The Mispha Pentecostal Mission, CHENNAI V. ITO, Nagercoil

ITA 74/CHNY/2011

• Counselvise Citation: 7421714 RSA 2011
• Duration Of Justice: 2 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-03-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: misc
• Appeal Filed On: 14-01-2011

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BENCH A CHENNAI (BEFORE SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER AND SHRI GEORGE MATHAN, JUDICIAL MEMBER) ..... I.T.A. NOS. 73 & 74 / MDS/2011 THE MISPHA PENTECOSTAL MISSION NEERALI THATTUVILAI, MUZHICODE ARUMANAI POST 629 151 KANYAKUMARI DISTRICT. PAN : AAABT 5636 C (APPELLANT) V. THE INCOME TAX OFFICER, WARD I(1), NAGERCOIL (RESPONDENT) APPELLANT BY : SHRI S. SRIDHAR RESPONDENT BY : SHRI SHAJI P. JACOB O R D E R PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER : THESE ARE APPEALS FILED BY ASSESSEE DIRECTED AGAIN ST THE ORDERS DATED 7.10.20101 OF THE LD. CIT I, MADURAI DENYING IT REGISTRATION U/S 12AA OF THE INCOME-TAX ACT, 1961 [ IN SHORT, THE ACT] AND APPROVAL U/S 80G OF THE ACT. I.T.A. NOS. 73 & 74/MDS/11 2 2. SHORT FACTS APROPOS ARE THAT ASSESSEE HAD FILED APPLICATION ON 26.4.2010 FOR GRANT OF REGISTRATION U/S 12AA OF ACT AND APPROVAL U/S 80G OF THE ACT. LD. CIT, AFTER VERIFYING THE TRUST DEED FILED BY THE ASSESSEE, WAS OF THE OPINION THAT ITS OBJECTS, THOU GH APPARENTLY CHARITABLE, WAS NEVERTHELESS BOTH RELIGIOUS AND CHA RITABLE IN NATURE. ASSESSEE HAD CLAIMED STATUS AS RELIGIOUS AND CHARIT ABLE TRUST. LD. CIT CAME TO THE CONCLUSION THAT ASSESSEE TRUST ENVI SAGED CARRYING OUT RELIGIOUS ACTIVITIES AS WELL AS CHARITABLE ACTI VITIES AND COPIES OF ACCOUNTS FILED BY THE ASSESSEE TRUST PROVED SPENDIN GS FOR BOTH RELIGIOUS AND CHARITABLE ACTIVITIES. THEREFORE, AC CORDING TO HIM, ASSESSEES OBJECTS WERE AN ADMIXTURE OF BOTH RELIGI OUS AND CHARITABLE ACTIVITIES AND IN VIEW OF SECTION 11(1)( A) AND 13(1)(B) OF THE ACT, IT WAS NOT ELIGIBLE FOR REGISTRATION U/S 1 2AA OF THE ACT. RELIANCE WAS PLACED ON THE DECISION OF THE HONBLE J & K HIGH COURT IN THE CASE OF GULAM MOHDIN TRUST VS. CIT [2001] 24 8 ITR 587 AND THE DECISION OF THE HONBLE SUPREME COURT IN THE CA SE OF STATE OF KERALA VS. M.P. SHANTI VERMA JAIN [1998] 9 231 ITR 7 87 AND CIT VS. UPPER GANGES SUGAR MILLS LTD. [1997] 227 ITR 578 [SC ]. I.T.A. NOS. 73 & 74/MDS/11 3 3. FOR A REASON THAT ASSESSEE WAS NOT GIVEN REGISTR ATION U/S 12AA OF THE ACT, LD. CIT DENIED IT APPROVAL SOUGHT U/S 8 0G ALSO. 4. NOW BEFORE US LD. A.R. STRONGLY ASSAILING THE ORD ER OF THE LD. CIT(A) SUBMITTED THAT THOUGH ASSESSEES OBJECTS WER E ADMIXTURE OF RELIGIOUS AND CHARITABLE ACTIVITIES, SUCH OBJECTS W ERE NEVERTHELESS PUBLIC IN NATURE AND HENCE DENIAL OF REGISTRATION U /S 12AA OF THE ACT AND APPROVAL U/S 80G OF THE ACT WERE UNJUSTIFIED. 