D.b. Income Tax Appeal v. Mandir Shree Ganesh Ji, Moti Doongri, Jaipur

{1} DB INCOME TAX APPEAL NO.61/2014 IN THE HIGH COURT OF JUDICATURE FOR RAJASTHANBENCH AT JAIPUR JUDGMENT D.B. INCOME TAX APPEAL NO.61/ 2014COMMISSIONER OF INCOME TAX, JAIPUR-II, JAIPUR Vs.MANDIR SHREE GANESH JI, MOTI DOONGRI, JAIPUR DATE:02.12.2014 HON'BLE THE ACTING CHIEF JUSTICE MR. SUNIL AMBWANIHON'BLE MR.JUSTICE J.K. RANKA Mr. Nikhil Simlote on behalf of Mr. R.B. Mathur, for the appellant.Mr. Kamlakar Sharma, Senior Counsel assisted byMr. Ashish Sharma, for the respondent. ***** REPORTABLE 1.This D.B. Income Tax Appeal under Section 260A of the Income Tax Act, has been preferred by the Commissioner of Income Tax,Jaipur-II, Jaipur, against the order passed by the Income Tax AppellateTribunal, Jaipur Bench, Jaipur, dated 24.01.2014, on the followingsubstantial question of law:- “ i) Whether in the facts and circumstances ofthe case the Tribunal has erred in law in holding theassessee trust as public and charitable trust inallowing the benefits of exemption u/ s. 11/ 12 of theIT Act, 1961 despite the fact that the assessee trust iscontrolled by two families and entire income andbenefits are passed over to the said families. ii) Whether, in the facts and circumstances ofthe case the Tribunal was justified in law in allowingthe benefit just because some charitable trust despiteall the activities done and controlled by trustees whoare family members and all the benefits are accrued to the said family trust. iii) Whether, in the facts and circumstances ofthe case the Tribunal was justified in law in holdingthat the assessee trust is entitled for benefit ofexemption u/ s. 11/ 12 contrary to the provisions ofsection 13(1) (a) of the IT Act, 1961. iv) Whether, in the facts and circumstances ofthe case the Tribunal was justified in law inconfirming the deletion of addition of Rs.7206002/ - onaccount of donation given for charitable activitiesdespite of the fact that the assessee is not entitled forany exemption/ deduction. v) Whether, in the facts and circumstances ofthe case the Tribunal was justified in law in treatingthe construction expenses of Rs.566627/ - as revenueexpenditure.” 2.We have gone through the orders passed by the AssessingOfficer, the Appellate Authority, and the Income Tax Appellate Tribunal.All the authorities have recorded concurrent findings of fact that therespondent-Trust stands registered under Section 12A of the Act, videorder dated 25.03.1976, which is still valid. The objects of the trust arecharitable in nature. The respondent-Trust is also registered under theDevasthan Vibhag (State Government), which is controlled by the StateGovernment. The Rajasthan Public Charitable Trust, 1959, gives thecontrolling power to the Devesthan Commissioner. Even the expenditureand funds received, and its disbursement, are controlled by the StateGovernment through Commissioner, Devasthan Vibhag. 3.The Tribunal found that the trust is subjected to periodicalinspections. The last inspection was made on 21.04.2011 by theAssistant Commissioner, Devasthan Vibhag. An amount of Rs.72,06,002/ - {3} DB INCOME TAX APPEAL NO.61/2014 has been spent on charitable activities in the assessment year inquestion, for which receipts in respect of the expenses incurred, accountbooks copies, newspaper clipping, carrying news of the activitiesconducted by the trust, are available on record. The trustees are filingtheir individual tax returns and paying substantial tax on their income. Two trustees, namely Shri Kailash Narayan and Shri Puran ChandSharma, have also filed their income tax returns. The Income TaxTribunal further held that the expenditure on the construction andrepairs of the generator, CCTV, note counting machine and wheel chairs,was clearly established on record. {3} DB INCOME TAX APPEAL NO.61/2014 has been spent on charitable activities in the assessment year inquestion, for which receipts in respect of the expenses incurred, accountbooks copies, newspaper clipping, carrying news of the activitiesconducted by the trust, are available on record. The trustees are filingtheir individual tax returns and paying substantial tax on their income. Two trustees, namely Shri Kailash Narayan and Shri Puran ChandSharma, have also filed their income tax returns. The Income TaxTribunal further held that the expenditure on the construction andrepairs of the generator, CCTV, note counting machine and wheel chairs,was clearly established on record. 4.It is submitted by learned counsel appearing for theDepartment that charitable trust is defined under Section 2(15) of theIncome Tax Act. As per Section 13(1), nothing contained in section 11 orsection 12 shall operate so as to exclude from the total income of theprevious year of the person in receipt thereof, whereas Section 13(1)(a),provides that any part of the income from the property held under atrust for private religious purposes, which does not inure for the benefitof the public. It is submitted that the amount of Rs.72,06,002/ -, was notspent for the benefit of the public, and thus, it would not fall within themeaning of charitable trust. 5.It is not denied that the certificate under Section 12A, is stillvalid. The details of the expenses incurred on charitable activities, werefiled along with the returns. We have gone through these details, whichinclude expenditure of major part of donation on religious and other {4} DB INCOME TAX APPEAL NO.61/2014 charitable purposes on 27 items. The amount spent on free fooddistributed in Rain Baseras in evening at Rs.17,75,289.53, Prasaddistribution on various functions, donation provided to the SMS Hospital for maintenance of Polytroma ward at Rs.4,13,819/ -, and otheractivities, clearly fall within the meaning of charitable purposes underSection 2(15) of the Act. 6.In our view, the findings recorded by the Income TaxAuthorities that so long the registration under Section 12A of the Act isvalid and the income is found to have been spent for charitable purposes,such income has to be excluded from the total income of the previousyear, does not raise any substantial question of law for consideration inthis appeal. 7.The Income Tax Appeal is dismissed. (J.K. RANKA),J. (SUNIL AMBWANI),ACTING C.J. / KKC/ Certificate: All corrections made in the judgment/ order have been incorporated in thejudgment/ order being emailed.KAMLESH KUMARP.A.