AMIT BAJAJ ADVOCATE

It is notable that certificate u/s 80G is granted to those organizations only who are established for charitable purposes and Explanation 3 to section 80G provides that charitable purpose doesnot include a purpose which is of religious nature

Facts:The assessee trust was set up with the object of “worship of Lord Shiva, Hanumanji, Goddess Durga and maintaining of temple” and “to celebrate festivals like Shivratri, Hanuman Jayanti, Ganesh Uttasav, Makar Sankranti”. It applied for a certificate under section 80G. S. 80G (5) provides that the trust should be established for a “charitable purpose”. Explanation 3 to s. 80G provides that “charitable purpose” does not include a purpose which is of a “religious nature”. S. 80G(5)(iii) also stipulates that the trust should not be expressed to be for the benefit of any particular religious community or caste. The CIT rejected the application on the ground that the assessee was set up for “religious” purposes. On appeal by the assessee to the Tribunal, HELD reversing the CIT

Held: The objects of the assessee is not for advancement, support or propagation of a particular religion. Worshipping Lord Shiva, Hanumanji, Goddess Durga and maintaining the temple is not advancement, support or propagation of a particular religion. Lord Shiva, Hanumanji & Goddess Durga do not represent any particular religion. They are merely regarded to be the super power of the universe. Further, there is no religion like “Hinduism”. The word “Hindu” is not defined in any of the texts nor in judge made law. The word was given by British administrators to inhabitants of India, who were not Christians, Muslims, Parsis or Jews. Hinduism is a way of life. It consists of a number of communities having different gods who are being worshipped in a different manner, different rituals, different ethical codes. The worship of god is not essential for a person who has adopted Hinduism way of life. Therefore, expenses incurred for worshipping of Lord Shiva, Hanuman, Goddess Durga and for maintenance of temple cannot be regarded to be for religious purpose

IN THE INCOME TAX APPELLATE TRIBUNAL

NAGPUR BENCH, NAGPUR

BEFORE: SHRI P.K. BANSAL, ACCOUNTANT MEMBER

AND

SHRI D.T. GARASIA, JUDICIAL MEMBER

ITA No.223/Nagpur/2009

Assessment Year : NA

Shiv Mandir Devsttan

Panch Committee Sanstan

Nagpur

Vs.

CIT-1

Nagpur

(Appellant) (Respondent)

Appellant By: Shri P.R. Gandhi, Advocate

Respondent By: Shri Suresh R. Kirtane, JCIT

Date of hearing: 09.10.2012

Date of pronouncement: 11.10.2012

ORDER

Per P.K. Bansal, Accountant Member:-

The only issue involved in this appeal filed by the assessee relates to the grant of approval u/s 80G(5)(vi) of the Income-tax Act, 1961.

The brief facts of the case are that Shiv Mandir Devsttan Panch Committee Sanstan, Nagpur filed an application in form no.10G on 9.7.2008 seeking approval u/s 80G(5)(vi) of the Income-tax Act. The copy of the accounts for the year 31.3.2008 was also filed. As

per this, the assessee has incurred total expenditure amounting to Rs.82,977/-,

which consist of building maintenance expenses – Rs.23,530/-; Free food expenses –

Rs.34,399/-; Festival prayer & daily expenses – Rs.18,328/-; Tailoring training

expenses – 1,225/-; Yoga training expenses – Rs.2,475/- and Free distribution of

opticals – Rs.3,020/-.

2. The CIT took the view that the expenses for building maintenance, free food

expenses and festival prayer & daily expenses related to the religious object. Only

balance sum of Rs.6,700/- were incurred for non-religious objects. In view of

explanation 3 to section 80G read with sub-section 5B, he took the view that since

the expenditure on religious object exceeds 5% of the total income of the assessee

trust, therefore, he did not approve the assessee u/s 80G(5)(vi).

3. The Ld. A.R. before us contended that the assessee is carrying on yoga

training, tailoring training and free distribution of opticals to the poor and needy

people. The building is required for the training, yoga etc. The maintenance

expenses incurred over the building relate to the charitable activities and not the

religious activities. Food distributed to the needy may be called as maha prasad and

distribution of the food to the poor people is not a religious expenditure. Similarly,

the expenses incurred on festival prayer & daily expenses represent Rs.3,600/- paid

to safai worker, Rs.1,080/- for news papers, Rs.1,136/- for cleaning the cloths and

Rs.5,373/- for miscellaneous purchases for day to day consumption. It is only a sum

of Rs.7,139/- which is less than 5% can be regarded to have been spent for the

religious purpose even if it is treated that maintenance of the temple is a religious

purpose. He contended that the temple is open to everybody without caste and

creed. Anybody who have faith or not in Shiva, Hanuman, Durga may come or even

the person who does not have faith in these deities, can also come. The temple

does not belong to a particular religion. The expenditure so incurred are not of

religious nature. Even the objects of the assessee are not the religious nature.

