ITO(E), NEW DELHI vs. BHAGWAN SHREE LAXMI NARAYAN DHAM TRUST, DELHI

Ld. AO noted that assessee trust has been holding spiritual and religious discourses at various samagams (congregations) and also on TV channels. The said discourses are addressed by Brhamrishi Shree Kumar Swamiji known as Gurudevji wherein the participants are imparted mantras i.e. Beej Mantras for providing relief from diseases, mental tension and materialistic worries. The AO noted that in the earlier years the assessee was engaged in imparting of spiritual education, however, in the assessment year 2009-10 and 2010-11, additions were made on account of anonymous donations and same was taxed by invoking provision of section 115BBC. He further noted that during the year, assessee has established a mandir at Greater Kailash Enclave, Part I devoted to Hindu Gods and Goddesses open to general public. He observed that looking into the objects of the trust, which was mainly for charitable purpose but there was no such clause which can call even religious purpose. It is not mentioned information of the 21 clauses incorporated by him in the impugned order. Even in the supplementary trust deeds, there is no alterations or amendments made in the objects of the trust. The activities of the assessee mostly revolves around its religious activities and setting up of temple for worshipping of Hindu God and Goddess and such discourses at every samagam is nothing but imparting of religion lectures. Thus, the assessee trust was not treated or established for religious purpose then it cannot be justified its activities which has now become religious in nature. The objects of a charitable trust is sacrosanct and it is not permissible to go beyond the objects. The assesee before the AO, submitted that it is essentially religious / spiritual and charitable trust and it is engaged in activities of public charity as well as spiritual / religious activities for the upliftment of consciousness of humanity and facilitation for freedom from suffering by way of cosmic grace. The AO released that as per the admission of assesee itself it is purely religious objects and trust was established for religious purpose. Further tried to distinguish the judgement of Hon’ble Apex Court in the case of CIT vs. Social Service Centre 250 ITR 39 (AP) as relied upon by the assesee and also other judgments. He also tried to reject the assessee’s contention that objects of the trust include imparting of spiritual lectures and the words spiritual and religious are sacrosanct. The reason given by for such rejection is that in the dictionary these two have been a different connotation. After detailed discussion and looking to the activities carried out by the assesee organising spiritual and other various religious and rituals, he held that thus activities are purely religious and hence asessee is entitled to claim exemption u/s 11 and 12. He also referred to the earlier assessment orders for the assessment year 2009-10 and 2010-11 wherein it was held that assessee and spiritual organisations. However, in this year the facts have changed simply because assessee has set up a temple of Hindu God and Goddess and thus precedence of earlier years will not apply because assessee has decided the issue in favour of the assesee in those years.

He further observed that assessee has incurred expenditure of Rs. 3,10,01,534/- under the head “Aadhyatamic Pravachan Expenses” on telecast of samagams where religious discourses and Beej Mantras are given by the followers. He required the assessee to submit expenditure incurred by gurudevji on telecast of discourse in his individual capacity. However, no details have been furnished. Thus he deduced that such an expenditure has been incurred by giving Rs.

Ld. CIT(A) held that Hon’ble Delhi High Court in the case of assessee itself in vide judgment and order dated 7.9.2015 after verifying the same objects and the activities carried out has upheld the benefit of exemption u/s 11. He also took note of the fact that the Hon’ble High Court after verifying the activities of the trust their Lordship held that “what can constitute religious activities in the context of the religion need not be confined the activities incidental to a place of worship like a temple". In para 15 of the order, High Court held "it might well be that a Hindu religious institution like the assessee is also engaged in charitable activities which are very much part of religious activity. In carrying on charitable activities alongwith organizing or spiritual lecturers, the assessee by no means ceases to be religious institution. The activities described by the assessee as having been undertaken by it during the assessment year in question can be included in the broad conspectus of Hindu religious activity when viewed in the context of the objects of the trust and its activities in general".

The Ld. CIT(A) further observed that assessee trust continues to enjoy the registration u/s 12A and there is no proceedings initiated for withdrawal of registration and assesee is continuing the activities and was carried out in the previous year i.e. imparting spiritual lectures through various modes. Regarding disallowance of TV expenditure after invoking provision of section 13(1)(c) he held that no benefit directly or indirectly has gone to any of the trust because the dominant purpose for such kind of telecast for money was to impart discourses and not to gain any personal benefit as envisaged in the clauses of section 13(2). He further held that if such a presumption premise of the AO is taken then it will result into denial of exemption to most of the trust engaged in charitable activities in public domain on account of so called gaining of popularity and good will by the persons specified u/s 13(3) which was never been the intention of the legislature because section 13(2) has specified the various nature of benefits disentitling the trust benefit of exemption. Lastly, on account of addition of Rs. 50 lacs on unexplained expenditure on Samagam expenses he accepted the assessee’s contention that the onus was on the AO to bring on record expenses incurred by the assessee which are not found recorded in the books of accounts. Here in this case, the AO has miserably failed. Thus after detailed discussion he held that assessee was not entitled for exemption u/s 11(1).

