Referred Sections:
Section 260A of the Income Tax Act, 1961
Section 12A of the Act
Section 11 and 12 of the Act.
Section 13(3) of the Act,
section 115BBC of the Act.
Section 143 (3) of the Act.
Section 68
Referred Cases / Judgments:
CIT vs. Bhagwan Shree Laxmi Naraindham Trust
$~29
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Date of Decision:- 19.11.2019
+ ITA 955/2019
COMMISSIONER OF INCOME TAX ..... Appellant
Through: Mr. Ajit Sharma and Ms. Adeeba
Mujahid, Advocates.
versus
BHAGWAN SHREE LAXMI NARAIN ..... Respondent
Through: Mr. Sachit Jolly and Ms. Disha Jham,
Advocates.
CORAM:
HON'BLE MR. JUSTICE VIPIN SANGHI
HON'BLE MR. JUSTICE SANJEEV NARULA
SANJEEV NARULA, J (ORAL):
C.M. No. 49726/2019
1. Issue notice. Learned counsel for the respondent accepts notice. He
fairly does not oppose the application seeking condonation of delay.
Accordingly, the same is allowed. The delay is condoned.
ITA 955/2019
2. The present appeal under Section 260A of the Income Tax Act, 1961
(hereinafter referred as ,,the Act) assails the order dated 08.03.2019 passed
by the Income Tax Appellate Tribunal (hereinafter referred as ,,ITAT) New
Delhi, in ITA No. 6564/Del./2015 for Assessment Year (AY) 2011-12
ITA 955/2019 Page 1 of 9
(hereinafter referred as ,,Impugned Order). By way of the Impugned Order,
ITAT has dismissed the appeal of the revenue, and confirmed the order of
CIT (A) overturning the Assessing Officers (AO) reasoning and findings to
the effect that the assessee trust is carrying out ,,religious activities, not
enshrined in the objects of the trust. As a result, the disallowances and
additions made by the AO and deletion made by the CIT (A), have been
sustained.
3. Briefly stated, the factual matrix leading to filing of the present appeal is
that the respondent-assessee was created vide Trust Deed dated 30.12.2002,
by its founder Brhamrishi Shree Kumar Swamiji also called as ,,Gurudevji.
It was granted registration under Section 12A of the Act vide
certificate/order dated 20.05.2005.
4. The assessee filed return for AY 2011-12 on 29.09.2011 in the status of
"Trust" declaring "NIL" income. The AO noted that in the year under
consideration, the assessee was mainly involved in imparting spiritual
education through lectures/samagams (congregation) and on TV channels;
and had also established a temple of Hindu Gods/Goddesses for the general
public. On that basis, he formed an opinion that the assessee was
predominantly carrying out religious activities in accordance with Hindu
religion. Further, after analysing the objects of the Trust as mentioned in the
Trust Deed, the AO concluded that the assessee was not created for religious
purposes and since its income was applied for purposes other than for which
it was created, it was not entitled to seek exemption under Section 11 and 12
of the Act. A similar view was taken by the AO in AY 2009-10 and 2010-
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11.
5. The AO held that Gurudevji is a person specified under Section 13(3) of
the Act, and the assessee had applied its income and incurred an expenditure
of Rs.3,10,01,535/- on telecast of samagams under the head "Aadhyatamik
Pravachan Expenses", for his benefit in violation of Section 13(1)(c) of the
Act and forfeited the exemption under Section 11 and 12 of the Act.
6. Besides, the AO held that the assessee had received donation of
Rs.11,01,15,431/- out of which identity of donors in respect of donation of
Rs. 94,66,053/- could not be proved and the same was treated as
unexplained/anonymous donation in terms of section 115BBC of the Act.
Further, since the assessee could not furnish the necessary details of Rs. 50
lacs, incurred as expenditure for arrangement of samagams, it was treated as
unexplained/anonymous donation. Since, the anonymous donation of Rs.
1,47,69,053/- exceeded 5% of the total donation of Rs. 11,01,15,431/-
received during the year, the excess donation of Rs. 92,63,281/- was taxed
under Section 115BBC of the Act. The assessee was treated as an
Association of Persons ("AOP") and an assessment under Section 143 (3)
was framed vide order dated 24.03.2014 at a total income of Rs.
5,33,81,050/-, after making the additions/disallowances due to denial of
exemption under Section 11 and 12 of the Act.
