DEVKI-KRISHNA EDUCATIONAL TRUST, MUMBAI v. DIT, MUMBAI

ITA 3800/MUM/2010 | misc
Pronouncement Date: 28-09-2011 | Result: Allowed

Appeal Details

RSA Number 380019914 RSA 2010
Assessee PAN AAATD8300Q
Bench Mumbai
Appeal Number ITA 3800/MUM/2010
Duration Of Justice 1 year(s) 4 month(s) 17 day(s)
Appellant DEVKI-KRISHNA EDUCATIONAL TRUST, MUMBAI
Respondent DIT, MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 28-09-2011
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted D
Tribunal Order Date 28-09-2011
Date Of Final Hearing 21-09-2011
Next Hearing Date 21-09-2011
Assessment Year misc
Appeal Filed On 11-05-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH D MUMBAI BEFORE SHRI N.V.VASUDEVAN(J.M) & SHRI T.R.SOOD (A. M) ITA NO.3800/MUM/2010 DEVKI-KRISHNA EDUCATIONAL TRUST A/02 KRISHNA KAMAL CO-OP. HSG. SOC. LTD. GOVIND NAGAR BORIVILI (W) MUMBAI. PAN:AAATD 8300Q (APPELLANT) VS. DIRECTOR OF INCOME TAX (EXEMPTION) MUMBAI. (RESPONDENT) APPELLANT BY : SHRI PRAKASH PANDIT RESPONDENT BY : SHRI G.P.TRIVEDI DATE OF HEARING : 21/09/2011 DATE OF PRONOUNCEMENT : 28/0 9/2011 ORDER PER N.V.VASUDEVAN J.M THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE OR DER DATED 15/3/2010 OF DIT(E) MUMBAI REJECTING GRANT OF CERTIFICATE UN DER SECTION 80G OF THE IT ACT 1961(THE ACT). THE GROUNDS OF APPEAL RAISED B Y THE ASSESSEE READ AS FOLLOWS. 1. THE LEARNED AO HAS ERRED IN DISAPPROVING OF EX EMPTION U/S. 80G TO THE APPLICANT TRUST. HE HAS FAILED TO APPRECIAT E THE FACT THAT THE EXPENDITURE IS NOT DIRECTED TOWARDS THE BENEFIT OF ANY PARTICULAR RELIGIOUS CASTE OR COMMUNITY. 2. THE EXPENDITURE IS IN KIND IN THE NATURE OF DO NATION OF FOODGRAINS TO POOR PEOPLE AND BOOKS TO POOR STUDENTS THROUGH S ARVAJANIK MANDALS DURING GANPATI FESTIVAL. 3. THE SUMS SO PAID HAVE BEEN DEBITED TO THE INCOME AND EXPENDITURE ACCOUNT UNDER RELIGIOUS EXPENSES MISLEADING THE LE ARNED AO. THE DISCLOSURE OF THE EXPENDITURE AS RELIGIOUS IN NATUR E IN THE BOOKS OF ACCOUNTS BE CONSIDERED AS AN ERROR. 4. THERE HAS BEEN NO INFRINGEMENT OF THE STATUTORY PROVISIONS UNDER SECTION 80G SINCE THE SAME ARE BEING FOLLOWED IN PR ACTICE. ITA NO.3800/MUM/2010 2 5. IRRESPECTIVE OF THE SERIES OF EVENTS SO FAR IT IS HEREBY ASSURED THAT HENCEFORTH THE RELIGIOUS EXPENDITURE OF THE TRUST W ILL NOT IN ANY CASE EXCEED 5% OF THE TOTAL INCOME. ALL THE PROVISIONS OF THE SECTION WILL BE FOLLOWED VERBATIM. 2. THE APPELLANT HEREIN IS A TRUST. IT WAS DULY RE GISTERED AS A TRUST UNDER SECTION 12A OF THE INCOME TAX ACT 1961 (THE ACT). THE APPELLANT WAS ALSO GRANTED A CERTIFICATE UNDER SECTION 80G OF THE ACT WHICH WAS VALID TILL 31/3/2010. UNDER SECTION 80G OF THE ACT DEDUCTION IN RESPECT OF DONATIONS TO CERTAIN FUNDS OR CHARITABLE INSTITUTIONS ARE ALL OWED AS DEDUCTION WHILE COMPUTING TOTAL INCOME OF DONOR. SUCH CHARITABLE I NSTITUTIONS SHOULD HOWEVER BE APPROVED FOR THE PURPOSE OF CLAIMING DED UCTION UNDER SECTION 80G OF THE ACT BY THE DIT(E). ONE OF THE CONDITION S FOR GRANT OF APPROVAL U/S.80-G OF THE ACT IS THAT THE CHARITABLE INSTITUT ION SHOULD NOT INCUR EXPENDITURE IN EXCESS OF 5% OF THE TOTAL INCOME. A S ALREADY STATED THE APPELLANT ENJOYED THE APPROVAL UPTO 31/3/2010. THE APPELLANT APPLIED FOR CONTINUATION OF THE APPROVAL IN FORM 10G PRESCRIBE D UNDER THE INCOME TAX RULES 1962. ALONGWITH APPLICATION THE AUDITED BAL ANCE SHEET OF THE THREE PREVIOUS FINANCIAL YEARS WERE ALSO ANNEXED. 