5. WE HAVE VERIFIED THE ORDERS OF THE AUTHORITIES B ELOW AND HAVE CONSIDERED THE RIVAL SUBMISSIONS. THERE WERE TWO R EASONS FOR WHICH LD. CIT DENIED REGISTRATION U/S 12AA OF THE ACT. F IRST ONE WAS THAT ASSESSEE WAS HAVING IN ITS OBJECTS BOTH RELIGIOUS A ND CHARITABLE PURPOSES AND ACCORDING TO THE LD. CIT, WHERE THE OB JECTS WERE BOTH RELIGIOUS AND CHARITABLE, REGISTRATION SOUGHT U/S 1 2AA COULD NOT BE GIVEN. SECOND ONE WAS THAT IN THE COPIES OF ACCOUN TS FILED ALONGWITH THE APPLICATION, ASSESSEE HAD SHOWN RECEI PTS FROM CHURCH OFFERINGS, BUT COULD NOT PRODUCE ANY DONATION RECEI PT, LIST OF DONORS, ETC. FOR VERIFICATION. HENCE, ACCORDING TO HIM, THE ASSESSEE WAS NOT ABLE TO ESTABLISH ITS GENUINENESS ALSO. WE HAVE HAD A LOOK I.T.A. NOS. 73 & 74/MDS/11 4 AT THE OBJECTS OF THE TRUST AS PER THE TRUST DEED D ATED 17.7.2003. SUCH OBJECTS HAVE BEEN REPRODUCED HEREUNDER: I. TO DO GOSPEL WORK PROCLAIMING SALVATION THROUGH LORD JESUS CHRIST EVERYWHERE IN INDIA AND ABROAD ACCORDI NG TO THE TEACHINGS OF LORD JESUS. II. TO MAKE AND CONSTITUTE CHURCHES AND CONGREGATIO NS BASED ON FAITH AND MAKE AVAILABLE TO THEM THE WAYS AND MEANS TO LIVE HOLY AND SPIRITUAL LIFE. III. TO TEACH THE DOCTRINES, CREEDS AND SACRAMENTS AS TAUGHT BY LORD JESUS AND HIS APOSTLES AND DISCIPLES. IV. TO BUILD PLACES OF WORSHIP AND PRAYER HALLS FOR THE USE OF THE CONGREGATIONS AND REDEEMED SOULS. V. TO PURCHASE LANDS AND BUILDINGS FOR THE VARIOUS USES OF THE TRUST. VI. TO DO SOCIAL AND OTHER AMELIORATIVE SERVICES TO THE POOR AND DOWN TRODDEN PEOPLE IN THE FIELDS OF EDUCATION, OCCUPATIONAL PURSUITS HEALTH AND HYGIENE AND SANITA TION. VII. TO ORGANIZE AND RUN POOR HOMES, ORPHANAGES AND HOMES OF THE GOOD. I.T.A. NOS. 73 & 74/MDS/11 5 VIII. TO AID AND HELP THE POOR AND ORPHAN STUDENTS IN THEIR EDUCATION AND OCCUPATIONAL PURSUITS IRRESPECTIVE OF CASTE, COLOUR OR CREED. IX. TO START AND RUN DOCTRINAL SCHOOLS FOR TRAINING SPIRITUALLY WHOLESOME YOUTHS TO DO PURE GOSPEL WORK. X. TO START AND RUN ALL KINDS OF SCHOOLS, BOTH ACAD EMIC AND INDUSTRIAL FOR GIVING EDUCATIONAL OPPORTUNITIES TO THE POOR AND MINORITY COMMUNITIES XI. TO CONDUCT HOLY CONVENTIONS, SEMINARS AND OTHER MEETINGS WITH THE AID OF AUDIO AND VIDEO PERFORMANCES AND TO PUBL ISH JOURNALS, MAGAZINES AND OTHER PERIODICALS AND BOOKS FOR THE SPREAD OF THE GOSPEL. XII. AND TO DO SUCH OTHER GOSPEL AND SOCIAL SERVICE WORKS AS MAY BE USEFUL AND CONDUCIVE TO THE OBJECTS OF THE TRUST . 