7. On the appeal filed by the assessee, CIT (A) vide order dated 23.09.2015
deleted all the additions. It relied upon the order of this Court in ITA
269/2015 dated 07.09.2015 for AY 2009-10, and held that the AO erred in
ITA 955/2019 Page 3 of 9
invoking Section 13(1)(C)(ii) and that the assessee is entitled to claim
exemption under Section 11(1) of the Act. With respect to the addition of
anonymous donations, it was held that the same had been made on estimate
basis which could not have been done under Section 115BBC of the Act,
wherein all anonymous donations are taxed.
8. The appeal preferred by Revenue, against the order of CIT (A), was
rejected by the Income Tax Appellate Tribunal (ITAT), relying upon the
previous orders in the Assessees own case for AY 2009-10 and the decision
of this Court for the same year. The Tribunal upheld the findings of CIT (A)
on disallowance of 1/3rd expenditure on telecast of Samagams, holding that
such expenditure was for public at large and cannot be held to be benefiting
Gurudevji. The ITAT also deleted the addition of Rs. 50 lacs observing that
the AO had failed to bring out any specific details on record for such an
addition and the same had been made on assumptions and surmises.
9. Revenue has assailed the aforesaid order of the ITAT in the present
appeal. Mr. Ajit Sharma, learned senior standing counsel for the appellant,
submits that the ITAT has largely relied upon its previous order in Assesees
own case for AY 2009-10 and the decision of this Court in ITA 269/2015
dated 07.09.2015 for AY 2009-10, without adverting to the merits of the
present case. He further submitted that assessees entire activities have been
found to be largely for religious purposes and it is therefore not entitled to
the benefits under Section 11(1) of the Act; as purely religious activities are
beyond the objects mentioned in the Trust Deed. Mr. Sharma further
submitted that the activities relating to T.V. telecast, benefited Gurudevji
ITA 955/2019 Page 4 of 9
who comes within the ambit of Section 13 (3) of the Act and since he has
derived personal benefits, the disallowance of 1/3rd of the expenditure on
account of Telecast of Samagams, is justified.
10. We have given due consideration to the submissions of Mr. Sharma,
learned counsel for the revenue.
11. The Tribunal has confirmed that the findings of the CIT (A), inter alia
observing as under:
"11. The above findings and observations of the Hon'ble High
Court, clearly clinches the issue in hand as, their Lordships have
clearly held that conducting of samagams and spiritual
discourses are part of religious activities and religious activity
in the context of the Hindu religion need not be confined to the
activities incidental to a place of worship only, like a temple. It
is not in dispute that the activities of the trust have been held to
be for imparting spiritual education to the persons of all the
caste and religion by organising samagam, distribution of free
medicines, etc. to needy and disabled people. Their Lordships
have also quoted the judgment of Hon'ble Apex Court in the case
of CIT vs. Bhagwan Shree Laxmi Naraindham Trust (supra),
wherein the Hon'ble Apex Court has defined the concept of
`religion' and also in another judgment as quoted in para 14,
wherein the religious activities under the Hindu faith has been
defined to be mainly a way of life. After referring to these
judgments their Lordships have held that the religious
institutions like assessee are also engaged in charitable
activities which are very much part of religious activities and
such activities alongwith organising spiritual lectures has been
held to be religious and this they have examined in the context
of objects of the assessee trust. By such reasoning, the order of
the Tribunal was affirmed. We do not find that the rationale
and the principle laid down by the Hon'ble High Court in the
earlier year, in any manner gets diluted in this year by the
ITA 955/2019 Page 5 of 9
reasoning given by the AO and in fact the issue is squarely
covered by this binding precedence.
12. Otherwise also, we find it very difficult to fathom the
reasoning of the AO that, simply because the asseessee's
activities have been held to be religious by the AO then same is
ether not charitable or assessee has transgressed its activities
from the objects. The so called religious activities here in this
case is nothing but spiritual activities, because trust has been
imparting spiritual and religious discourses in various
samagams for providing spiritual healing to the public at large.
In a country like India, the religion is mostly a way of life and for
pursuing spiritual path. The goal for every human has been for
spiritual upliftment by whatever beliefs and practices one
follows. Such spiritual upliftment has been believed to give
strength to overcome many problems arising from materialistic
worries and related diseases. In the context of our country,
especially in Hindu Dharma, religion and spirituality cannot be
segregated and it cannot be understood by resorting to
dictionary meaning as done by the AO. In fact both the concepts
are overlapping and often distinction between the two gets
blurred, as Hindu dharma has various set of beliefs, rituals and
practices, but aim has always being for general well being and
spiritual upliftment of the individuals and public at large. Hindu
religion cannot be confined to the activities incidental to a
place of worship like temple only which is too myopic view as it
is much broader and even without temple/Mandir, religion can
be practised, professed, followed and believed. Such kind of
spiritual and religious discourses in our country has to be seen
from a broader perspective and as quoted by the Hon'ble High
Court, such discourses falls in the broad concepts of Hindu
religious activities which is well within the permissible objects
of the assessee trust which is giving spiritual lectures to the
needy persons. Thus, the reasoning and the findings of the AO
that it is purely carrying out religious activities not enshrined in
the object of the trust cannot be sustained.