Putting the idols is not a religious activity. The CIT has not stated how the activity so

carried are religious. The assessee has duly been registered u/s 12A of the Incometax

Act.

4. The Ld. D.R. on the other hand contended that the CIT(A) has rightly denied

the approval u/s 80G. The assessee was carrying on religious activities and has

spent money for the maintenance of the temples.

5. We have heard both the parties and have carefully perused the entire

material available on record along with the order of CIT. The provisions of section

80G sub-section (5) of the Income-tax Act lays down as under :

“(5). This section applies to donations to any institution or fund

referred to in sub-clause (iv) of clause (a) of sub-section (2), on if it is

established in India for a charitable purpose and if it fulfils the

following conditions, namely –

(i). where the institution or fund derives any income, such income

would not be liable to inclusion in its total income under the

provisions of section 11 and 12 or clause (23AA) or clause (23C)

of section 10 :

Provided that where an institution or fund derives any income,

being profits and gains of business, the condition that such

income would not be liable to inclusion in its total income under

the provisions of section 11 shall not apply in relation to such

income, if –

(a) the institution or fund maintains separate books of

account in respect of such business;

(b) the donations made to the institution or fund are not

used by it directly or indirectly, for the purposes of such

business; and

(c) the institution or fund issues to a person making the

donation a certificate to the effect that it maintains

separate books or account in respect of such business

and that the donations received by it will not be used,

directly or indirectly, for the purposes of such business;

(ii) the instrument under which the institution or fund is constituted

does not, or the rules governing the institution or fund do not,

contain any provision for the transfer or application at any time

of the whole or any part of the income or assets of the

institution or fund for any purpose other than a charitable

purpose;

(iii) the institution or fund is not expressed to be for the benefit of

any particular religious community or caste;

(iv) the institution or fund maintains regular accounts of its receipts

and expenditure;

(v) the institution or fund is either constituted as a public charitable

trust or is registered under the Societies Registration Act, 1860

(21 of 1860), or under any law corresponding to that Act in

force in any part of India or under section 253 of the Companies

Act, 1956 (1 of 1956), or is a University established by law, or is

any other educational institution recognised by the Government

or by a University established by law, or affiliated to any

University established by law, or is an institution financed wholly

or in part by the Government or a local authority; and

( vi) in relation to donations made after the 31st day of March,

1992, the institution or fund is for the time being approved by

the Commissioner in accordance with the rules made in this

behalf:

Provided that any approval shall have effect for such

assessment year or years, not exceeding five assessment years,

as may be specified in the approval.”

6. From the perusal of the aforesaid section, it is apparent that section 80G of

the Act provides for deduction in respect of the donations made by the tax payers to

certain trust or institution. These trusts or institutions have to comply with the

condition as laid down u/s. 80G(5)(i) to (v) of the Income-tax Act. By Finance Act,

1991, the deduction under the provisions of section 80G for any fund or Institution

not specifically mentioned is allowed if it is approved by the Commissioner of

Income-tax in accordance with section 80G(5)(vi). The approval has to be made in

accordance with the Rules made in this behalf. Rule 11A under the Income-tax Rules

has been inserted w.e.f. 21.09.1992. This rule requires an institution or fund to

make an application for approval under section 80G(5)(vi) in form No. 10G. The

application was to be submitted in triplicate. This Rule further requires that the

application shall be accompanied with the following documents namely :

(i). Copy of registration granted u/s. 12A or copy of the notification issued

u/s. 10(23) or 10(23C);

(ii). Notes on activities of the institution or fund since its inception or

during the last three years, whichever is less;

(iii). Copies of account of the Institution or fund since its inception or during

the last three years, whichever is less.

