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2016 Supreme(Pat) 1256
IN THE HIGH COURT OF JUDICATURE AT PATNA
Ramesh Kumar Datta, Anjana Mishra, JJ.
Shri Mahavir Sthan Nyas Samiti – Petitioner
Versus
Union of India, through Chief Commissioner Income Tax – Respondent
Civil Writ Jurisdiction Case Nos. 20698 of 2010 and 2468, 2634 of 2011
Decided On : 23-11-2016
For the Petitioners: Mr. P.N. Mishra, Mr. Shekhar Singh, Mr. D.V. Pathy, Mr. Abhi Sarkar and Mrs. Manju Jha.
For the Respondents: Mrs. Archana Sinha, Mr. Ganpati Trivedi, Mr. Manoj Kumar and Mr. Rishi Raj Sinha.
The omission of the proviso to Section 80-G (5) (vi) by the Finance (No. 2) Act, 2009, did away with the requirement of renewal of registration under Section 80-G and that a trust may have both religious and charitable purposes and activities and that the same would not mean that it would be ineligible for the benefit of exemption under the provisions of Section 11 and 12 of the Act.
Headnote:
INCOME TAX - Renewal of registration under Section 80-G - Cancellation of registration under Section 12AA - Show cause notice - Charitable purpose - Religious purpose - Benefit of any particular religious community or caste - Section 13 (1) (b) of the Income Tax Act, 1961.
Fact of the Case:
The petitioners, temple trusts registered under Section 12A of the Income-tax Act, 1961 (the Act), sought to quash the orders refusing renewal of exemption under Section 80-G of the Act and notices for cancellation of registration under Section 12AA of the Act. The petitioners contended that the renewal of registration under Section 80-G was not required as the proviso to Section 80-G (5) (vi) had been omitted by the Finance (No. 2) Act, 2009, and that the activities of the trusts were not for the benefit of any particular religious community or caste, as required under Section 13 (1) (b) of the Act.
Finding of the Court:
The Court held that the renewal of registration under Section 80-G was not required as the proviso to Section 80-G (5) (vi) had been omitted by the Finance (No. 2) Act, 2009, and that the activities of the trusts were not for the benefit of any particular religious community or caste, as required under Section 13 (1) (b) of the Act. The Court also held that the orders refusing renewal of exemption under Section 80-G of the Act and notices for cancellation of registration under Section 12AA of the Act were illegal and invalid.
Issues: 1. Whether the renewal of registration under Section 80-G was required after the omission of the proviso to Section 80-G (5) (vi) by the Finance (No. 2) Act, 2009? 2. Whether the activities of the trusts were for the benefit of any particular religious community or caste, as required under Section 13 (1) (b) of the Act?
Ratio Decidendi: 1. The Court held that the renewal of registration under Section 80-G was not required as the proviso to Section 80-G (5) (vi) had been omitted by the Finance (No. 2) Act, 2009. The Court relied on Circular No. 05/10 dated 03.06.2010 and Circular No. 7/210 dated 27.10.2010 issued by the Central Board of Direct Taxes (CBDT), which clarified that any approval under Section 80-G (5) on or after 1.10.2009 would be a one-time approval which would be valid till it is withdrawn. 2. The Court held that the activities of the trusts were not for the benefit of any particular religious community or caste, as required under Section 13 (1) (b) of the Act. The Court relied on the decision of the Supreme Court in Commissioner of Income-tax, Ujjain vs. M/s. Dawoodi Bohra Jamat, (2014) 364 ITR 31, in which it was held that a trust may have both religious and charitable purposes and activities and that the same would not mean that it would be ineligible for the benefit of exemption under the provisions of Section 11 and 12 of the Act.
Final Decision: The Court allowed the petitions and quashed the orders refusing renewal of exemption under Section 80-G of the Act and notices for cancellation of registration under Section 12AA of the Act.
Ramesh Kumar Datta, J.
1. Heard learned counsels for the petitioners in all the three writ petitions and learned counsels for the Income-tax Department and for the Bihar State Board of Religious Trust.
2. All the three writ applications raise several common issues and they have, accordingly, been heard together and are being disposed of by this common order.
3. In CWJC No. 20698 of 2010, the petitioner-Shri Mahabir Sthan Nyas Samiti has sought quashing of the order of the Commissioner of Income Tax-1 dated 29.09.2010, by which the application of the petitioner for renewal of grant of exemption under Section 80-G of the Income-tax Act, 1961 (In short the "Act") has been refused holding that the assessee-trust does not fulfil the condition laid down in sub-section 5 (iii) of Section 80-G of the Act. The prayer is also to quash the notice dated 13.12.2010 issued by the CIT-1, Patna as to why the registration granted under Section 12AA of the Act to the Trust should not be cancelled. The further challenge is to the order dated 27.03.2014 passed by the CIT-1, Patna under Section 263 of the Income Tax Act holding that for the assessment year 2009-10, the Assessing Officer failed to make investigation/enquiry which he was legally bound to make during the course of assessment, making the order erroneous and prejudicial to the interest of revenue and accordingly set aside the assessment order under Section 143 (3) dated 28.11.2011 with a direction to pass an order afresh de novo in accordance with law after allowing opportunity to the assessee.
4. The other two writ applications have been filed by the petitioner-Imarat Shariah Educational and Welfare Trust. In CWJC No. 2468 of 2011, the prayer is to quash the order dated 27.10.2010 passed by the CIT-1, Patna, by which he has refused to grant continuance of exemption under Section 80-G of the Act to the petitioner holding that the petitioner does not fulfil the conditions as laid down in clauses (ii) and (iii) of Section 80-G (5) of the Act.
5. In CWJC No. 2634 of 2011, the challenge was initially to the notice dated 20.12.2010 issued by the CIT-1, Patna under Section 12AA of the Act issuing show cause to the petitioner as to why the registration granted under Section 12AA to it should not be cancelled. The further challenge by a subsequent amendment is to the order dated 28.09.2011, by which the registration of the petitioner granted to it under Section 12AA of the Act bearing registration No. 20 of 1996-97 dated 01.08.1996 was cancelled holding that the activities of the assessee-trust are not genuine and as such they are not being carried out in consonance with the declared objects of the trust.
6. The petitioner-Shri Mahavir Sthan Nyas Samiti (in short Nyas Samiti) is a temple trust registered under Section 12A of the Act. It was declared a public trust in 1958 by the judgment of a Division Bench of this Court, which approved a compromise between the Management Committee of the temple and the Bihar State Board of Religious Trust in 1958. Subsequently, it was registered by the Bihar State Board of Religious Trust, Patna under Registration No. 657 dated 04.02.1958. It was registered under Section 12AA of the Income-tax Act, 1961 under registration No. 3592 dated 12.12.1991 and has continued to be so registered till this day. It is also granted the benefit of exemption under the provisions of Section 80-G of the Act since the same period, on the basis of such exemption being granted from time to time. As per the Gazette Notification (Ordinary) No. 37 dated 16.03.1990 of the Bihar State Board of Religious Trust, the objectives for which the fund of the trust shall be applied are the following:-
(i) Worship, Raj bhog (food offering to the deity), Akhand Jyoti (continuous lighting of lamp before the deity) religious ceremonies, lectures, etc.
(ii) Conservation, beautification and development of the temple.
(iii) Establishment and development of educational institutions.
(iv) Propagation o
