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Income Tax Appellate Tribunal, BENCH “E”, MUMBAI
Before: SHRI B.R. BASKARAN & SHRI PAWAN SINGH
Revenue by : Shri Suman Kumar ( Sr DR) Assessee by : Sh. Hiten Chande AR. Date of hearing : 16.04.2018 Date of Pronouncement : 16 .04.2018 Order Under Section 254(1) of Income Tax Act PER PAWAN SINGH, JUDICIAL MEMBER: 1. These two appeal by revenue under section 253 of Income-tax Act, is directed against the order of Commissioner of Income-tax (Appeals)
(CIT-A)-1, dated 18.04.2015 and 30.09.2014 for assessment year 2010- 11 and 2011-12 respectively. The revenue has raised identical grounds of appeal in both the appeal, thus, both the appeal heard together and are decided by common order.
ITA No. 7009/M/2014 & Sri Radha Damodar Charitable Trust
At the outset of the hearing the ld AR for the assessee submits that the grounds of the appeal raised by the revenue are covered in favour of the assessee in assessee’s own case for assessment year 2009-10 in dated 04.04.2018. The ld AR for the assessee also filed the copy of the order in appeal for assessment year 2009-10 in ITA No. 3809/M/2016 dated 04.04.2018 after going through the contents of the order of the Tribunal the ld DR for the revenue fairly conceded the contentions of the ld AR for the assessee.
We have considered the contentions of both the parties and have gone through the order of the Tribunal for assessment year 2009-10 in dated 04.04.2018. We have note that on the identical grounds (except little variations of figure), the Tribunal passed the following order:
“5.We have considered the rival submission of the parties and perused the orders of authorities below. During the assessment the assessing officer observed that the assessee was carrying on business activities by distribution of Prasadam and Mandap services. And that the assessee derived a sale of Rs.70,725,469/-, and purchases are of Rs. 17,826,586/- and indirect expenses of Rs.18,814,423/- apart from the other items debited to the profit and loss account. The primarily reason is that the assessee had generated substantial revenue. The ld CIT(A) allowed the appeal of the assessee on the basis of order of ld CIT(A) in assessment year 2010-11 dated 28.04.2015. The order of CIT(A) for assessment year 2010-11 is based on the order of Tribunal in assessment year 2008-09. We have noted that the assessee was denied similar deductions in assessment year 2008-09. On appeal ld. Commissioner (Appeals) the assessee was allowed the relief. The Revenue filed appeal before Tribunal, the appeal of the revenue was ITA No. 7009/M/2014 & Sri Radha Damodar Charitable Trust dismissed vide order dated 18.07.2012 in ITA No.5773/M/2011. For appreciation of order the relevant part of the order is extracted below;
“7. We have carefully considered the submissions of the rival parties and perused the material available on record. We find that the facts are not in dispute inasmuch as it is also not in dispute that the principle objects of the trust include promotion of vegetarianism and distribution of Prasad. It was submitted by the ld. counsel for the assessee that by not using onion and garlic in the food preparations, the assessee is propagating the Vaishnavi principles, thereby furthering the principles of Krishna consciousness and promoting the vegetarianism. According to the A.O. the assessee is not acting as chartable organization. The entire character and focus of the assessee has become totally commercial. There is generation of huge profits year after year, a part of which 7 ITA 5773/M/2011 is diverted to the related concern. Thus, the activities are being carried on commercial lines and also not in conformity with the objects of the assessee trust. However, we find that since the principle object of the trust includes promotion of vegetarianism, the business of preparing vegetarian food items and selling the same is very much incidental to the object of the assessee trust and such business can be conducted by a charitable trust as per provisions of section 11(4A) of the Act.
In the case of Sri Sri Radha Rasbihariji Prasadam Viniyog Trust (supra) on the similar issue the Tribunal has held as under:-
"3. We have considered the arguments advanced by both sides and perused the orders passed by the revenue authorities and the paper book filed by the assessee. We are of the considered opinion that no interference is called for in the impugned order of the CIT(A). The Assessing Officer held in his order that there is no charitable activity done by the trust but the trust is doing a business and the income from the business also was not utilized on any object of the trust and hence exemption under sec. 11 is not allowable in the present case. In his impugned order, the CIT(A) accepted the contention of the assessee holding as under:- "I have perused the contention raised by the appellant as well as in the assessment order. The figure of net profit as worked out by the assessing officer is incorrect and the net profit actually comes to Rs. 5.29 lakhs. The amount of Rs. 1.20 lakhs also does not represent sale proceeds as alleged ITA No. 7009/M/2014 & Sri Radha Damodar Charitable Trust by the assessing officer and is only a donation from one Public Charitable Trust to another. This incorrect fact as mentioned in the assessment order suggests that the accounts were not properly perused by the assessing officer and he was deeply influenced by the bumper profit in arriving at the conclusion that the appellant was conducting the business solely with the profit motive. Besides, the assessing officer has simply ignored the main object of the appellant that is promotion of vegetarianism. The business of preparing vegetarian food items and selling the same was very much incidental to the objects of the appellant and such business can be of section 11(4A). In case the public charitable trust is engaged in a business which is incidental to its object the same will not disqualify the charitable trust from exemption u/s 11. In my 8 ITA 5773/M/2011 opinion the preparation of vegetarian food items and selling the same was mainly for popularizing the vegetarian food habits and in this way the appellant was engaged in promoting the vegetarianism among the people, which is undoubtedly a charitable object of the appellant. The major portion of the income received by the appellant was donated to ISKCON which is a public charitable trust of worldwide recognition and reputation and any donation from one charitable trust to another constitute application of income for the charitable purposes. The ISKCON are also publishing booklets and brochures for the promotion of vegetarianism among the people. Thus the contribution of the appellant to the ISKCON also helps to promote its own object indirectly. In view of the above discussion it is held that the appellant trust is conducting the business which is very much incidental to its charitable objects and the income from such business is applied for the fulfillment of charitable purposes and the appellant is eligible for the benefit of exemption u/s.
