The order of the Bench was delivered by
1. These four appeals are filed by four different assessee-trusts, viz., (1) Raghunath Das Damodardas Lohia Charitable Trust, Hyderabad (2) Kaushalya Bai Srinivas Lakhotiya Charitable Trust, Hyderabad (3) Kanta Bai Govind Kumar Lohia Charitable Trust, Hyderabad, (4) Ayodhya Bai Damodardas Lohia Charitable Trust, Hyderabad against the identical order of the Director of Income-tax (Exemptions), Hyderabad dated February 26, 2014, in denying the registration under section 12AA of the Income-tax Act, 1961. Since common issue is involved in these appeals, the appeals are heard together and are being disposed of by the single consolidated order.
2. Briefly stated, the assessee-trusts had filed an application in Form 10A seeking registration under section 12AA of the Income-tax Act, 1961. The authorised representative of the assessee appeared and filed reply to the questionnaire raised by the Director of Income-tax (Exemptions). However, the learned Director of Income-tax (Exemptions) was not satisfied with the explanation offered by the assessee-trusts and rejected the application of the assessee-trusts and passed the following order :
"2. From the trust deed, it is noticed that the assessee-trust has both religious and charitable objects. The object clause (a) mentioned under para 9 of the trust deed which clearly shows religious purpose on the part of the applicant-trust is reproduced as under :
'9(a) To establish and manage dharmashala, choultries or rest houses. Donation to the temples, maintenance of the temples. Dona tion towards construction of room at various pilgrimage places for the benefit of pilgrims, tourists'."
Making donation to temple and maintenance of temple is clearly of religious nature. Further, making donation for construction of rooms at different pilgrimage places for the benefit of pilgrims visiting such pilgrim centers is also clearly of religious nature. Thus, the applicant- trust in this case has both religious and charitable objects, i.e., has got mixed objects, and since it has been formed on November 18, 2006 i.e., after April 1, 1962, under that circumstance, it does not qualify either as a public religious trust or as a public charitable trust and hence its income would not be eligible for exemption under section 11 of the Act. Further, in view of the provisions contained in section 11(1)(a) of the Act, where, reference is made specifically to words wholly for "charitable purposes" or "religious purposes", under that circumstance, having regard to the provisions of section 12A(1)(aa) of the Act read with section 11(1)(a) of the Act, the assessee-trust, in this case, would not be eligible for registration under section 12AA of the Act. Furthermore, under the prevailing facts, i.e., in the face of such mixed objectives, having regard to the ratio of the decision of the hon'ble Supreme Court in State of Kerala v. M. P. Shanti Verma Jain [1998] 231 ITR 787 (SC) and CIT v. Palghat Shadi Mahal Trust [2002] 254 ITR 212 (SC) and Upper Ganges Sugar Mills Ltd. v. CIT [1997] 227 ITR 578 (SC) and of the hon'ble Jammu and Kashmir High Court in Ghulam Mohidin Trust v. CIT [2001] 248 ITR 587 (J&K), the above trust, whose income would not be eligible for exemption, would consequently not be eligible for registration under section 12AA of the Act. In this context, it is pertinent to refer to the following observation made by the hon'ble Jammu and Kashmir High Court in the said decision in Ghulam Mohiddin Trust v. CIT (supra) (page 593) :
'. . . because the law is well-settled that if there are several objects of the trust, some of which are charitable and some non-charitable, and the trustees in their discretion are to apply the income to any of the objects, the whole trust would fail and no part of its income would be exempt from tax. The reason is that in such a case no definite part of the property or its income is allocated for charitable purposes and it would be open to the trustees to apply its income to any of the non-charitable objects or religious purposes.' (at pages 593-594)
2.1. . . . It may be further mentioned that, while clarifying on section 11 of the Act, which deals with exemption of income in case of a public trust or institution, and in which there is reference to term 'charitable purposes' or 'religious' purposes, the hon'ble Madhya Pradesh High Court, in their decision in Shri Dhakad Samaj Dhar amshala Bhawan Trust v. CIT [2008] 302 ITR 321 (MP), held that, when such a purpose is shown that registration can be granted. The pertinent observations of the hon'ble High Court in this regard, at page 324 of the said decision, are reproduced as under :
'8. In our considered view, since section 11 of the Act provides for exemptions to the trust registered under the Act, it is primarily the purpose of section 11 that will dominate or prevail over other consideration. Section 11 provides for this exemption only if the property held is for charitable or re1igious purposes. It is only when such a purpose is shown that registration can be granted.'