Before us, Ld. Counsel appearing on behalf of the assessee trust submitted that this precise issue has come up for consideration before the Tribunal in assessee’s own case in the assessment year 2009-10 and wherein this Tribunal held that activities carried out by the assessee were within the hindu religious activities. He further pointed out that the Tribunal order was also subject matter of appeal before the Hon’ble High Court by the revenue and the Hon’ble High Court after noting similar objections raised by the revenue had upheld the order of the Tribunal in a very detailed and speaking manner. He also drew our attention to various objections and the findings of the Hon’ble High Court raised specifically given at page 8,15,16. He submitted that in the present year also there is no change in facts because the assessee has constructed a temple. Earlier the department’s objection was the activities of the assesee’s trust is spiritual and not religious and this year the AO has sought it a religious. Thus, there is an inherent contradiction in the stand of the department whereas the issue has been dealt threadbare by the Tribunal and the Hon’ble High Court in the case of assessee there remains no basis for denying exemption u/s 11(1) in this year. In so far as other observations of the AO and disallowance of 1/3 of expenditure of TV expenses, he submitted that first of all AO has failed to point out any monetary benefit derived by Gurudev by samagam and no iota for instance have been pointed out or identified by the AO what could have been the benefit of Guruji in terms of section 13(2). The benefit must be such the same should be capable of being quantified not on the basis of any kind of conjecture and surmises. Lastly on the issue of adhoc estimation of Rs. 50 lacs which has been incurred on organising Samagam he submitted that the assessee has shown expenditure of Rs. 9,23,944/- which has been accepted by the AO. However without any basis or material he has estimated sum of Rs. 50 lacs completely based on hypnotically which cannot be sustained. Accordingly order of the Ld. CIT(A) should be upon.

On the other hand, Ld. DR strongly relied upon the various observations of the AO submitted that AO has tried to distinguish the facts on the earlier years and have given a very detailed reasoning as to why the facts are different from earlier years and in any case the assessee’s entire activities have been found to be for religious purpose and no such objects of religious purpose has been enshrined in the trust deed and, therefore, such activities beyond the objects cannot entitled the asseee’s trust for benefiting u/s 11(1). Unfortunately, there is no such arguments noted by him. Thus activities of the assessee being purely religious in nature and not given in the trust deed therefore entire benefit u/s 11(1) gets forfeited.