6. A READING OF THE ABOVE OBJECTS WOULD SHOW THAT C LAUSES (I) TO (IV) ARE RELIGIOUS IN NATURE WITHOUT DOUBT. CLAUSE S THEREAFTER ARE CHARITABLE IN NATURE. THAT ALSO GOES WITHOUT DOUBT . SO, THE OBSERVATION OF THE LD. CIT THAT ASSESSEES OBJECTS WERE AN ADMIXTURE OF RELIGIOUS AND CHARITABLE OBJECTS IS CERTAINLY CO RRECT. QUESTION IS WHETHER THERE CAN BE A DENIAL OF REGISTRATION U/S 1 2AA OF THE ACT I.T.A. NOS. 73 & 74/MDS/11 6 FOR THIS REASON. WE FIND THAT THIS ISSUE HAD COME UP BEFORE THE COCHIN BENCH OF THIS TRIBUNAL IN A THIRD MEMBER DEC ISION, NAMELY, THE SOCIETY OF PRESENTATION SISTERS VS ITO [318 IT R (AT) 287]. AFTER CONSIDERING THE VARIOUS DECISIONS RELIED ON BY THE LD. CIT FOR DENYING REGISTRATION HERE, IT WAS HELD BY THE THIRD MEMBER BENCH AS UNDER:. (I) THAT NO RELEVANT FACTS HAD BEEN BROUGHT ON REC ORD TO MAKE OUT A CASE JUSTIFYING DENIAL OF EXEMPTION UNDER SECTION 11 (1)(A). THERE WAS NO FINDING THAT CHAPELS AND CONVENTS WERE TO SERVE A PARTICULA R COMMUNITY AND THE PURCHASE HIT BY PROVISIONS OF SECTION 13(1)(B). AGA IN, MAINTENANCE OF CHURCH MUST BE TREATED AS CHARITABLE PURPOSE. EVEN IF THEY WERE RELIGIOUS, THERE WAS NO JUSTIFICATION FOR DENYING EXEMPTION TO THE A SSESSEE. IT WAS NOBODY'S CASE THAT PURPOSES WERE PARTLY CHARITABLE AND PARTL Y NON-CHARITABLE AND, THEREFORE, EXEMPTION UNDER SECTION L1(1)(A) WAS NOT AVAILABLE AS TRUSTS WERE CREATED AFTER APRIL 1, 1962. II) THAT THE DEPARTMENT DID NOT ALSO MAKE OUT ANY CASE UNDER SECTION 13(1)(B) OR ANY OTHER CLAUSE OF THE SECTION. THERE WAS NO FINDING THAT THE TRUSTS IN QUESTION WERE CHARITABLE INSTITUTIONS CRE ATED OR ESTABLISHED FOR THE BENEFIT OF ANY PARTICULAR RELIGIOUS COMMUNITY OR CASTE. NO VIOLATI ON OF THE SECTION 13(1)(B) OF THE ACT HAD BEEN STATED OR ESTA BLISHED. THE FINDING OR BASIS FOR DENIAL OF EXEMPTION UNDER SECTION L1(L)(A ) WAS THAT THE TRUSTS WERE PARTLY RELIGIOUS AND PARTLY CHARITABLE. SUCH BASIS WAS NOT LEGALLY TENABLE. THE ASSESSEES WERE ENTITLED TO EXEMPTION UNDER SECT ION L1(1)(A) OF THE ACT. I.T.A. NOS. 73 & 74/MDS/11 7 : (I) IT IS NOT OPEN TO A MEMBER OF THE TRIBUNAL TO TAKE A DIFFERENT VIEW THA N ONE TAKEN BY A CO-ORDINATE BENCH OF THE SUCH A CASE HE IS AT LIBERTY TO MAKE OUT A CASE FOR REVIEW OF THAT FOR REFERENCE AND CON SIDERATION OF THE ISSUE BY A LARGER BENCH OF THE TRIBUNAL. (II) THE WORD 'OR' HAS ALWAYS