2.2. From the above, thus, it follows that only when the income derived from property held under a trust, is meant for application wholly for charitable purposes or wholly for religious purposes, that registration can be granted to that trust under section 12AA of the Act to such trust. Consequently, it follows that, if the income incase of a trust or institution, is meant for application for both charitable and religious purposes, under that circumstance, such trust or institution will not be eligible for registration under section 12AA of the Act. Further, the emphasis on specific purpose of the trust, i.e., either 'charitable' or 'religious', in the context of granting of registration, has been stressed by the hon'ble Madhya Pradesh High Court in their subsequent observation made at page 325 of the said decision. The pertinent observation of the hon'ble High Court, in this regard, is as under :
'. . . It is only when it is proved that the property is consecrated for charitable or religious purposes that the trust may become entitled to registration subject to fulfilment of other conditions.'
3. For the aforementioned reasons, the applicant-trust thus, cannot be granted registration under section 12AA of the Act. Hence, registration sought under section 12AA of the Act is refused to the above trust. Thus, the said application in Form 10A is rejected."
3. The Director of Income-tax (Exemptions) thus concluded that the assessee-trusts cannot be granted registration under section 12AA of the Act and the application in Form 10A was rejected. Aggrieved, the assessees have filed the present appeals before the Tribunal and has raised the following grounds. For the sake of reference we reproduce the grounds raised in I. T. A. No. 851/Hyd/2014 in the case of Raghunath Das Damodardas Lohia Charitable Trust.
"1. The order of the learned Director of Income-tax (Exemptions) is erroneous both on facts and in law.
2. The learned Director of Income-tax (Exemptions) erred in holding that the activities of the appellant include both charitable and religious. The Director of Income-tax (Exemptions) ought to have considered the fact that the activities of the appellant are only charitable and do not include religious activities.
3. In the alternate and without prejudice to the above contention, the Director of Income-tax (Exemptions) erred in holding that the appellant is not eligible for registration under section 12AA of the Income-tax Act simply because both charitable and religious activities were carried on by the appellant herein.
4. The Director of Income-tax (Exemptions) ought to have seen that the activities carried on by the appellant are only charitable activities and ought to have granted registration under section 12AA of the Income-tax Act.
5. Any other grounds that may be urged at the time of hearing."
4. Learned counsel for the assessee Mr. S. Rama Rao relied on the decision of the jurisdictional High Court in thecase of Social Service Centre, Srikakulam v. ACIT, I.T.A. No. 299/Vizag/1998 dated January 24, 2000. Further, learned counsel for the assessee has also relied on the decision of the Income-tax Appellate Tribunal, Nagpur Bench in I.T.A. No. 223/Nag/ 2009 dated October 11, 2012 wherein it has been held as follows :
"12. Even we noted that all the building maintenance expenses, free food expenses and festival, prayer and daily expenses cannot be regarded to be the one incurred for religious object, even if the object is regarded to be religious one. It is not denied that in the building the assessee was carrying yoga centre, tailoring training centre as well as food for the needy and optical centre for the poor.
