BHARITAYA JAIN SANGHATANA,KOTA vs. COMMISSIONER OF INCOME TAX (EXEMPTION), JAIPUR

आयकर अपीलीय अधिकरण] जयपुर न्यायपीठ] जयपुर IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES,”B-Bench” JAIPUR

Jh jkBkSM+ deys'k t;UrHkkbZ] ys[kk lnL; ,o aJh ujsUnz dqekj] U;kf;d lnL; ds le{k BEFORE: SHRI RATHOD KAMLESH JAYANTBHAI, AM & SHRI NARINDER KUMAR, JM vk;dj vihy la-@ITA. No. 87/JPR/2024

Bharitaya Jain Sanghanatana, cuke The CIT (Exemption) Jaipur. H. No. 357-B Talwandi, Vs. Kota. LFkk;hys[kk la-@thvkbZvkj la-@PAN/GIR No.: AA DTB6311J vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksjls@Assessee by : Shri Sidhartha Ranka, Adv & Miss. Swatika Jha, Adv. jktLo dh vksjls@Revenue by: Ms. Alka Gautam (CIT) lquokbZ dh rkjh[k@Date of Hearing :19/09/2024 mn?kks"k.kk dh rkjh[k@Date of Pronouncement: 20/09/2024

vkns'k@ORDER PER: NARINDER KUMAR, JUDICIAL MEMBER.

Appellant claims itself to be a charitable trust. It is said to have been created on 16.12.2018. The objects set to be achieved by the trust are stated to be promotion of education, yoga, preservation of the environment (including watersheds, forests and wildlife). Advancement of any other object of general public utility is also set to be achieved.

2 ITA No. 87/JPR/2024 Bharitaya Jain Sanghanatana vs. CIT(E) 2. On 29.06.2023, the appellant-applicant, through authorized representative, submitted an application, online, in Form No. 10AB seeking its registration u/s 12AB of the Income Tax Act, 1961 (hereinafter referred to as “the Act”). Learned CIT(E) processed the application. Ultimately, vide order dated 29.12.2023, he rejected the prayer for registration of the trust. As per impugned order, following two grounds are said to be the basis of rejection of the prayer: (i) Part of the income of the applicant trust was being applied for the benefit of caste/religious community; (ii) Income of the applicant trust was not being applied for the object of the trust. Feeling aggrieved by the impugned order, the applicant trust is before this Appellate Tribunal. 3. Arguments heard. File perused. 4. It may be mentioned here that earlier on 07.08.2024 on behalf of the appellant, a paper book was submitted with Index depicting 21 documents. Today, fresh Index to the said paper book consisting of only 20 documents has been furnished. Copy supplied to Ld. DR for the Department.

3 ITA No. 87/JPR/2024 Bharitaya Jain Sanghanatana vs. CIT(E) Objects of the appellant-Trust 5. So far as objects of the appellant trust are concerned, on behalf of the appellant reference has been made to copy of the trust deed dated 28.11.2018. Learned AR for the appellant has specifically referred to only clause (c) and (e), available at page no. 22 of the deed. But, we are inclined to reproduce all the objectives of the said trust, as per the said trust deed. Relevant portion of the trust reads as under:- “2. The name of the Trust shall be Bharatiya Jain Sanghatana, Kota Chapter with its office "Kewalya" B-357(D-2) Talwandi, Kota (Rajasthan) Pin- 324005. The name of the trust shall be abbreviated as BJS, Rajasthan for the purpose of Bank account or correspondence etc. "The Trust Fund" shall mean the said sum of 15,500/- (Rupees Fifteen Thousand Three Hundred only) and all investments and any money or any property which may be paid or transferred to the Trustees at any time to be held by them on the trusts hereby declared and the investments representing the same. The Trustees shall apply or utilise the income and/or the corpus of the Trust Fund for all or any of the aforesaid purposes in India as they may determine and without prejudice to the generality of the foregoing the Trustees will have powers to do anything for advancement of the purposes aforesaid and without any distinction of caste, creed or sex.