We have heard the rival submission, perused the relevant finding given in the impugned orders and also in the case of the assessee in the previous years. It is an undisputed fact that based on the objects as enshrined in the trust deed the assessee was given registration u/s 12A and such a registration has neither been revoked nor cancelled by the competent authority . It is a trite law if any proof or institution has been granted registration u/s 12A then income of such trust has to be constituted strictly in accordance with section 11 to 13.This is a which AO has to strictly adhered to. If assesee is not carrying out any activity as per its objects then only the authority granting registration has the power to cancel the registration or view the same. Here in this case , there could not be any dispute that the objects as incorporated in the impugned assessment order as well as in the foregoing paragraphs continues the same as was there in the earlier years. That means there is no change in the objects. The entire case of the AO revolves around the premise that assessee in this year has carried out mainly religious activities simply because assessee has established one Mandir devoted to Hindu God and Goddess. And it is on this fact he has tried to take a divergent view from the earlier years and also not following the precedence of the Tribunal. In para 3 of the assessment order he himself has admitted that trust has been holding spiritual and religious discourses at various Samagam and also on TV channels which are conducted and addressed by Bramrishi Shree Kumar Swamiji wherein the disciples / participants are given imparted that disease, mental tensions and materialist worries. He has also tried to distinguish the words religious and spiritual are two different concepts and they cannot be treated as one and the same and it is for this reason also he has tried to distinguish the past precedence. He further held that intention of the legislature to cover trust for charitable purpose which are for religious for charitable and since here in this case none of the objects are religious, therefore , assessee cannot be held tobe religious trust. We find that the Tribunal after noting down the single objects at para 10.4 have also occasioned to discuss the concept of the term “wholly for religious purposes” or “wholly for religious and charitable purposes”. The relevant observations on the findings of the Tribunal in para 10.6 to 10.9 for the sake of ready reference are reproduced hereunder :- “10.6. The term" "wholly for religious purposes" or "wholly for religious and charitable purposes" have not been defined under the Income Tax Act. As per general principle of interpretation, expressions which are not defined in a Statute should be construed to give them sensible meaning having regard to well known and accepted concepts so as not to lead to a manifestly absurd or anomalous result which could not have been intended by the Legislature. Hence the expression. "religion" has to be appropriately construed in the context of the document i.e. then Trust Deed in the present case. Before we proceed to consider the Trust Deed, it also needs to be kept in mind that it is a well accepted principle of interpretation that the nomenclature adopted by the parties in any document is not conclusive to indicate the real nature of the document or the intention it actually records. It is the duty of the Court to see and examine what in truth is the essential and factual nature of the document. This Rule relating to inconclusiveness of the nomenclature adopted is more relevant in interpretation of document then on law and Court is never found or concluded by language which may have been used in the document. Hence in order to determine whether the expression "spiritual" used in the Trust Deed conveyed its real nature and meaning it must follow that it is the Trust Deed itself and its form and content which is to be examined and considered alongwith the expression "spiritual" as understood in its popular senseuti loquitor vulgus so as to be in accord with the real intention of the parties as appearing from the instrument. 10.7. On a consideration of the above alongwith the findings recorded in the assessment order which have been extracted in para 2 & 3 of this order, it is seen that while considering the explanation qua the anonymous donations which was claimed to be voluntary donations by the assessee, the tax authorities have come to the incorrect conclusion that since the assessee was engaged in spiritual lectures which according to their understanding of the context in which the explanation was offered was mistakenly and erroneously considered to be a bar to the assessee in claiming that the rigours of sec. l15BBC were not attracted. The said conclusion has been arrived at by the tax authorities on considering the anonymous donations in the facts of the present case in the light of the newly inserted section l15BBC and the aforesaid Circular No.14 of the CBDT which explained the same. On considering the objects of the trust we are of the view that in the facts of the present case the tax authorities have proceeded on a very narrow and incorrect understanding in holding that the assessee trust was engaged in spreading spirituality and since section ll5BBC only exempts religious trust, a trust allegedly imparting spiritual knowledge was consequently not contemplated as an exception by the Legislature as much as it

In the appeal before the Hon’ble High Court against the said judgement the High Court has noted the submission of the Ld. Sr. Standing Counsel of the revenue had discussed the issue threadbare in the following manner :- “8. It was submitted by Mr. Kamal Sawhney that none of the activities stated in Clause 5 of the Trust Deed can be said to be a purely religious activity. In other words charitable activities enumerated therein could not be said to be ‘religious activities’. According to Mr. Sawhney, even giving of spiritual lectures would not strictly qualify as a religious activity.”

In Commissioner of Income-Tax v. Dawoodi Bohra Jamat (supra), the Supreme Court, after analysing the objects of the Trust in that case held that they were “not indicative of a wholly religious purpose but were collective indicative of both charitable and religious purposes.” It was held in the context of that case that “the establishment of Madarsas or institutions to impart religious education to the masses would qualify as a charitable purpose qualifying under the head of the education under the provisions of Section 2(15) of the Act.” Further, “the objects reflected the intent of the trust as observance of the tenets of Islam, but did not restrict the activities of the trust to religious obligations only and for the benefit of the members of the community.” It was emphasized that : “In certain cases, the activities of the trust may contain elements of both religious and charitable and thus, both the purposes may be overlapping. More so when the religious activity carried on by a particular section of people would be a charitable activity for or towards other members of the community and also public at large. For example, the practice of option charity in the form of Khairat or Sadaquah under the Mohammadan Law would be covered under both charitable as well as religious purpose. Further, while providing food and fodder to animals especially cow is religious activity for Hindus, it would be charitable in respect to non- Hindus as well. Similarly, service of water to the thirsty would find mention as religious activity in sacred texts and at the same time would qualify as a charitable activity.” (emphasis supplied)”

What can constitute religious activity in the context of the Hindu religion need not be confined the activities incidental to a place of worship like a temple. The Supreme Court in the Commissioner, Hindu Religious Endowments, Madras v. Sri Lakshmindra Thirtha Swamiar 1954 AIR 282 SC held that “a religious denomination or organisation enjoys complete autonomy in the matter of deciding as to what rites and ceremonies are essential according to the tenets of the religion they hold and no outside authority has any jurisdiction to interfere with their decision in such matters.” It examined the scope of the protection