Commissioner Of Income-Tax, Rohtak v. Ii)Whether On Facts And In Circumstances Of The Case, Thehon’ble Itat Was Justified In Law In Directing The Cit Toallow Approval Under Section 80G(5)(Vi) Of The

IN THE HIGH COURT OF PUNJAB AND HARYANA ATCHANDIGARH I.T.A. No. 44 of 2011 Date of Decision: 06.12.2011 Commissioner of Income-Tax, Rohtak …Appellant Vs. M/s Shri Lalita Ashram Trust…Respondent CORAM:HON'BLE MR. JUSTICE HEMANT GUPTAHON'BLE MR. JUSTICE G.S. SANDHAWALIAPresent: Mr. Inderpreet Singh, Advocate, for the appellant. HEMANT GUPTA, J. (Oral) The Revenue is in appeal under Section 260A of the IncomeTax Act, 1961 (for short 'the Act') against the order passed by the IncomeTax Tribunal, Delhi Bench ‘G’, New Delhi in ITA No.4440/Del/2009 dated30.04.2010. The Revenue has sought the following substantial questions oflaw:- (i)Whether on facts and in circumstances of the case, theHon’ble ITAT was justified in law in directing the CIT toallow approval under Section 80G(5)(vi) of the Income TaxAct, when income derived by the applicant trust wasincludible in its total income as per the provisions of theclause (i) of sub-section (5) of Section 80G of the Income TaxAct & where expenditure with reference to sub-section (5B)read with explanation 3 of Section 80G of the Income Tax Actexceeded 5% of the total income of the assessee trust? (ii)Whether on facts and in circumstances of the case, theHon’ble ITAT was justified in law in directing the CIT toallow approval under Section 80G(5)(vi) of the Income TaxAct, when income derived by the applicant trust was includible in its total income as per the provisions of theclause (i) of sub-section (5) of Section 80G of the Income TaxAct & where expenditure with reference to sub-section (5B)read with explanation 3 of Section 80G of the Income Tax Actexceeded 5% of the total income of the assessee trust? The assessee-Trust was constituted on 14.10.1996 and wasregistered under Section 12A of the Act on 20.01.1987. The assessee-Trustwas given registration under Section 80G of the Act as well. The lastrenewal was on 26.05.2006 for the period from 01.04.2004 to 31.03.2009.The assessee-Trust sought renewal of registration under Section 80G(5) ofthe Act. The subsequent request for renewal of registration was declined bythe Commissioner of Income-Tax inter-alia for the reason that the Trust hasincurred an expense of Rs.2,40,167/- on Mandir Pooja, which exceeds 5%of the total income of the Trust permissible for religious activities. Inappeal, the learned Tribunal returned a finding that the amount incurred onMandir Pooja – a religious activity is 4.93%, it being Rs.2,40,167/- out ofthe total income of Rs.48,68,989/-, therefore, the Trust is entitled toregistration. Learned counsel for the appellant on the basis of CircularNo.5P (LXX-6) issued by the Central Board of Direct Taxes dated19.06.1968 and a judgment of Madras High Court reported asCommissioner of Income-Tax, Tamil Nadu-I Vs. Rao Bahadur CalavalaCunnan Chetty Charities 135 ITR 485has vehemently argued that Section11 of the Act does not deal with total income, it deals with income and,therefore, the expenditure on religious activity has to be seen after allowingthe expenditure and not on the total income. We find that the argument raised by the Revenue is whollymisconceived. Under Section 80G(5B), the expenditure of a religiousnature should not exceed 5% of its total income. The relevant clause readsas under: “(5B) Notwithstanding anything contained in clause (ii) of sub-section (5)and Explanation 3, an institution or fund which incurs expenditure, duringany previous year, which is of a religious nature for an amount notexceeding five per cent of its total income in that previous year shall bedeemed to be an institution or fund to which the provisions of this sectionapply.”and Explanation 3, an institution or fund which incurs expenditure, duringany previous year, which is of a religious nature for an amount notexceeding five per cent of its total income in that previous year shall bedeemed to be an institution or fund to which the provisions of this sectionapply.” “(5B) Notwithstanding anything contained in clause (ii) of sub-section (5)and Explanation 3, an institution or fund which incurs expenditure, duringany previous year, which is of a religious nature for an amount notexceeding five per cent of its total income in that previous year shall bedeemed to be an institution or fund to which the provisions of this sectionapply.”and Explanation 3, an institution or fund which incurs expenditure, duringany previous year, which is of a religious nature for an amount notexceeding five per cent of its total income in that previous year shall bedeemed to be an institution or fund to which the provisions of this sectionapply.” A perusal of above provision would show that the expressionused is ‘total income’ and not ‘income’ which falls within the scope ofSection 11 of the Act. The income as mentioned in Section 11 is exclusivedefinition, as certain income is not to be included in the total income inrespect of charitable and religious trusts. The ‘total income’ is defined inSection 5 of the Act. It reads as under: “5. (1) Subject to the provisions of this Act, the total income of anyprevious year of a person, who is a resident includes all income fromwhatever source derived which – (a)is received or is deemed to be received in India in such year by oron behalf of such person; oron behalf of such person; or (b)accures or arises or is deemed to accrue or arise to him in Indiaduring such year; or during such year; or (c)accrues or arises to him outside India during such year;” The ‘total income’ as mentioned in sub-clause (5B) of Section 80G of the Act does not mean the ‘income’, as it appears in Section 11 ofthe Act. The expression “total income” and income have been useddifferently and has distinct application. The circular dated 19.06.1968 and ’the judgment in Rao Bahadur Calavala Cunnan Chetty Charitiesscase(supra) is in respect of “income” relatable to Section 11 of the Act and not“total income”. Therefore, we do not find any merit in the argument raisedby learned counsel for the revenue. Consequently, no substantial question of law arises forconsideration by this Court in the present appeal. The same is accordinglydismissed. (HEMANT GUPTA) JUDGE 06.12.2011Vimal (G.S.SANDHAWALIA) JUDGE