3. THE DIT(E) ON PERUSAL OF THE RETURNS OF INCOM E FOR A.Y.2009-10 AND A.Y. 2007-08 FILED ON RECORD BY THE APPLICANT TRUST AND MORE PARTICULARLY THE INCOME AND EXPENDITURE FOR THE YEAR ENDING 31.03.20 09 AND 31.03.2007 NOTICED THAT THE TRUST HAS EXPENDED AN AMOUNT OF RS .15 351/- AND RS.13 709/- ON RELIGIOUS ACTIVITIES OUT OF THE TOTA L INCOME FOR THE SAID PERIOD ENDING ON 31.03.2009 AND 31.03.2007 WHICH STOOD AT RS.2 7 O74/- AND RS.1 47 637/- RESPECTIVELY. IN VIEW OF THE FACT THA T THE EXPENDITURE ON RELIGIOUS ACTIVITIES EXCEEDED THE PRESCRIBED MONETA RY LIMIT OF 5% OF THE TOTAL INCOME WHICH IS IN CONTRAVENTION TO THE PROVISIONS OF SECTION 80G (5B) OF THE INCOME-TAX ACT A SHOW CAUSE LETTER DATED 25.02.201 0 WAS ISSUED TO THE ITA NO.3800/MUM/2010 3 TRUST ASKING FOR AN EXPLANATION AS TO WHY THE APP LICATION U/S.80G SHOULD NOT BE REJECTED FOR CONTRAVENTION OF THE AFORESAID PROVISIONS. 4. IN RESPONSE A LETTER DT.09.03.2010 WAS BY THE APPELLANT WHEREIN THE APPELLANT TOOK A STAND THAT THE EXPENSES IN QUESTIO N WHICH WERE SHOWN AS RELIGIOUS EXPENSES WERE GIVEN PURELY OUT OF SOCIAL OBLIGATIONS. THE APPELLANT POINTED OUT THAT IN THE STATE OF MAHARASHTRA GANESH FESTIVAL CELEBRATION ARE VERY POPULAR. THE APPELLANT SUBMITTED THAT VARIOUS SARVAJANIK MANDALS APPROACH THE APPELLANT FOR CONTRIBUTION. IN ORDER T O CARRY ON TRUST OBJECTIVES WE NAVE TO COMPULSORILY CONTRIBUTE TO THOSE MANDALS WHICH ARE IN AN AROUND AREA OF OPERATION OF THE APPELLANT. ACCORDI NG TO THE AQPPELLANT THE CONTRIBUTION WAS PURELY A SOCIAL COMMITMENT OF EXPE NSES AND THE DONATIONS WERE USED DURING GANESH UTSAV CELEBRATIONS FOR CHAR ITABLE PURPOSES CARRIED OUT BY THE MANDALS. 5. THE DIT(E) HOWEVER HELD THAT IN VIEW OF EXPLAN ATION 5B OF SECTION 80G INSERTED BY FINANCE ACT 1999 W.E.F. 1/4/2000 ONE OF THE CONDITION FOR GRANT OF APPROVAL UNDER SECTION 80GOF THE ACT WAS THAT T HE CHARITABLE INSTITUTION SHOULD NOT HAVE SPENT MORE THAN 5% OF THE TOTAL INC OME ON RELIGIOUS ACTIVITIES. ACCORDING TO THE DIT(E) ON PERUSAL OF THE INCOME AND EXPENDITURE OF THE APPELLANT FOR THE PERIOD ENDING 31/3/2009 AND 31/3/2007 IT WAS CLEAR THAT THE APPELLANT HAD SPENT MORE THAN 5% OF ITS TOTAL INCOME ON RELIGIOUS ACTIVITIES. THUS THE DIT (E) HELD THAT THE APPELLANT IS NOT ENTITLED TO GRANT OF CONTINUATION OF APPROVA L UNDER SECTION 80G OF THE ACT. HE ALSO HELD THAT THERE WAS NO PROVISION TO C ONDONE CONTRAVENTION OF THOSE PROVISIONS. 