SEPARATED RELIGIOUS A ND CHARITABLE PURPOSES. THE PROVISIONS OF SECTION 11 (1)(A) OF THE INCOME-TAX ACT, 1961 MAKE NO DISTINCTION BETWEEN CHARITABLE AND RELIGIOUS PURPOS ES. A CHARITABLE INSTITUTION CAN HAVE RELIGIOUS PURPOSES; WHEREAS A RELIGIOUS INSTITUTION MAY BE PARTLY CHARITABLE. CHARITABLE AND RELIGIOUS PURP OSES OVERLAP IN INDIA. EVEN OTHERWISE, RELIEF AND HELP TO THE POOR, MEDICAL HEL P TO THE NEEDY, LOOKING AFTER DEITY AND TEMPLES (MOSQUE, CHURCH INCLUDED) A RE NO DOUBT RELIGIOUS PURPOSES BU T THESE ARE ALSO CONSIDERED AS CHARITABLE IN INDIA. T HEREFORE, THE VIEW THAT EXEMPTION UNDER SECTION 11(1)(A) CANNOT B E ALLOWED TO A CHARITABLE ALSO CARRYING OUT SOME PURPOSES WHICH ARE TERMED 'R ELIGIOUS' IS CONTRARY TO T'HE WELL ESTABLISHED AND SETTLED LAW IN INDIA. III) ALTHOUGH THERE IS NO DISTINCTION BETWEEN RELIG IOUS OR CHARITABLE INSTITUTIONS AS FAR AS SECTION 11(1)(A) IS CONCERNE D, SUCH DISTINCTION IS RECOGNIZED U/S 13 WHICH IS AN EXEMPTION TO SECTION 11 AND 12 OF THE ACT. CASES WHICH ARE COVERED UNDER CLAUSES (A), (B), (C) AND (D) OF SECTION 13 WOULD NOT BE ENTITLED TO EXEMPTION UNDER SECTION 11 OR 12 OF THE ACT. CLAUSE (A) OF SECTION 13 RELATES TO INCOME FROM PROPERTY UNDER A TRUST FOR PRIVATE RELIGIOUS PURPOSES WHICH DOES NOT ENURE FOR THE BENEFIT OF THE PUBLIC. CLAUSE (B) DEALS WITH CASES OF CHARITABLE I NSTITUTION CREATED OR ESTABLISHED AFTER THE COMMENCEMENT OF THE ACT. IT I S REQUIRED TO BE SEEN I.T.A. NOS. 73 & 74/MDS/11 8 WHETHER SUCH CHARITABLE TRUST OR INSTITUTION IS EST ABLISHED FOR THE BENEFIT OF A PARTICULAR RELIGIOUS COMMUNITY OR CASTE. IF IT IS SO ESTABLISHED THEN THE PROVISIONS OF SECTION 11 WILL NOT BE ATTRACTED. BUT FOR APPLICATION OF THIS CLAUSE, IT IS TO BE SHOWN THAT INCOME OF THE TRUST ENURES AND IS USED OR APPLIED DIRECTLY OR INDIRECTLY FOR THE BENEFIT OF T HE PERSONS REFERRED TO IN SUB-SECTION (3). CLAUSES (C) AND (D) ARE APPLICABLE TO BOTH TYPES OF TRUSTS, I.E., TRUSTS FOR CHARITABLE OR RELIGIOUS PURPOSES, UNLIKE IN CLAUSES (A) AND (B) WHICH WERE APPLICABLE TO PRIVATE RELIGIOUS TRUSTS O R TO CHARITABLE TRUSTS. THE LEGISLATURE HAS SPECIFICALLY USED IN CLAUSE (C) THE WORDS 'TRUST FOR CHARITABLE OR RELIGIOUS PURPOSES'. CLAUSES (C) AND (D) WOULD BE APPLICABLE TO TRUSTS WHICH ARE EITHER FOR CHARITABLE PURPOSES OR FOR RELIGIOUS PURPOSES OR PARTLY CHARITABLE AND PARTLY RELIGIOUS. IN OTHER WO RDS, IF SUCH TRUST IS ESTABLISHED ONLY FOR THE BENEFIT OF A PARTICULAR RE LIGIOUS COMMUNITY OR CASTE, THEN THE PROVISIONS OF SECTION 11 WOULD NOT BE