CIT (Exemptions) Vs Tulshishyam Mandir Trust-Junagadh (Gujarat High Court)
Summary: Gujarat High Court dismissed the Revenue’s appeal against the ITAT Rajkot order allowing Section 80G(5) approval to Tulshishyam Mandir Trust-Junagadh. The CIT(E) had rejected the Trust’s application on the ground that its objects were religious in nature, including running Shri Tulsi Shyam temple for public darshan and providing facilities to saints and pilgrims. The Tribunal, however, found that for FYs 2011-12 to 2013-14 the Trust’s gross income was ₹75,35,581, ₹93,92,601 and ₹1,08,48,331 respectively, whereas religious expenditure comprising temple and Swamijee Mandir expenses was only ₹1,51,542, ₹2,28,703 and ₹1,88,594 respectively—less than 2.5% in each year and therefore below the statutory 5% ceiling. Applying Section 80G(5B), the Tribunal held that where religious expenditure does not exceed 5% of total income, the institution is deemed to satisfy the relevant requirement for purposes of Section 80G(5). Before the High Court, Revenue contended that the Trust’s objects were religious and relied upon the Commissioner’s enquiry powers under Rule 11AA(3). The High Court noted, however, that Revenue had been unable before the Tribunal to dispute the facts and figures showing religious application of income below 5%. In view of these undisputed facts, the Court declined to answer the proposed substantial question of law and dismissed the Revenue’s appeal.
FULL TEXT OF THE GUJARAT HIGH COURT ORDER
1. In the present Tax Appeal, following substantial question of law is proposed:-
“(i) Whether the Appellate Tribunal is correct in allowing approval u/s 80G(5) of the Act, disregarding the fact that some of the objects of the assessee trust are against provisions of section 80G(5)(ii) and explanation 3 to section 80G of the Act?”
2. The present appeal is filed under Section 260A of the Income Tax Act, 1961 (for short “the Act”) emanates from the order dated 03rd March, 2016 passed by the Income Tax Appellate Tribunal, Rajkot Bench (for short ‘the Tribunal’) in ITA No.471/Rjt/2015.
3. The brief facts of the present case are under :-
The assessee filed application for approval under Section 80G (5) of the Act with the Commissioner of Income Tax (Exemption), Ahmedabad on 15.12.2014. The CIT (E), Ahmedabad rejected the assessee’s application for registration holding that the objects of the trust are religious in nature. Being aggrieved with the order of CIT (E), Ahmedabad, the assessee filed appeal before the Appellate Tribunal. The Appellate Tribunal allowed the appeal of the assessee and observed that the assessee’s gross incomes from financial years 2011-12 to 2013-14 are of Rs.75,35,581/-, Rs.93,92,601/- and Rs.1,08,48,331/- and corresponding expenditure incurred thereto is Rs.73,94,446/-, Rs.98,17,024/- and Rs.80,29,426/-; respectively. The trust has also incurred religious expenses less than 5% of gross income (i.e. Rs.1,51,542/-, Rs.2,28,703/- and Rs.1,88,594/- in each year, respectively. The same are in the nature of temple and Swamijee Mandir expenses. The Appellate Tribunal has further found that section 80G (5B) of the Act inserted by the Finance Act, 1999 w.e.f. 01.04.2000 is in the nature of non-obstante clause to the other corresponding provisions which clearly stipulates that when an institution or a fund incurs expenditure of a religious nature not exceeding 5% of its total income in the previous year, it is deemed to be an institution or fund to which provisions of section 80G (5B) of the Act apply.
4. Mr.Aman Mir, learned Senior Standing Counsel has submitted that the decision of Appellate Tribunal, Rajkot is erroneous for the reasons that for approval of an institution or fund under Section 80G (5) of the Act as provided in Rule 11AA (3) of the Income Tax Rules, 1962, the Commissioner may call for such documents or information from the institution or fund or cause such inquiries to be made as he may deem necessary in order to satisfy himself about the genuineness of activities of such institution or fund. Accordingly, on perusal of the details/documents submitted by applicant trust, it is revealed that the objects of the trust are religious in nature such as to (I) To run a temple of Shri Tulsi Shyam for darshan of general public. (II) To give all facilities which are required to saints and pilgrims who come to visit the temple. Further, Section 80G of the Act deals with deduction in respect of donations to certain funds, charitable institutions, etc.
5. At this stage, we may incorporate the order passed by the tribunal, which is as under :-
“3. We have heard both the parties. There is no dispute about the assessee’s above extracted objects. It emerges from the case file that the assessee’s gross incomes from financial years 2011-12 to 2013-14 are of Rs.75,35,581/-, Rs.93,92,601/- and Rs.1,08,48,331/-and expenditure incurred corresponding thereto is Rs.73,94,446/-, Rs.98,17,024/- and Rs.80,29,426/-; respectively. We notice from the relevant tabulation that religious expenses are of Rs.1,51,542/-, Rs.2,28,703/-and Rs.1,88,594/- coming to be less than 2.5% in each case; respectively. The same are in the nature of temple and Swamijee Mandir expenses. The Revenue seeks to make out a strong case in favour of the CIT’s order holding the assessee to have been having wholly religious objects as well as activities. We proceed further and find that section 80G(5B) inserted by the Finance Act, 1999 w.e.f. 01-04-2000 is in the nature of non-obstante clause to the other corresponding provisions which clearly stipulates that when an institution or a fund incurs expenditure of a religious nature not exceeding 5% of its total income in the previous year, it is deemed to be an institution or fund to which provisions of section 80G(5) apply. The Revenue is unable to dispute correctness of the above stated facts and figures demonstrating the impugned application of income on religious purposes to be less than 5%. We accept assessee’s arguments in this backdrop of facts. It is made clear that our instant adjudication is solely on the basis of above stated statutory provision only and not on merits of the case. The assessee’s sole substantive ground succeeds.”
6. Thus, the Revenue before the Tribunal was unable to dispute correctness of the facts and figures, which were incorporated in the impugned application of the income on religious purposes to be less than 5% and in wake of such undisputed facts, we are not inclined to answer the proposed question of law and hence, the appeal stands dismissed.