7. Sub-rule (3) empowers the Commissioner to call for such documents or

information from the institution or fund or cause such enquiries to be made as he

may deem necessary in order to satisfy himself about the genuineness of the

activities of such Institution. Sub-rule (4) lays down that if all the conditions as

enumerated in clause (1) to (v) of sub-section (5) of section 80G are fulfilled by the

institution or fund, CIT shall record such satisfaction in writing and grant approval to

the institution or fund specifying the assessment year or years for which the

approval is valid. Sub-rule (5) empowers the CIT to reject the application for

approval after recording the reasons for such rejection in writing where the CIT is

satisfied that one or more conditions laid down in clause (i) to (v) of section 80G(5)

are not fulfilled. This rule also states that no order rejecting the application shall be

passed without giving an opportunity of hearing to the institution or trust. Subrule(

6) requires the CIT to pass an order granting or rejecting the application within

6 months from the date on which the application is made. We noted that in the case

of the assessee-trust, the CIT was of the opinion that the assessee-trust has not

complied with the conditions No. (ii) and (iii) of section 80G(5). He is of the opinion

that the trust is expressed for the religious object and has applied the fund for the

purpose other than charitable as contemplated in Explanation 3 to section 80G(5) in

contravention of section 80G(5)(ii) of the Income-tax Act. The Explanation 3 to this

section lays down that charitable purpose does not include any purpose the whole or

substantially whole of which is of a religious nature. The main objection of the CIT is

that the objects as enumerated in the trust deed are religious and the expenditure

has been incurred for religious purposes. He has also noted that a trust or institution

is permitted to incur an expenditure not exceeding to 5% of his total income in the

previous year for religious purpose so that it may not contravene the condition No.

(ii), as stipulated u/s. 80G(5) of the Act.

8. We have gone through the relevant clauses which have been regarded to be

religious in nature by the CIT(A). The object clause of the trust reads as under:

“Worship of Lord Shiva , Hanumanji, Goddess Durga and maintaining of

temple. To celebrate festivals like Shivratri, Hanuman Jayanti, Ganesh Uttasav,

Makar Sankranti, renovation and maintenance of temple. To make available temple

for general public and to provide facilities for the public visiting temple. Balance

fund, if any after utilizing for the above mentioned objects, may be utilized for

education, social and the cultural activities. To conduct nursery school, library,

sports club, hostels and other activities. To help poor children for education. To

provide medical aid for poor. To help the peoples affected by natural calamity.”

Now the question arise whether these objects can be regarded to be of

religious nature and the expenditure incurred for the fulfillment of these objects can

be said to have been incurred for the benefit of particular religion.

9. The charitable purpose has been defined u/s. 2(15) of the Act. The definition

of charitable purpose is inclusive one. It includes relief of the poor, education,

medical relief, and the advancement of any other object of general public utility.

The objects as enumerated above held on by the assessee trust are charitable within

the meaning of section 2 of sub section 15. Some of the objects fall within the

“advancement of any other object of general public utility”. Proviso to section 2 sub

section 15 restricts the meaning “advancement of any other objects of general public

utility”. But CIT(A) has not stated that proviso to section 2 sub section 15 is

applicable in the case of the assessee.

10. Now coming to the question whether the assessee trust has violated the

conditions as laid down in clause (iii) of section 80G(5), we reproduce this clause

which reads as under :

“(iii). the institution or fund is not expressed to be for the benefit of

any particular religious community or caste.”

This clause stipulates that the Institution or the Trust must not be for the benefit of

any particular religious community or caste. The words “religious community” means

the group of people having a common religion or faith. The word “religion” means

the belief in and worship to a superhuman controlling power, specially the personal

god or gods, a particular system of faith and worship. It means the trust should not

be for the benefit of any particular group of persons having the common belief in

worshiping of superhuman controlling power or having common system & faith and

worship. If the trust is for the benefit of any particular religious community, it would

include the advancement, support or propagation of a religion and its tenants, it

could be said that a trust has violated the condition No. (iii) of section 80G(5). The

objects as has been pointed out by CIT, nowhere talks of advancement, support or

propagation of a particular religion, worshipping of Lord shiva, hanumanji , goddess

Durga and maintaining of temple, in our opinion, cannot be regarded for the

advancement support or propagation of a particular religion. No evidence or material

was placed on record or brought before us by the learned DR which may prove that

these object relate to a particular religion. No doubt the DR argued that it relate to

Hindu Religion but in our opinion it is not so. Lord shiva, Hanumanji, goddess Durga

does not represent any particular religion, they are merely regarded to be the super

power of the universe.