The Trust shall adopt charitable objects as per charter of Bhartiya Jain Sangatata, Pune. All the chapters of Rajasthan shall comprise into this trust,

a. To achieve all-round development, growth and progress of the people through promotion of education, health, upliftment of self, moral foundation and by promotion of moral values and social and physical aspects of life.

b. in coder to awaken the potentialities of Indian people and to create the stream of potentialities among them, to help the private social

4 ITA No. 87/JPR/2024 Bharitaya Jain Sanghanatana vs. CIT(E) organizations and to assist in achieving speed in the social and economic development of India.

c. To assist public and private organizations devoted to social cause and, further, to assist in implementing the programmes which shall be useful to different social streams in India.

d. To achieve coordination and cooperation between governmental and non- governmental institutes of national Importance doing work in education and research.

e. To fill up the lapses in the field of national development and particularly, in the field of conflicts arising out of cultural and racial diversity.

f. To provide succor and relief to people affected by unnatural and unnatural disasters through relief and rehabilitation.

g. To provide support to trade, finance, business, entrepreneurs and start ops to Improve skills, knowledge by way of training, work-shops, programs and all type of such activities with an object of improving capabilities, maturity, employment and all type of support services.”

In order to achieve the above objects, the trust deed provides to undertake the following programmes, among other things:

i. Start and conduct orphanages, ashrams, and rescue-homes for orphans, destitute children and women, widows, the disabled and the helpless for their care, protection and rehabilitation. ii. Start, conduct and manage hospitals, health centers, maternity homes, dispensaries, clinics, ambulance facilities, etc. and provide the poor Wand the needy with medicines and medical facilities gratis or on nominal charges. iii. Start and conduct institutes for promotion of science, literature, fine arts, commerce, industry, technology and engineering, as well as for training students to be self-reliant citizens of India and help other institutions with similar objects. iv. Start and conduct pre-primary, primary, secondary schools and colleges in all faculties of education through formal, non-formal and open streams with residential and non-residential facilities.

5 ITA No. 87/JPR/2024 Bharitaya Jain Sanghanatana vs. CIT(E) v. Assist victims and people affected by communal riots, atrocities, social unrest as well as natural calamities (example: earthquakes, floods, drought, volcanoes, etc.) vi. To assist social and developmental activities of governmental and private institutes working in the fields of education, family planning. medical services, and other welfare activities. vii. Start research and development centers in the field of economics, social sciences, medicine, science and industry, and other faculties and to impart education in these subjects.”

6 ITA No. 87/JPR/2024 Bharitaya Jain Sanghanatana vs. CIT(E) Clause(b) of Sub-section (1) of Section 13 of the Act provides as to in which circumstances provisions of section 11 shall not apply. Section 11 provides as to which of the income shall not be included in the total income of the previous year of the person in receipt of the income , in case of income from property held for charitable or religious purposes. Sub-section (4) of Section 12AB of the Act, empowers a Principal Commissioner or Commissioner to pass an order for cancelling the provisional registration of a trust or any institution in case of any specific violation. Trust had applied for registration under section 12 AB. There was no allegation leveled by anyone that the trust was indulging in any specific violation or that cancellation of its provisional registration was called for. As regards violation of provisions of Section 13(1)(b) of the Act, observed by Learned CIT(E), in the impugned order, said provision would come into application at the time of computation of total income even in case of trust for charitable purpose. Matter before Learned CIT(E) was not for or at the stage of computation of total income of the trust. The only prayer was for registration under section 12 AB of the Act. No prior notice is said to have been issued by the CIT(E) to the Trust for consideration of the point of any specific violation calling for cancellation

7 ITA No. 87/JPR/2024 Bharitaya Jain Sanghanatana vs. CIT(E) of even the provisional registration. So, it is beyond comprehension as to how the issue of application of section 11 was considered at the time of registration of the Trust. Application of income of the Trust for its activities as per its objects or not? 8. As per record, reply of the applicant was called for, and the applicant trust furnished it twice, firstly, on 02.11.2023, secondly, on 26.12.2023. Copy of reply dated 02.11.2023, has not been made available by the applicant trust to this Appellate Tribunal, for the reasons best known to the appellant trust. However, from para 2.2 of the impugned order, it transpires that on receipt of reply dated 02.11.2023 from the applicant in respect of certain activities said to have been undertaken by the said trust during the period from 01.03.2022 to 31.03.2023, the applicant-trust submitted information, in the form of a table having organized Diwali Milan Pratibha Samman/programme on 15.10.2022, as one of the activities undertaken by the said trust. As observed by Learned CIT(E), no details regarding beneficiary of said activity was furnished, and as such notice dated 08.12.2023 was issued to the applicant trust to provide details of the persons facilitated in

