Shri Digambar Jain Malwa Prantik Sabha Trust vs Commissioner of Income Tax

Prakash Shrivastava, J.—This writ petition has been filed by the Petitioner challenging the order dated 29-7-2003 passed by the Commissioner of income tax, Ujjain, rejecting the Petitioner''s application u/s 80G of the income tax Act, 1961.

The Petitioner Shri Digamber Jain Malvva Prantik Sabha is a registered Public Trust. The Petitioners had moved an application before the Commissioner of income tax, Ujjain for obtaining exemption u/s 80G of the income tax Act, on 1-2-2003, so that the persons contributing to the trust can receive the benefit in their assessment under the Act. The income tax Officer (Head Quarters) sent the communication to the Petitioner pointing out some defects and making certain enquiry which were duly cured and replied by the Petitioner. The Petitioner also submitted documents in support of his application claiming exemption. The Commissioner of income tax, thereafter passed the impugned order dated 29-7-2003 rejecting the Petitioners application on the ground that the Petitioner trust is involved in the work of spread of religion. Aggrieved with this order the Petitioners have approached this Court by way of present writ petition.

Learned Counsel appearing for the Petitioner submitted that the objects of the Petitioner trust are wholly charitable in nature. He submitted that the Commissioner committed an error in gathering the true meaning ''Dharma'' since the activities of ''Dharma'' by the Petitioner are not religious activities in terms of the judgment of the Supreme Court in the matter of A.S. Narayana Deekshitulu Vs. State of Andhra Pradesh and Others, . He further submitted that the Commissioner has not properly appreciated the provisions of Sections 18G, 5C and the Explanation 3 of the Act and in terms of the judgment in the matter of Sri Ramakrishna Seva Ashrama Vs. Commissioner of Income Tax, . and in the matter of Tirumala Tirupathi Devasthanam Vs. Chief Commissioner of Income Tax and Another, the matter needs to be remitted back to the Commissioner for fresh adjudication.

Learned Counsel for the Respondent submitted that no error has been committed by the Commissioner in rejecting the Petitioners application u/s 80G of the Act. He submitted that in view of the reasons disclosed in the impugned order as well as the reply filed by the Respondents before this Court, the Petitioner is not entitled to the benefit of Section 80G of the Act and since some of the objects of the Petitioner trust are religious in nature, therefore, it is not entitled for exemption u/s 80G.

We have heard the Learned Counsel for the parties and perused the record.

Sub-section (1) of Section 80G of the Act provides for deduction of certain income from the total income. Sub-section (5) of Section 80G provides that Section 80G applies to donations to any institution or fund referred to in Sub-clause (iv) of Clause (a) of Sub-section (2), only if it is established in India for a charitable purpose and if it fulfils the following conditions, among others, namely, 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. This condition No. (ii) of Sub-section (5) if read with Explanation 3 makes it clear that the Commissioner can refuse to grant recognition u/s 80G of the Act only in the event of finding that the claimed charitable purpose includes any purpose the whole or substantially the whole of which is of a religious nature.

In the present case, the impugned order passed by the Commissioner indicates that the Commissioner has quoted the object of the trust and has held the activity of ''Updeshak Vibhag'', to be religious in nature. While deciding this issue the law laid down by the Supreme Court in the matter of A.S. Narayana Deekshitulu''s case (supra), where the difference between "religion" and "Dharma" and their meaning and scope has been examined, needs consideration. It is also worth noting that the Commissioner while considering the activity of the ''Updeshak'' rejected the affidavit submitted by Shri Dharamdas Jain ''Updeshak'' on the technical ground. An affidavit of Shri Dharamdas Jain ''Updeshak'' has been placed on record by Petitioner as Annexure P/10 in this writ petition which needs to be considered by the Commissioner. The Commissioner has noted the expenditure incurred on the ''Updeshak Vibhag'' to hold that more than 5 per cent of the amount has been spend on the work of religious nature, but the Commissioner has not mentioned and taken note of different heads on which this amount was spend by ''Updeshak Vibhag'' and has not ascertained the part of this expenditure which was on religious activity. In the reply, the Respondents have relied upon some material for holding that the activity of the Petitioner trust was religious in nature but that material has not been referred and discussed in the impugned order. It is also worth noting that the Petitioners activity in the earlier years from 1994 to 2001 was continuously treated to be solely charitable activity and the benefit of Section 80G was extended to it. If the Commissioner was taking a different view in the current year then in such a case, it was all the more necessary for Commissioner to elaborately discuss the material which formed the basis for taking a different view from earlier years to deny the benefit of Section 80G.

The aforesaid analysis indicates that the impugned order passed by the Commissioner cannot be sustained and it is accordingly set aside and the matter is remitted back to the Commissioner for fresh adjudication in the light of the observation made above. In the course of the fresh adjudication the Commissioner will permit the parties to adduce additional evidence, if they so desire, and the Commissioner will pass the fresh order after taking into account the provisions of law, the judgment of the courts and the material produced by the respective parties. The Commissioner will complete this exercise and pass the reasoned and speaking order as expeditiously as possible preferably within a period of six months from the date of receipt of certified copy of this order.

The Writ petition is accordingly disposed of.

No order as to costs.