13. Explanation 3 to section 80G(5D) states that 'in this section, "charitable purpose" does not include any purpose the whole or substantially the whole of which is of a religious nature'. This expla nation takes note of the fact that an institution or fund shall be for a charitable purpose and may have a number of objects. If anyone of these objects is wholly or substantially wholly of a religious nature, the institution or funds falls outside the scope of section 80G and the donation to it will not make the donor entitled for the deduction under section 80G. The objects as per Explanation 3 must be wholly or substantially whole of which must be of religious nature. The assessee has submitted all the evidence including the objects and how the expenditure has been incurred by it. The onus, in our opinion, gets shifted on the Revenue to prove that the assessee-trust is wholly or substantially for the religious purpose. There is no allegation on the part of the Revenue that the whole or substantially whole of the object of the trust is to propagate or advance support to a particular sect. We may observe that Hinduism is a way of life of a civilised society. It as such is not a religion. In this regard we rely on the case of T. T. Kuppuswamy Chettiar v. State of Tamil Nadu [1987] 100 LW 1031 in which it was held 'the word "Hindu" has not been defined in any of the texts nor in judgment made law. The word was given by British administrators to inhabitants of India, who were not Chris tians, Muslims, Parsis or Jews. The alleged Hindu religion consists of four castes Brahmins, kshatriyas, vaishyas and sudras belonging ultimately to two schools of law, mitaksharas and dayabhaga. There is, however, no religion by the name 'Hindu'. It only shows that so called Hindu religion has been called for convenience'. The Commis sioner of Income-tax must be aware of that the Hindu consists of a number of communities having the different gods who are being worshipped in a different manner, different rituals, different ethical codes. Even the worship of god is not essential for a person who has adopted Hinduism way of life. Thus, Hinduism holds within its fold men of divergent views and traditions who have very little in common except a vague faith in what may be called the fundamentals of the Hinduism. The word 'community' means a society of people living in the same place, under the same laws and regulations and who have common rights and privileges. This may apply to Christi anity or moslem but not to Hinduism. Therefore, it cannot be said that Hindu is a separate community or a separate religion. Technically Hindu is neither a religion nor a community. Therefore, expenses incurred for worshipping of Lord Shiva, Hanuman, Goddess Durga and for maintenance of temple cannot be regarded to be for religious purpose. Under these facts and circumstances, we are of the view that the Commissioner of Income-tax is not correct in law in not allowing the approval to the assessee-trust under section 80G of the Act. We accordingly, set aside the order of the Commissioner of Income-tax and direct the Commissioner of Income-tax to grant approval to the assessee-trust under section 80G(5)(vi) of the Act."
5. We have heard both parties and also perused the relevant material on record. We find that the Director of Income-tax (Exemptions) has cited a decision which is relevant for the purpose of section 80G and not section 12AA. Further, section 12A does not prohibit charitable activities of an institution from having mixed objects, i.e., both charitable and religious. In respect of this contention, we rely on the following cases :
1. Kasyapa Veda Research Foundation v. CIT [2011] 11 ITR (Trib) 468 (Cochin) ;
2. Vanita Vishram Trust v. Chief CIT [2010] 327 ITR 121 (Bom) ;
3. Addl. DIT (Exemption) v. Islamic Research Foundation [2013] 21 ITR (Trib) 588 (Mumbai) ; and
4. The Society of Presentation Sisters v. ITO [2009] 318 ITR (AT) 287 (Cochin).
6. With respect to maintenance of the temple, the Director of Income-tax (Exemptions) opined that it is clearly of religious nature. We are of the opinion that the maintenance expenses incurred for the building relate to the charitable activities and not the religious activities. Since learned counsel for the assessee has submitted that food is distributed to the needy which is called as "Mahaprasadam" and the distribution of the food to the poor people is not a religious expenditure. The temple is open to everybody without caste and creed and the temple does not show partiality to a particular religion. The temple is the place where people gather for distributing alms and donations which are given to the poor and the needy who have gathered there. The maintenance of the temple cannot be regarded for religious purpose and is for the benefit of the general public. Hence, we direct the Director of Income-tax (Exemptions) to grant registration under section 12AA of the Income-tax Act, 1961 to the assessee-trusts.
7. In the result, the appeals of the assessees are allowed.
The order pronounced in the open court on May 29, 2015.