8 ITA No. 87/JPR/2024 Bharitaya Jain Sanghanatana vs. CIT(E) ‘Pratibha Samman Sammaroh’. Applicant was also called upon to submit provisional Income and Expenditure Account for the financial year 2023-24 and bank statement for the last 3 years. Ld. CIT(E) mentions that the applicant trust failed to submit Income and Expenditure Account for the financial year 2023-24. The applicant trust surprisingly also denied to have arranged any ‘Pratibha Samman Sammaroh’ activity, even though earlier in the reply dated 02.11.2023, it was specifically shown at serial No. 11 of the table depicting list of the programmes implemented and that on 15.10.2022 ‘Pratibha Samman Sammaroh’ was arranged. As per the impugned order, as regards the Income and Expenditure account, the applicant had requested Learned CIT(E) to allow time somewhere in the first week of January, 2024. However, keeping in view the time line for the disposal of such application, Learned CIT(E) proceeded to dispose of the application. In the paper book submitted before this Appellate Tribunal, at page 90 is available copy of Income and Expenditure Account for the year ending 31.03.2023. The applicant trust should have submitted said statement before Learned CIT(E) for effective adjudication of the matter. However, if we believe what is recorded in the impugned order, it appears

9 ITA No. 87/JPR/2024 Bharitaya Jain Sanghanatana vs. CIT(E) that the applicant trust failed to produce the same, in reply to the notice dated 08.12.2023, and no satisfactory justification appears to have been put forth in seeking adjournment to submit the same in the first week of January, 2024. 9. Not only this, the applicant trust also failed to submit before Learned CIT(E) its books of accounts. The applicant trust should have submitted the same, but it failed to do so and that too without any satisfactory justification for seeking adjournment for the first week of January, 2024. 10. Since we find that production of the above said record before Learned CIT(E) was necessary for adjudication of the issues involved on the point of registration of the trust, we deem it a fit case to remit the matter to Learned CIT(E) so as to allow the applicant trust , another opportunity to produce the books of accounts & Income and Expenditure Account. Whether a case of substantial payments to persons of Jain community? 11. Before Learned CIT(E), one statement of bank account was furnished by the applicant trust. On its perusal, Learned CIT(E) found that substantial payments were made to persons of Jain community. Thereupon, Learned CIT(E) asked for details of the said payments and for their justification, having regard to the objects of the said trust.

10 ITA No. 87/JPR/2024 Bharitaya Jain Sanghanatana vs. CIT(E) In response, the applicant trust submitted a list of 19 students who had participated in the programme arranged in connection with Sambal Scholarship Award. Said information is available in tabular form at pages 8 and 9 of the impugned order. 12. In reply to a show cause notice, the applicant trust submitted on 26.12.2023 that the scholarship was not only for Jain students. In this regard, reference was made to the pamphlet/screenshot for announcement. In the course of arguments here, reference has been made to the information circulated in connection with scholarship programme. Same is available at page 196 of the paper book. The contention is that from this document, it cannot be said that scholarship was only for Jain students. 13. Having gone through the advertisement in connection with scholarship programme inviting applications for the said benefit, it cannot be said that students belonging to Jain community only were invited to apply for scholarship. Even otherwise, in the impugned order, Learned CIT(E) mentioned about response from the applicant trust that one of the 20 applications for said scholarship, one application was declined because the applicant -a Jain student- did not qualify the prescribed norms.

11 ITA No. 87/JPR/2024 Bharitaya Jain Sanghanatana vs. CIT(E) Even otherwise, as claimed by the applicant, one of the applicants, namely, Shard Purswani did not belong to Jain community. There is nothing in the impugned order to suggest that Learned CIT(E) disbelieved said explanation submitted by the applicant trust. 14. In para 2.5 of the impugned order, Learned CIT(E) observed that the funds of the trust were mainly used for benefit of Jain caste/community. However, we find that when books of accounts and Income Expenditure Account for the financial year 2023-24 were not made available, the matter needs to be re-looked by Learned CIT(E), for any adjudication of this issue. Even as regards the observation made in the impugned order that out of total expenses 92% expenses were incurred for the benefit of Jain students, same can be adjudicated effectively only on production of the entire requisite record. As noticed above, we are inclined to remit the matter to Ld. CIT(E) for reconsideration on production of the requisite record. Objects of the applicant trust 15. As regards the observations made by Learned CIT(E) in para 3.2 of the impugned order that the objects of the applicant trust are not religious in nature, Learned CIT(E) referred to the decision in case of