6. AGGRIEVED BY THE AFORESAID ORDER OF THE DIT(E) T HE APPELLANT HAD PREFERRED THE PRESENT APPEAL BEFORE THE TRIBUNAL. ITA NO.3800/MUM/2010 4 7. THE LD. COUNSEL FOR THE APPELLANT SUBMITTED BEFO RE US THAT THE MISCELLANEOUS EXPENSES DEBITED IN THE INCOME AND EX PENDITURE ACCOUNT WITH DESCRIPTION RELIGIOUS WERE IN FACT DONATIONS GIVEN TO SARVAJANIK MANDALS FOR THE PURPOSE OF PURCHASE OF FOOD GRAINS BY MANDALS TO FEED THE POOR AND NEEDY PEOPLE DURING THE GANAPATI FESTIVAL. IN THIS REGARD OUR ATTENTION WAS DRAWN TO THE CERTIFICATES OF THE CHAR TERED ACCOUNTANT DATED 27//5/2007 AND 5/6/2009 COPY OF WHICH WAS PLACED A T PAGE 60 AND 70 OF THE ASSESSEES PAPER BOOK WHEREIN THE AUDITORS HAV E DULY CERTIFIED THAT THE FACT THAT THE RELIGIOUS EXPENSES WERE DONATIONS TO SARVAJANIK MANDALS FOR PURCHASE OF FOOD GRAINS TO FEED THE POOR AND NEEDY PEOPLE DURING THE GANAPATI FESTIVAL. IT WAS THUS SUBMITTED BY HIM TH AT FEEDING POOR AND NEEDY COULD NOT BE EXPENDITURE INCURRED WHICH IS OF RELI GIOUS NATURE. IT WAS ALSO SUBMITTED THAT THE SARVAJANIK MANDALS CAME INTO VOG UE BECAUSE OF EFFORTS OF BALGANGADHAR TILAK TO PROMOTE PEACE AND HARMONY FOR COMMON GOOD AND TO INCREASE PUBLIC AWARENESS AND THEREFORE IT CANNOT BE SAID THAT SARVAJANIK MANDALS HAVE RELIGIOUS BASIS FOR THEIR EXISTENCE. IT WAS HIS ARGUMENT THAT GANAPATI FESTIVAL WAS THE ONLY OCCASION FOR CELEBR ATION. THE ACTIVITIES OF THE SARVAJANIK MANDALS CANNOT BE THEREFORE SAID TO BE RELIGIOUS IN NATURE. THE LD. D.R HOWEVER RELIED ON THE ORDER OF THE DIT(E). 8. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. IN OU R VIEW THE SUBMISSIONS MADE ON BEHALF OF THE APPELLANT HAVE TO BE ACCEPTED. THE DONATIONS WERE GIVEN TO THE SARVAJANIK MANDALS FOR PROVISIONS OF FOOD GRAINS TO FEED THE POOR AND NEEDY. THE OCCASION FOR FEEDI NG THE POOR AND NEEDY HAPPENED TO BE GANAPATI FESTIVAL. THAT BY ITSELF W ILL NOT MEAN THAT THE EXPENDITURE IN QUESTION IS OF A RELIGIOUS NATURE. IT IS ALSO NOTICED THAT THE TOTAL INCOME AND THE AMOUNT EXPENDED ARE MEAGER AND WOULD NOT CALL FOR ANY ADVERSE INFERENCE. WE ARE HOWEVER HASTEN TO AD D THAT THE CONCLUSIONS ARE APPLICABLE ONLY TO THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE AND ITA NO.3800/MUM/2010 5 ARE OF NO GENERAL APPLICATION. WE ARE THEREFORE OF THE VIEW THAT THE APPELLANT WOULD BE ENTITLED TO CONTINUATION OF APPR OVAL UNDER SECTION 80G(5)(VI) OF THE ACT. WE ORDER ACCORDINGLY. 7. IN THE RESULT THE APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON TH E 28 TH DAY OF SEPT. 2011. SD/- SD/- (T.R.SOOD ) (N.V.VASUDEVAN) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI DATED. 28 TH SEPT.2011 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3 . THE CIT CITY CONCERNED 4. THE CIT(A)- CONCERNED 5. THE D.RD BENCH. (TRUE COPY) BY ORDER ASST. REGISTRAR I TAT MUMBAI BENCHES MUMBAI. VM. ITA NO.3800/MUM/2010 6 DETAILS DATE INITIALS DESIGNATION 1 DRAFT DICTATED ON 21/9/11 SR.PS/PS 2 DRAFT PLACED BEFORE AUTHOR 22/9/11 SR.PS/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS/PS 6. KEPT FOR PRONOUNCEMENT ON SR.PS/PS 7. FILE SENT TO THE BENCH CLERK SR.PS/PS 8 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER