SARDARMAL SANCHETI CHARITABLE TRUST Vs. UNION OF INDIA

JUDGEMENT

(1.) THIS writ petition has been preferred against the order dt. 27th Jan., 2005 (Annex. 7) as passed by the CIT -I, Jodhpur whereby an application moved by the petitioner trust for renewal of exemption under Section 80G of the IT Act, 1961 ('the Act') has been rejected essentially on the ground that the petitioner trust made a donation of Rs. 71,000 to one Oswal Chhatrawas, Jodhpur out of its income of Rs. 6,90,250 for the period ended on 31st March, 2004. The learned CIT was of opinion that the purpose of the said donee -institution being apparently of religious nature and for a particular community, donation to such an institution could not be considered as expenditure for charitable purpose; and, while finding that the petitioner trust spent more than 5 per cent of its total income on religious purpose and while relying on the decision of the Hon'ble Supreme Court in the case of Upper Ganges Sugar Mills Ltd. and Ors. v. CAT : [1997]227ITR578(SC) , the learned CIT came to the conclusion that the petitioner has not fulfilled the requisite conditions in terms of Section 80G(5B) of the Act and hence, was not qualifying for further exemption under Section 80G of the Act.

(2.) ASSAILING the order aforesaid, the learned Counsel for the petitioner has contended that the learned CIT proceeded to reject the application in a wholly cursory manner without having regard to the facts of the case and without applying the relevant principles. Learned Counsel submitted that the CIT proceeded on a misplaced reliance on the decision of the Hon'ble Supreme Court in Upper Ganges Sugar Mills Ltd. (supra); that the petitioner trust had never utilised its funds for construction of temple or any religious purpose; and, according to the learned Counsel, one donation for the purpose of construction of a room in Oswal Chhatrawas cannot be said to be an act of diverting the funds for religious purpose. Learned Counsel has referred to and relied upon a decision of this Court in the case of Umaid Charitable Trust v. Union of India and Ors. .

(3.) HAVING regard to the facts and circumstances of this case and the nature of impugned order passed by the CIT, this Court is satisfied that such an order cannot be sustained and the matter would definitely require reconsideration by the CIT in the light of the view taken by this Court in Umaid Charitable Trust's case (supra) that a single instance of donation of more than 5 per cent of income for renovation of temple would not by itself disentitle the trust from claiming the exemption particularly when there is no clause in the trust deed indicating that the income of the trust was to be applied wholly or substantially for a particular religion.