12 ITA No. 87/JPR/2024 Bharitaya Jain Sanghanatana vs. CIT(E) Commissioner of Income Tax vs. Palghat Shadi Mahal Trust, 254 ITR 212 wherein Hon’ble Apex Court held that any trust making discrimination on the basis of caste or religion, unless covered under explanation, i.e. meant for SC/ST cannot be considered charitable and thus is not eligible for registration under Section 12A. On behalf of the appellant, reliance has been placed on decision in the case of Umaid Charitable Trust vs. The Union of India (Uoi) And Ors. decided by our Hon’ble High Court on 02.05.2008. Therein, it was observed that the line of distinction between religious purposes and charitable purposes is very thin and no water tight compartment between the two activities can be very well established. It was further observed that unless objective of the charitable trust is for spending its income for a particular religion and it is so found in the trust-deed, the Income Tax Department cannot reject the renewal of the trust as charitable trust u/s 80G of the Act, merely because one particular expenditure is for an activity which may be termed as spending for a particulars religion. As noticed above, the observations made by Learned CIT(E) are based on incomplete record i.e. for want of production of complete record by the appellant trust itself.

13 ITA No. 87/JPR/2024 Bharitaya Jain Sanghanatana vs. CIT(E) 16. Therefore, when Learned CIT(E) is to re-look into the matter, he must also take into consideration the well settled law on these issues as well i.e. as to whether the objects and/or acitivities of the applicant trust are/were not religious in nature, and that the expenses said to have been incurred on festivals like Holi Milan, Har Ghar Diwali or that total expenses to the tune of 73%, were incurred for the activities which were or were not as per the objects of the applicant. Result 17. In view of the above discussion, the impugned order passed by the Learned CIT(E) is hereby set aside, and while disposing of this appeal for statistical purposes, the application filed by the appellant trust u/s 12AB on 29.06.2023, is restored to the files of Learned CIT(A), who shall decide the same afresh, after providing reasonable opportunity of being heard to the applicant. Learned CIT(E) shall be at liberty to requisition any other relevant record for the purpose of disposal of the issues arising in the application. However, taking into consideration that the appellant trust failed to produce the books of account and Income & Expenditure account before Learned CIT(E), despite opportunity, and the same are relevant for

14 ITA No. 87/JPR/2024 Bharitaya Jain Sanghanatana vs. CIT(E) adjudication of the issue involved, we hereby impose cost of Rs.2,000/-on the applicant trust. Cost to be deposited in the Prime Minister’s Relief Fund. The applicant to produce before Learned CIT(E), receipt in proof of deposit of cost of Rs. 2,000/- imposed today, and thereupon, Learned CIT(E) to commence proceedings. Order pronounced in the open court on 20/09/2024. Sd/- Sd/- ¼jkBkSM+ deys'k t;UrHkkbZ ½ ¼ujsUnz dqekj½ (RATHOD KAMLESH JAYANTBHAI) (NARINDER KUMAR) ys[kk lnL; @Accountant Member U;kf;d lnL;@Judicial Member Tk;iqj@Jaipur fnukad@Dated:- 20/09/2024 *Santosh आदेश की प्रतिलिपिअग्रेf’ात@ब्वचल वf जीम वतकमत वितूंतकमक जवरू The Appellant- Bharitaya Jain Sanghanatana, Kota. 1. 2. izR;FkhZ@ The Respondent- CIT(E), Jaipur. 3. vk;djvk;qDr@ The ld CIT 4. विभागीय प्रतिनिधि] आयकरअपीलीय अधिकरण] जयपुर@क्त्ए प्ज्Aज्ए Jंपचनत 5. xkMZQkbZy@ Guard File ITA No. 87/JPR/2024) vkns'kkuqlkj@ By order,

सहायक पंजीकार@Aेेजज. त्महपेजतंत