APPLICABLE. BUT THE POSITION WOULD BE DIFFERENT AND IN CASE OF A TRUST OR INSTITUTION FOR RELIGIOUS PURPOSES, WHEREIN CERTAIN ACTIVITIES TERMED AS CHAR ITABLE ACTIVITIES ARE ALSO CARRIED FOR THE BENEFIT OF A RELIGIOUS COMMUNITY OR CASTE, CLAUSE (B) WOULD HAVE NO APPLICATION IN SUCH A CASE. 8. HERE ALSO THERE IS NO CASE FOR THE REVENUE THAT THE ASSESSEE TRUST WAS ESTABLISHED FOR A PARTICULAR RELIGIOUS CO MMUNITY OR CASTE. ADVOCATION OF THE DOCTRINES AND GOSPEL AS PROCLAIME D BY LORD JESUS CANNOT BE CONSIDERED AS BENEFITING ANY PARTICULAR R ELIGIOUS COMMUNITY ALONE. BASED ON THE ABOVE MENTIONED THIR D MEMBER I.T.A. NOS. 73 & 74/MDS/11 9 DECISION, WE ARE OF THE OPINION THAT ADMIXTURE OF R ELIGIOUS AND CHARITABLE OBJECTS COULD NOT BE CITED A REASON FOR DENYING REGISTRATION SOUGHT BY THE ASSESSEE. AS FOR CHURCH OFFERING NOT HAVING RECEIPTS, WE CANNOT EXPECT TITHE AND BOX OFF ERINGS OF DEVOTEES VISITING TEMPLES AND CHURCHES TO BE ISSUED RECEIPTS. EVEN SECTION 115BBC, WHICH TAXES ANONYMOUS DONATIONS, AP PLY ONLY FOR PURELY CHARITABLE TRUST. THUS WE ARE OF THE OPINIO N THAT LD. CIT WAS NOT JUSTIFIED IN DENYING REGISTRATION U/S 12AA TO T HE ASSESSEE. HENCE WE QUASH THE LD. CITS ORDER DENYING SUCH REGISTRAT ION AND DIRECT HIM TO GRANT THE ASSESSEE REGISTRATION SOUGHT U/S 1 2AA OF THE ACT. 9. IN SO FAR AS DENIAL OF APPROVAL U/S 80G OF THE A CT IS CONCERNED, AS MENTIONED BY US ABOVE, OBJECTS CLAUSES (I) TO (I V) OF THE ASSESSEE ARE, WITHOUT DOUBT, RELIGIOUS IN NATURE, THOUGH, O F COURSE, OF A PUBLIC RELIGIOUS NATURE. NEVERTHELESS, SUB-SECTION (5) OF SECTION 80G OF THE ACT AT SUB-CLAUSE (II) STIPULATES THAT THE I NSTRUMENT UNDER WHICH AN INSTITUTION OR FUND WAS CONSTITUTED SHOULD NOT CONTAIN ANY PROVISION FOR THE TRANSFER OR APPLICATION, AT ANY T IME, OF THE WHOLE OR ANY PART OF THE INCOME OR ASSETS OF THE INSTITUT ION OR FUND FOR ANY PURPOSE OTHER THAN A CHARITABLE PURPOSE. THEREFORE, ASSESSEE WAS I.T.A. NOS. 73 & 74/MDS/11 10 NOT ELIGIBLE FOR THE APPROVAL U/S 80G(V) OF THE ACT . THEREFORE, WE DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF THE LD. CIT DENYING APPROVAL U/S 80G OF THE ACT. 10. IN THE RESULT, APPEAL OF THE ASSESSEE IN ITA NO . 73/MDS/2011 IS ALLOWED WHEREAS APPEAL IN ITA NO. 74/MDS/2011 IS DI SMISSED. THE ORDER WAS PRONOUNCED IN THE COURT ON 30 TH MARCH 2011. SD/- SD/- (GEORGE MATHAN) (ABRAHAM P. GEORGE) JUDICIAL MEMBER ACCOUNTANT MEMBER CHENNAI, DATED THE 30 TH MARCH, 2011. VL/ COPY TO: (1) APPELLANT (2) RESPONDENT (3) CIT (4) CIT[A] (5) DR (6) GUARD FILE