11. In the case of Commissioner of Hindu Religious and Charitable Endowments

Madras vs. Sri Lakshmindra Thirtha Swamiar 1954 SCJ335, Religion has been

expressed to mean a matter of faith with individuals or communities and it is not

necessarily theristic. There are well known religions in India, like Buddhism and

Jainism, which do not believe in God or in any intelligent first cause. A religion

undoubtedly has its basis in a system of beliefs or doctrines which are regarded by

those who profess that religion as conducive to their spiritual well being, but it will

not be correct to say that religions is nothing else but a doctrine or belief. A religion

may not only lay down a code of ethical rules for its followers to accept, but it might

prescribed rituals and observances, ceremonies and modes of worship which are

regarded as integral parts of a religion, and these forms and observances might

extend even to matters of food and dress. No material or evidence has been

brought on record by the department which may prove that any person coming,

worshipping and maintaining the temple has to follow a particular code of ethical

rules and has to carry out the prescribed rituals and observances, ceremonies and

modes of worship. The entry is not restricted to a particular group of persons. Any

body whether want to worship or not and want to maintain or not can come to the

temple and avail of all the facilities available to the public at large. Therefore, these

objects cannot be regarded to be the religious objects. In our opinion, until and

unless the activities for which the trust is established, involve the activity religious

purpose, it cannot be said that the assessee has not complied with the condition No.

(iii) enumerated u/s. 80G(5) of the Act.

12. Even we noted that all the building maintenance expenses, free food expenses

and festival , prayer and daily expenses cannot be regarded to be the one incurred

for religious object ,even if the object is regarded to be religious one. It is not

denied that in the building the assesse was carrying yoga centre , tailoring training

centre as well as food for the needy and optical centre for the poor.

13. Explanation 3 to section 80G(v) states that “in this section, “charitable

purpose” does not include any purpose the whole or substantially the whole of which

is of a religious nature.” This explanation takes note of the fact that an institution or

fund shall be for a charitable purpose and may have a number of objects. If any one

of these objects is wholly or substantially wholly of a religious nature, the Institution

or Funds falls outside the scope of section 80G and the donation to it will not make

the donor entitled for the deduction u/s. 80G. The objects as per Explanation 3 must

be wholly or substantially whole of which must be of religious nature. The assessee

has submitted all the evidence including the objects and how the expenditure has

been incurred by it. The onus, in our opinion, gets shifted on the Revenue to prove

that the assessee-trust is wholly or substantially for the religious purpose. There is

no allegation on the part of the revenue that the whole or substantially whole of the

object of the trust is to propagate or advance support to a particular sect. We may

observe that Hinduism is a way of life of a civilized society. It as such is not a

religion. In this regard we rely on the case of T T Kuppuswamy Chettiar Vs. State

of Tamil Nadu (1987) 100 LW 1031 in which it was held “ The word “Hindu” has not

been defined in any of the texts nor in judgment made law. The word was given by

British administrators to inhabitants of India, who were not Christians, Muslims,

Parsis or Jews. The alleged Hindu religion consists of four castes Brahmins,

kshatriyas, vaishyas and sudras belonging ultimately to two schools of law,

mitaksharas and dayabhaga. There is, however, no religion by the name ‘Hindu’. It

only shows that so called Hindu religion has been called for convenience.” CIT must

be aware of that the Hindu consists of a number of communities having the different

gods who are being worshipped in a different manner, different rituals, different

ethical codes. Even the worship of god is not essential for a person who has adopted

Hinduism way of life. Thus, Hinduism holds within its fold men of divergent views

and traditions who have very little in common except a vague faith in what may be

called the fundamentals of the Hinduism. The word ‘community’ means a society of

people living in the same place, under the same laws and regulations and who have

common rights and privileges. This may apply to Christianity or moslem but not to

Hinduism. Therefore, it cannot be said that Hindu is a separate community or a

separate religion. Technically Hindu is neither a religion nor a community.

Therefore, expenses incurred for worshipping of Lord Shiva, , Hanuman, Goddess

Durga and for maintenance of temple cannot be regarded to be for religious

purpose. Under these facts and circumstances, we are of the view that the CIT is not

correct in law in not allowing the approval to the assessee trust u/s. 80G of the Act.

We accordingly, set aside the order of the CIT and direct the CIT to grant approval

to the assessee-trust u/s. 80G(5)(vi) of the Act.

14. In the result, the appeal of the assessee is allowed.

Pronounced in the open Court on 11.10.2012

Sd/- Sd/-

(D.T. GARASIA ) (P.K. BANSAL)

JUDICIAL MEMBER ACCOUNTANT MEMBER

VG/SPS

Nagpur

Dated 11th October, 2012

Copy to

1 Shiv Mandir Devsttan Panch Committee Sanstan, Tailor Lane, Chaoni,

Nagpur

2 The CIT-1, Nagpur

4 The CIT(A), Nagpur

5 The DR, ITAT, Nagpur

6 Guard file. By order

Sr. Private Secretary

Income Tax Appellate Tribunal

Nagpur