In view of the clear cut provision of section 11(4A), the exemption u/s 11(1) has to be allowed to the appellant. The Assessing Officer is directed to allow the same and to grant other consequential benefits of application and accumulation of income to the appellant trust u/s 11(1). However, the accumulation u/s 11(1) is hereby restricted to the extent of positive income which remain after allowing the expenses of the appellant trust for the application of income for its object.
ITA No. 7009/M/2014 & Sri Radha Damodar Charitable Trust
On a careful consideration of the matter, we fully agree with the reasoning given by the CIT(A) for coming to the conclusion that the assessee trust is eligible for the benefit of exemption under sec. 11 of the I.T. Act and uphold his order."
9. In absence of any distinguishing feature brought on record by the Revenue, we respectfully following the order of the Tribunal (supra) hold that the preparation of vegetarian food items and selling the same was mainly for popularising the vegetarian food habits and in this way the assessee is engaged in promoting the vegetarianism among the people so that they can change their living habits and take the necessary steps for the betterment of humanity, which is undoubtedly a charitable object of the assessee. The major portion of the income received by the assessee was donated to ISKCON which is a Public Charitable Trust of worldwide recognition and reputation and any donation from one charitable trust to another charitable trust constitute application of income for the charitable purposes.
10. As regards the A.O.'s objection that the assessee is claiming double deduction on account of depreciation on the same very assets, we are of the view that there was no double deduction claimed by the assessee. Recently the Hon'ble Punjab & Haryana High Court in the case of CIT vs. Market Committee, Pipli (2011) 330 ITR 16 (P&H) after considering various decisions while distinguishing the decision in Escorts Ltd. v. UOI (1993) 199 ITR 43 (SC) has held as under (page 20 & 21):-
"In the present case, the assessee is not claiming double deduction on account of depreciation as has been suggested by learned counsel for the Revenue. The income of the assessee being exempt, the assessee is only claiming that depreciation should be reduced from the income for determining the percentage of funds which have to be applied for the purposes of the trust. There is no double deduction claimed by the assessee as canvassed by the Revenue. The judgment of the hon'ble Supreme Court in Escorts Ltd. case [1993] 199 ITR 43 is distinguishable for the above reasons. It cannot be held that double benefit is given in allowing claim for depreciation for computing income for purposes of section 11. The questions proposed have, thus, to be answered against the Revenue and in favour of the assessee."
ITA No. 7009/M/2014 & Sri Radha Damodar Charitable Trust
11. For the reasons as discussed above and keeping in view that the assessee is distributing Prasad and doing other charitable activities for the promotion of vegetarian food habits among the people, the assessee is entitled for the benefit of exemption u/s 11 of the Act. The order passed by the ld. CIT(A) in directing the A.O. to allow the exemption u/s 11 of the Act and to grant other consequential benefit of application and accumulation of income to the appellant trust u/s 11(1) of the Act does not call for any interference.
As regards the disallowance of deduction u/s 80G of the Act, we find that there is no dispute that the assessee has donated its major portion of its income to ISKCON, a Public Charitable Trust of worldwide recognition and reputation. It is settled law that any donation from one charitable trust to another charitable trust would constitute application of income for the charitable purposes according to the provisions of the Income Tax Act. This being so and keeping in view that the certificate u/s 80G of the Act for the period 1-4-2005 to 31-3-2008 has been granted to the ISKCON by the DIT (Exemption), Mumbai vide certificate dtd. 4-4-2005, we are of the view that the amount of donation to be treated as spent for the charitable purposes of the trust and accordingly we are inclined to uphold the findings of the ld. CIT(A) in allowing both the claim of the assessee. The grounds taken by the Revenue are, therefore, rejected.”
