Additional Director of IncomeTax (Exemption) v. Islamic Research Foundation

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The Tax PublishersI. T. A. No. 6069/Mum/2011 2013 TaxPub(DT) 0498 (Mum-Trib) : (2013) 058 SOT 0170 : (2013) 021 ITR (Trib) 0588 INCOME TAX ACT, 1961 --Charitable trust--Bar to exemption under section 13(1)(b) Charitable purpose--For the relevant assessment year, assessing officer denied exemption under section 11 to assessee institution on observing that its objects were including propagation of Islamic faith and promotion of religious activities of Islamic faith and it was for benefit of a particular community. Commissioner (Appeals) however, allowed assessee's appeal. *Held:* Rightly so. Major expenses of assessee was on conducting a peace conference, whose focus was to create commercial harmony and awareness and understanding of Islam and its message of peace for entire humanity. Conference cannot be held to be mere religious activity for the benefit of a particular community. Exemption under section 11 could not therefore, be denied. Assessing officer has not discussed the activities of the assessee carried out during the year under consideration. The Commissioner (Appeals) has discussed the activities of the trust in detail and he has found that out of the total expenditure incurred by the assessee at Rs. 5,53,27,631 the major expenses of the assessee is on conducting a peace conference which were to the tune of Rs. 4,84,61,830. It was a 10 day peace conference and the focus was to create communal harmony and awareness and understanding of Islam and its message of peace for entire humanity to help, remove misconception, false fear, hate of Islam globally to help realise that justice, human rights, moral values and peace be it on any individual or at world wide collective level are a must for effective human progress and realistic global unity. The said conference was attended by various dignitaries, the names of whom have already been mentioned in the earlier part of this order. The said peace conference cannot be held to be a mere religious activity for the benefit of a particular community. In fact, during the course of hearing referring to the details of expenditure incurred, the authorised representative was specifically required to describe as to which expenditure can specifically be assigned as religious expenditure incurred exclusively for Muslim community. It was submitted by the authorised representative that the major expenses were on peace conference and none of the expenses can be said to have incurred exclusively for religious activity. The Departmental Representative also could not point out any of such expenditure which can be stated to have incurred exclusively for the purpose of a particular religious community. It has already been mentioned that the assessing officer has not pointed out any such expenditure. Therefore, simply on the basis of one or two objects stated in the objects of the trust which are limited to religious activity, it cannot be said that in the year under consideration the assessee has suddenly become a purely religious trust. The authorised representative has carried through assessment orders of the earlier years. In one of the assessment orders, the assessing officer has specifically mentioned about the issue of religious nature of trust and exemption has been granted to the assessee under section 11 after being satisfied with the reply submitted by the assessee. Therefore, the case of the assessee is also acceptable on the basis of principle of consistency relying upon the decision referred to by the authorised representative, which has already been discussed in the above part of this order. [Para 23] There is also force in the contention of the authorised representative that the entire gross income could not be assessed as income of the assessee as in case it is held that trust is not eligible for exemption under section 11, then net income should be assessed [Para 27] In view of the above discussions, there is no infirmity in the order passed by the Commissioner (Appeals), vide which it has been held that the assessee has wrongly been denied benefit of exemption under section 11. This Tribunal declines to interfere and the appeal filed by the Revenue is dismissed. [Para 28] SUBSCRIBE FOR FULL CONTENT

The Tax PublishersI. T. A. No. 6069/Mum/2011
2013 TaxPub(DT) 0498 (Mum-Trib) : (2013) 058 SOT 0170 : (2013) 021 ITR (Trib) 0588

INCOME TAX ACT, 1961

--Charitable trust--Bar to exemption under section 13(1)(b) Charitable purpose--For the relevant assessment year, assessing officer denied exemption under section 11 to assessee institution on observing that its objects were including propagation of Islamic faith and promotion of religious activities of Islamic faith and it was for benefit of a particular community. Commissioner (Appeals) however, allowed assessee's appeal. Held: Rightly so. Major expenses of assessee was on conducting a peace conference, whose focus was to create commercial harmony and awareness and understanding of Islam and its message of peace for entire humanity. Conference cannot be held to be mere religious activity for the benefit of a particular community. Exemption under section 11 could not therefore, be denied.

Assessing officer has not discussed the activities of the assessee carried out during the year under consideration. The Commissioner (Appeals) has discussed the activities of the trust in detail and he has found that out of the total expenditure incurred by the assessee at Rs. 5,53,27,631 the major expenses of the assessee is on conducting a peace conference which were to the tune of Rs. 4,84,61,830. It was a 10 day peace conference and the focus was to create communal harmony and awareness and understanding of Islam and its message of peace for entire humanity to help, remove misconception, false fear, hate of Islam globally to help realise that justice, human rights, moral values and peace be it on any individual or at world wide collective level are a must for effective human progress and realistic global unity. The said conference was attended by various dignitaries, the names of whom have already been mentioned in the earlier part of this order. The said peace conference cannot be held to be a mere religious activity for the benefit of a particular community. In fact, during the course of hearing referring to the details of expenditure incurred, the authorised representative was specifically required to describe as to which expenditure can specifically be assigned as religious expenditure incurred exclusively for Muslim community. It was submitted by the authorised representative that the major expenses were on peace conference and none of the expenses can be said to have incurred exclusively for religious activity. The Departmental Representative also could not point out any of such expenditure which can be stated to have incurred exclusively for the purpose of a particular religious community. It has already been mentioned that the assessing officer has not pointed out any such expenditure. Therefore, simply on the basis of one or two objects stated in the objects of the trust which are limited to religious activity, it cannot be said that in the year under consideration the assessee has suddenly become a purely religious trust. The authorised representative has carried through assessment orders of the earlier years. In one of the assessment orders, the assessing officer has specifically mentioned about the issue of religious nature of trust and exemption has been granted to the assessee under section 11 after being satisfied with the reply submitted by the assessee. Therefore, the case of the assessee is also acceptable on the basis of principle of consistency relying upon the decision referred to by the authorised representative, which has already been discussed in the above part of this order. [Para 23] There is also force in the contention of the authorised representative that the entire gross income could not be assessed as income of the assessee as in case it is held that trust is not eligible for exemption under section 11, then net income should be assessed [Para 27] In view of the above discussions, there is no infirmity in the order passed by the Commissioner (Appeals), vide which it has been held that the assessee has wrongly been denied benefit of exemption under section 11. This Tribunal declines to interfere and the appeal filed by the Revenue is dismissed. [Para 28]