One single object out of all objectives, will not give charitable trust registered u/s 12A, religious or communal colour, for denying approval u/s 80G(5): ITAT
By TIOL News Service
CHANDIGARH, NOV 10, 2017: THE ISSUE BEFORE THE TRIBUNAL IS - Whether a single object out of all several objectives with which the charitable trust was formed, can give the trust any religious or communal colour. NO is the answer.
Facts of the case:
The Assessee, a registered charitable trust u/s 12AA, filed an application for approval in Form NO.10G during the concerned year. The CIT(E) however denied approval for the reason that assessee trust did not fulfill the foremost requirement which was to be satisfied by it for being eligible for grant of approval u/s 80G(5) i.e. being established solely for charitable purpose. The CIT(E) stated that at least 3 of 5 purposes for which the assessee had been established had religious contours, which was in contravention to the provisions of section 80G(5)(iii) and was also hit by Explanation-3 to sub-section (5) of section 80G, which precludes purposes of religious nature from the coverage of charitable purpose. The CIT(E) also denied approval for the reason that the assessee trust was spending meagre amount on its charitable activities.
ITAT held that,
++ undoubtedly, the approval u/s 80G(5) is granted to institutions or funds which are established for charitable purpose and it rules out funds or institutions which are established for the benefit of a particular religious community or caste or objects which are of religious nature. Considering the objects of the assessee society from this angle, we find that none of the objects of assessee carry a religious contour or are for the benefit of any particular community or caste. As for the object at clause (a) of fulfilling the aims of Agroha Vikas Trust & Maharaja Agarsein, it has not been shown as to how it benefits only the Agarwal community. Furher, as rightly pointed out by the AR, propagating and inculcating religious feelings, brotherhood and national is among Aggarwal community only aim at bringing together members of the Agarwal community and developing feeling of nationalism amongst them which benefits the society at large and cannot be said to be either benefiting Aggarwal community only nor being in the nature of religious purpose. As for the object of celebration of Agarsain Jayanti, it defintely does not have a religious contour and the AR has emphasized that the celebrations involve the public at large, therefore we fail to understand as to how the said object is for the benefit of a particular community only. Moreover only one object out of several objects cannot give a religious or communal colour to the assessee society. The rest of the objects aimed at developing the moral fabric of the society, help poor and needy children in their education and running charitable dispensaries and hospitals for the public at large are all charitable activities for the benefit of the general public;
++ further the contention of the Revenue that the assessee was spending only a small portion of its receipts on the stated charitable activities is again we find factually incorrect. The said finding, we find, has been arrived at after excluding the spend on salary, which as per the CIT(E) is not a charitable activity. But considering the fact that the assessee is carrying out number of charitable activities as stated in its objects which includes running the charitable dispensaries and hospitals for the public in general, the manning of the said dispensaries by adequate personnel and also the requirement of staff for managing the affairs of the society are basic and essential expenditure which are to be considered to have been incurred in the course of carrying out its charitable activities alone and, therefore, staff salary paid on account of the same cannot be treated as being expenses not related to the charitable activity of the assessee concern. In such circumstances, the expenses incurred on staff salary are also to be treated as part of charitable activities carried out by the assessee and considering the same, therefore, the quantum of expenditure incurred by the assessee on its activities takes a quantum jump and thus the findings of CIT(E) that the assessee has incurred meagre income on its stated charitable expenses gets negated.
(See 2017-TIOL-1561-ITAT-CHD)
