to establish places of worship in the Indian union, to promote, sustain and carry out programmes and activities of the Church, which are among others educational, charitable religious, social and cultural etc.
The Assessing Officer examined the amended Memorandum of Association which was adopted on 21.09.2002, in which, Article IV pertaining to Powers (h) states as under:
"In order to serve the Charitable purposes of The Church of Jesus Christ of Latter-day Saints ("the Church") in providing educational opportunities to its young members who cannot afford to finance their education, (i) to act as an agent of the Church or an affiliated entity thereof to disburse, collect, and service loans to students who qualify for low interest loans under the Perpetual Education Fund and International Education Fund programs of the Church, etc."
Accordingly, the assessee organization declared it to be a charitable organization whose objects as per memorandum of & 2361/Del/2018 3 Indian Society of Church association and activities performed showed that it was working towards the benefit of a particular community.
The AO held that most of its objects and activities are geared for the benefit of Christian religion which was held to be in violation of the provision of section 13(1)(b). Accordingly, the assessee was asked to show cause as to why exemption should not be denied since the society had purely religious objects and no charitable activity has been carried out by the society except some donations to other societies and only religious activity extremes are claimed as major expenses.
The assessed explained that, (i) The objects nowhere state that the benefits and activities must only be done for the Christian Community.
(ii) On perusal of the objects, it is abundantly clear that the society is not a purely a charitable society but a "Public Religious-cum-Charitable Society" and the benefit of its activities arises to the public at large.
(iii) The activities of the society are entirely free and open for all Indians and without any distinction as to caste, creed or religion.
(iv) Some of the other activities of the society which are conducted all over its branches all over India are in the form of seminars, conference, classrooms etc, and which are a regular feature at all the branches of the society and which are open to the public at large and which involve presentations regarding social and moral values.
(v) It is a fact that the society has not been created or established only for the benefit of any particular religious community or caste which is a pre-requisite condition for applicability of section 13(1)(b) and section 13(1)(b) is not applicable at all since the primary requirement of section 13(1)(b) of creation or establishment of a trust or institution only for the benefit of any particular religious community or caste is not full-filled. & 2361/Del/2018 4 Indian Society of Church (vi) There was no change in the objects and the activities of the assessee as compared to the previous year.
(vii) As regards the contention that only religious activities expenses are being claimed as major expenses, the same was denied. The expenses being incurred by the assessee are towards the fulfillment of the objects of the society and the expenses are in the nature of expenses that would ordinarily be incurred by any organization which is similar to the assessee organization and not to benefit a particular religious community.
The AO while agreeing with the fact that the objects of the society are charitable but held its activities are towards benefit of a particular religious community. It was also held that the assessee has violated the provisions of section 13(1)(b) and hence the exemption available to assessee under section 11 was denied. Application of income received by the assessee society under the head advertisement allowances, conference & seminars, construction, rent, welfare expenses, and donations and renovation was also denied.
The brief history of the assessee is as under:
Issues for Asstt. Decision of the Decision of the CIT Decision of the Year 2009- 10, ITAT Delhi Bench (Appeals)-40 for ITAT, Delhi Bench 2010-11, 2011-12, for Asstt. Year Assessment Years and Hon'ble Delhi 2012-13 and 2013- 2009-10 2010-11 and 2011- High Court for 14 12 Asstt. Year 2012- 13 (i) Violation of Exemption under Exemption under Exemption under provision of section 11 is section 11 is section 11 is section 13(1)(b) available to the available to the available to the leading to denial Assessee and no Assessee and no Assessee and no of exemption Violation of Violation of Violation of under section 11 provision of provision of provision of section 13(1) (b) section 13(1) (b) section 13(1) (b) (ii) Disallowance The expenditure is The expenditure is The expenditure is of expenditure of fully allowable and fully allowable and fully allowable and Rs. 8.74 crores the disallowance is the disallowance is the disallowance is under 8 heads of not warranted not warranted not warranted income for Assessment Year 2009-10 Rs.11.99 crores under same & 2361/Del/2018 5 Indian Society of Church 8 heads for Assessment Year 2010-11, Rs.15.88 Crores under same 8 heads for Assessment Year 2011-12 and Rs. 7.57 Crores under the same 8 heads for Assessment year 2012-13 and Rs. 8.49 crores under the same 5 heads for Assessment Year 2013-14
We find that the issues for the instant year are fully covered by the Order of the Co-ordinate Bench of ITAT, Delhi which was decided in favour of the Assessee for the Assessment year 2009-10 and the order of Commissioner of Income Tax (Appeals)-40 for Assessment Year 2010-11 and 2011-12 also stands decided in favour of the Assessee. Further on the same issues, the Order of the Co-ordinate Bench ITAT, Delhi decided in favour of the Assessee for the Assessment Year 2012-13 and the appeal filed by the Revenue Department against the order of the ITAT has also been decided in favour of the Assessee by the Hon'ble High Court vide its order dated 7th September, 2017.
The Hon’ble High Court in held that, “16. The CIT (A) had proceeded on the basis that although the 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 & 2361/Del/2018 6 Indian Society of Church 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.”
Thus, we find that the similar issue has been continuously agitated between the assessee and the revenue from the assessment years 2009-10 onwards and the matter has been adjudicated in favour of the assessee by the Tribunal, Hon’ble Jurisdictional High Court.
On going through the wider interpretation given by the authorities as to what constitutes “Public Religious and Charitable Trust” and “Religious and Charitable purpose”, which was duly followed by the ld. CIT (A), we hereby decline to interfere with the order of the ld. CIT (A). & 2361/Del/2018 7 Indian Society of Church 16. In the result, both the appeals of the revenue are dismissed. Order Pronounced in the Open Court on 06/08/2021.