6.The Hon'ble Jurisdictional High Court 'in the case of Director of Income-tax Vs. Womens India Trust (2015) 379 ITR 506 (Bom) had upheld the observations of the Tribunal that where a trust formed to carry out the object of education and development of natural talents of the people having special skills, more particularly the women in the society, had in the course of imparting to them training in the field of catering, stitching, toy making, etc., therein carried out sale of certain finished products, viz. pickles, jams, etc. which were in the course of such training produced by them, through shops, exhibitions and personal contracts, the same could not be held to be activities in the nature of trade, commerce or business as contemplated in the proviso of Sec. 2(15).
The Hon’ble High Court of Madras in the case of Director of Income Tax. (Exemption) Vs. The Chartered Accountant Study Circle (2012) 250 CTR 70 (Mad), had the occasion to .deliberate on the scope and gamut of the first proviso of Sec. 2(15) in the case of an assessee trust whose objects among other things was to conduct periodical meetings on professional subjects. The High Court 6 ITA No. 7009/M/2014 & Sri Radha Damodar Charitable Trust observed that the publishing and sale of books, booklets etc. on professional subjects related to audit and not on any other subject by the assessee. The sale of the books was primarily made to the members of the society, as well as made available to the general public, with the aim to help the society to get better, well-equipped and skilled set of Chartered Accountants for maintaining audit quality, which however could not be construed as a trade or commerce or business. Thus, the High Court observed that the activities of the assessee trust in publishing and selling books of professional interest, which were meant to be used as a reference material even by the general public as well as the professionals in respect of Bank Audit, Tax Audit, etc., could not be construed as a commercial activity.
8. We further find that a similar view had also been taken by the Hon'ble High Court of Delhi in the case of The Institute of Chartered Accountants of India Vs, Director General of Income (Tax (Exemption) (2013) 260 CTR l (Del). The High Court held that no doubt the assessee institute was holding classes and providing coaching facilities for the members and articled clerks etc. who wanted to appear in the examination conducted by the Institute of Chartered Accountants, but these classes were not held for coaching or for appearance in an examination conducted by some other entity. The High Court observed that as conducting of coaching classes was with the predominant object of maintaining and upholding the standards of the accountancy profession and in furtherance of the object and purpose for which the institute was established, i.e., professional excellence and promotion of accountancy as a preferred profession, and to sharpen the skills and knowledge of the members of Institute who would attend the courses/lectures etc., therefore, the activities of providing coaching classes or undertaking campus placement interviews for a fee were in relation to the main object of the assessee institute, which could not be held to be trade, business or commerce. The High Court while concluding as hereinabove, had observed as under: "After going through the provisions of the ICAI Act and the Regulations framed therein as well as various activities carried on by the petitioner, we are of the view that the petitioner institute does not carry on any business, trade or commerce. The activity of imparting 7 ITA No. 7009/M/2014 & Sri Radha Damodar Charitable Trust
education in the field of accountancy and conducting courses both at pre-qualification as well as post-qualification level are activities in furtherance of the object for which the petitioner has been constituted. Activities of providing coaching classes or undertaking campus placement interviews for a fee are in relation to the main object of the petitioner which as stated earlier cannot be held to be trade, business or commerce. Accordingly, even though fees are charged by the petitioner institute for providing coaching classes and for holding interviews with respect to campus placement, the said activities cannot be stated to be rendering service in relation to any trade, commerce or business as such activities are undertaken by the petitioner institute in furtherance of its main object which as held earlier are not trade, commerce or business.”
We have given a thoughtful our consideration on the facts qua the issue before us. We find that the activities of the assessee trust were directed for promoting its objects of vegetarianism and distribution of Prasadam and food to the general public to support the cause of Lord Krishna consciousness movement. The assessee trust follows the principle of Bhagwat Gita while Cooking, selling and preparation of vegetarian Prasadam. The activities of the assessee are essential to spread the thought of understanding the Lord Krishna consciousness and vegetarianism. The assessing officer has not disputed that the assessee trust is not spreading the Krishna consciousness and vegetarianism. The assessing officer has not brought any material on record to show that distribution of Prasadam has any commercial angel. We are of the considered view that the providing of the aforesaid services is indispensably required to facilitate the furtherance of the very interest of the Lord Krishna consciousness in the society. Even, we are of a strong conviction that in the absence of the aforesaid activities of the assessee trust, which as observed by us hereinabove can safely be held to have been indispensably required to achieve the object of the assessee trust.
In view of the aforesaid discussions we do not find any illegality or infirmity in the order passed by ld. CIT (A) in granting the exemption under section 11 of the Act. In the result, appeal filed by Revenue is dismissed.”
Considering the order of the Tribunal in assessee’s own case for assessment year 2009-10 in dated 04.04.2018, we ITA No. 7009/M/2014 & ITA No. 4336/M/2015 Sri Radha Damodar Charitable Trust do not find any merit in the grounds of appeal raised by the revenue as the same are covered against the revenue. No contrary material or law is placed before us.
In the result both the appeals filed by the revenue are dismissed. Order pronounced in the open court on 16th day of April 2018.