I-T - Sec 11 benefits not to be denied merely because assessee has both religious-cum-charitable objectives for society at large and not for a particular community: HC
By TIOL News Service
NEW DELHI, SEPT 11, 2017: THE issue before the Bench is - Whether where a trust or society has both religious and charitable objects and such religious-charitable activity serves across the communities rather than exclusively meant for a particular religious community, the exemptions available u/d 11 is not to be denied. YES is the answer from the High Court.
Facts of the case
The Assessee-society is registered under Section 12A (a) of the Act and main object of the Assessee is to undertake the dissemination of useful religious knowledge in conformity with the purposes of the Church of Jesus Christ of Latter-Day Saints, to assist in promulgation of worship in the Indian Union, to establish places of worship in the Indian Union, to promote, sustain and carry out programmes and activities of the Church, which are, educational, charitable, religious, social and cultural etc. In assessment order the AO held that Assessee is a charitable society established 'for the benefit of any particular religious community or caste and had not pursued any activity in the true nature of charity for the general public directly thereby in violation of Section 13 (1) (b) and accordingly denied it exemption under Section 11 of the Act.
On appeal, the CIT (A) upheld the view taken by AO. On further appeal, the Tribunal however, disagreed with such conclusions and held that the programmes conducted by the Society "are open for public at large without any distinction of caste, creed or religion and the benefits of these programmes held at the meeting house are available to the general public at large and accordingly set aside the order of the AO.
On appeal, the High Court held that,
++ the factual determination by the ITAT that (i) the programmes conducted by the Society "are open for public at large without any distinction of caste, creed or religion and the benefits of these programmes held at the meeting house are available to the general public at large and (ii) priests are not managing the affairs of the society, have not been shown by the Revenue to be perverse. It is not the percentage of expenditure on persons not belonging to the religious community that mattered. What was significant was that there were donations made by the Society for the general public utility. This showed that it was not exclusively for the benefit of one particular religious community;
++ the CIT (A) had proceeded on the basis that although the Assessee Society was for both religious and charitable purposes, since it was for the benefit of only one religious community the provision of Section 13 (1) (b) would apply to deny it exemption under Section 11 of the Act. The above conclusion was legally flawed. It was contrary to the decision of the Supreme Court in Dawoodi Bohra Jamat which held that even where the trust or society has both religious and charitable objects, " it needs to be examined whether such religious-charitable activity carried on by the trust only benefits a certain particular religious community or class or serves across the communities and for society at large ". In that case it was factually found that " the activities of the trust though both charitable and religious are not exclusively meant for a particular religious community " and, therefore Section 13 (1) (b) was not attracted. In the present case too, the factual finding of the ITAT is likewise. It has been found that the activities of the Assessee Society, though both religious and charitable, were not exclusively meant for one particular religious community. It was, therefore, rightly not denied exemption under Section 11 of the Act.
(See 2017-TIOL-1833-HC-DEL-IT)