13. Coming to the other disallowances made by the Ld. AO, we
do not find any substance in the reasoning given by the AO,
ITA 955/2019 Page 6 of 9
which in fact is sans any material or evidence but based on wild
conjectures. For instances, in so far disallowance of 1/3 rd
expenditure on telecast of samagam on TV, he has held that,
there might be some kind of benefit to Gurudevji, who is one of
the persons specified u/s 13(3), as such telecast will give
personal benefit to the personality of Gurudevji. Such reasoning
is outlandish and farfetched, firstly, for the reason that any
kind of befit needs to be quantified; and secondly, there has to
be some material to indicate that some personal befit has gone.
The Legislature has categorically given the specified nature of
benefits for which section 13(2) can be invoked. No such
benefits have been ascribed by the AO, albeit is based on
hypothesis that TV telecast might give some benefit to the
Gurudevji by enhancing his popularity as he has benefited by
these TV programmes. In fact such kind of spiritual lecture
telecast by various TV channels is meant for general public at
large and not for the benefit of the person delivering the
lectures. Hence such contention of the disallowance made by
the AO is rejected.
14. Further on the issue of addition of the Rs. 50 lacs on account
of anonymous donations that assessee must have incurred
expenditure from anonymous donations by organising samagam,
here also it has AO has not disputed the expenditure debited in
the books of account or they are not verifiable, but he has held
that expenditure incurred could be more and source of such
expenditure must have come from the anonymous donations.
Without there being there being any material on record, how
can he hold that assessee must have spent Rs. 50 lacs which in
turn must have come through anonymous donations. Thus,
such reasoning is rejected. Accordingly, the findings of the Ld.
CIT (A) are affirmed. Consequently, we uphold the direction of
the Ld. CIT (A) to allow exemption/benefit u/s 11(1).
15. In the result appeal of the revenue is dismissed."
(emphasis supplied)
12. The tax authorities have relied upon the order of this Court in ITA
ITA 955/2019 Page 7 of 9
269/2015 (Supra) for AY 2009-10, to set aside the findings of the AO
denying the assessee exemption under Section 11 of the Act. As regards the
findings pertaining to withdrawal of exemption under Section 11 of the Act
is concerned, it has been observed that the reasons assigned by the AO were
based on presumption, and the basis of invoking Section 13(1)(c)(ii) was
completely misplaced and contrary to the scheme of the Act relating to the
taxation of charitable or religious organisations. The addition of Rs. 50 lacs
as undisclosed income, being unexplained expenditure of samagams has
been held to be contrary to the provisions of the Act as Section 68 has no
application on taxation of religious and charitable organisation, because of a
specific provision Section 115BBC, which governs taxation of all
anonymous donations.
13. On a perusal of the order of this Court in ITA 269/2015 dated
07.09.2015 for AY 2009-10, it emerges that after verifying the objects of the
Trust and the activities carried out by the assessee, this Court held that the
activities undertaken by the assessee can be included in the broad conspectus
of religious activities and in the context of Hindu Religion, such activities
cannot be confined to activities incidental to a place of worship like a
temple. The findings of the Tribunal on this aspect, do not call for any
interference. The observations of the Tribunal vis-a-vis disallowances of
1/3rd expenditure for telecast of samagams, are reasonable and they do not
warrant any interference. There is no evidence on record to construe that the
GurudevJi "has derived any personal benefit" which would justify the
Revenue to invoke the provisions of Section 13(1)(c)(ii) of the Act to deny
assessee the benefit of the expenditure.
ITA 955/2019 Page 8 of 9
14. We also do not find anything perverse in the findings of the Tribunal.
The concurrent findings of facts, do not give rise to any substantial question
of law for our consideration. We do not find any ground or reason to
entertain the present appeal and the same is dismissed.
SANJEEV NARULA, J
VIPIN SANGHI, J
NOVEMBER 19, 2019
Pallavi
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