Director of Income Tax (Exemptions) vs International Society For Krishna Consciousness

N. Kumar, J.

Heard both counsel.

Misc. Civil Appeal No. 375 of 2011 for early hearing is allowed.

This appeal is by the revenue, challenging the order passed by the Tribunal, holding that as the total amount of expenditure incurred by the trust towards religious activities is less than 5 per cent of the total income, they are entitled to renewal of registration of the trust u/s 80G of the IT Act.

The respondent/assessee is a society registered under the Societies Registration Act for religious and charitable purposes. They have been registered u/s 12AA of the Act as a charitable trust. Thereafter they have been granted registration u/s 80G of the Act. When the respondent/assessee sought for renewal of registration u/s 80G in the year 2009, the renewal was refused on the ground that the objects and activities of the assessee were religious activities as contemplated in Expln. (iii) to section 80G(5) of the Act and therefore the assessee is not entitled to renewal of registration and therefore the renewal was rejected by an order dt. 6-10-2009. Aggrieved by the same, the assessee preferred an appeal before the Tribunal. The Tribunal took note of the balance sheet and income and expenditure account and the relevant Schedules and found that the total income of the assessee as on 31-3-2007 was Rs. 8,10,01,223 out of which they have spent Rs. 30,29,282 towards religious expenditure which is around 3.73 per cent of the total income. Further it held that the total income as on31-3-2008 is Rs. 8,59,48,956 whereas religious expenditure of Rs. 18,81,016 which is around 2.18 per cent of the total income. Thus applying the provision of sub-s. (5B) of section 80G, the assessee shall be deemed to be an institution or a fund to which the provisions of section 80G would apply and therefore allowed the appeal preferred by the assessee and directed the Director of IT (Exemptions) to grant exemption u/s 80G to the assessee as prayed for. Aggrieved by the order, the revenue is in appeal.-

The learned counsel for the revenue submitted in the first place, that this plea of expenditure incurred for religious purpose is less than 5 per cent is taken up for the first time before the appellate authority and therefore the revenue had no occasion to effectively meet the said plea. Therefore he sought for remand of the case for investigation and to find out the truth or the assertion made by the assessee.

Per contra, the learned counsel appearing for the assessee submitted that the said plea was raised before the CIT. The CIT did not apply his mind to the said plea. Therefore the appellate authority was fully justified in looking into the said plea, the assessee made available all the relevant records, the appellate authority has recorded a finding of fact, which is based on the aforesaid income and expenditure account which is not in dispute and therefore no case for interference or remanding the matter for fresh de novo enquiry is called for.

From the material on record, it is clear that the assessee is a society registered under the Societies Registration Act. From the objects of the said society, it is clear that they are carrying on religious and charitable activities. They have been granted registration u/s 12AA and consequently u/s 80G of the Act being satisfied that they are entitled to such exemption. It is only for the first time for the year 2009 the CIT for the first time called upon them to show cause why the registration should not be renewed (sic--refused) as it is a society which is only carrying on religious activities. A detailed reply setting out their stand is filed and it is on record. In para 2 of the said statement of objections, the assessee has categorically stated that the expenditure incurred for religious activity is less than 5 per cent of the total income and therefore entitled to benefit of section 80G. Unfortunately the CIT has not adverted to the statement of objection except to the first para where the assessee has asserted that they have established a temple and are carrying on religious activities. Secondly the CIT has not taken note of the amendment to section 80G wherein notwithstanding anything contained in the aforesaid provision, if the expenditure incurred towards religious activities is less than 5 per cent of the total income, the benefit u/s 80G is available to such a trust. Ignoring the aforesaid change in law, ignoring the assertion of the assessee in the statement of objections claiming exemption because of the amended law, the CIT proceeded to pass an order refusing registration. Therefore such a finding recorded by the CIT is without any substance. The Tribunal which on facts took note of the aforesaid income and expenditure account and the relevant Schedules, came to the conclusion that the expenditure incurred by the assessee towards religious activities for two years is less than 5 per cent. The balance sheet or income and expenditure account of the Schedules is not in dispute. It is under those circumstances the appellate authority has applied its mind, looked into aforesaid undisputed records and has recorded a finding of fact.

We do not see any justification to set aside such a well considered order and to remand the matter back to the CIT for fresh consideration for de novo enquiry. Under these circumstances we do not see any merit in this appeal. Accordingly appeal is dismissed.