KOTHARI, J. - (1.) THIS writ petition has been filed by the petitioner Umaid Charitable Trust, Pali being aggrieved by the order passed by the Commissioner of Income Tax-I, Jodhpur dated 16. 12. 2004 refusing to renew the registration of exemption of the petitioner - Trust by the impugned order passed under Section 80g (5 (vi) of the Income Tax Act, 1961. According to the said order, exemption certificate granted to the petitioner Trust under Section 80g of the Act by order dated 20. 3. 2002 was effective for a period from 1. 4. 2001 to 31. 3. 2004 and the petitioner - Trust by application for renewal of said exemption on the prescribed from No. 10g on 23. 8. 2004. However, the learned Commissioner found that in income and expenditure statement of the trust for the period ended on 31. 3. 2004, the trust had spent a sum of Rs. 20,000/- for repairing and colouring of Lord Vishnu's temple out of its total income for the said previous year of Rs. 26,727/- and therefore since the petitioner - Trust had incurred expenditure exceeding 5% of its total income of that year on a particular religion, according to the learned Commissioner, the said Trust was not entitled to renewal of exemption under section 80g of the Act as per provisions of Section 80g (5) (B) of the Act and therefore, following the decision of Hon'ble Supreme Court in the case of Upper Ganges Sugar Mills reported in (1997) 227 ITR 578 (SC), the learned Commissioner rejected the said application for renewal.
(2.) THE petitioner approached this Court by way of present writ petition being aggrieved of the said order. Mr. Mahendra Gargeiya learned counsel for the petitioner urged that petitioner - trust is wholly a charitable trust and the object clause of the said trust-deed clearly shows that said trust had undertaken activities of charitable nature and it is not meant for any particular religion and therefore, the learned CIT (A) has erred in rejecting the application for renewal of exemption under Section 80g of the Income Tax Act. He submits that said expenditure of Rs. 20,000/- was by way of donation to another trust which carried out repair and renovation of Lord Vishnu's temple. He also raised the contention that the said expenditure was out of accumulated fund of the said trust carried forward from last year and therefore, the conditions of Section 80g (5) of the Act were not violated by the petitioner - trust. He relied upon the various judgments in support of his contention. On the side opposite, Mr. K. K. Bissa, appearing for the respondent Income Tax Department urged that since the petitioner - trust had spent more than 5% of its total income for the previous year ending on 31. 3. 2004 for repair and renovation work of temple of a particular region i. e. Hindu religion, the petitioner Trust had violated the condition of renewal and therefore, the learned Commissioner was justified in passing the impugned order. He relied upon the judgment of Hon'ble Supreme Court in Upper Ganges Case (supra) along with two decision of this Court, reference to which will be made hereinafter. That before considering the various judgments on this aspect of the matter, it would be appropriate to reproduce the relevant provisions of Section 80g of the Act to the extent the same are relevant for the controversy involved in the present case.      " Deduction in respect of donations to certain funds, charitable institutions, etc. 80g. (1 ). . . . . . . . . . . . . (2) The sums referred to in sub-section (1) shall be the following, namely:- (a) (i) to (iiihj) (iv) any other fund or any institution to which this section applies; or (v) to (viii) (a) to (d) 3. . . . . . 4 . . . . . . . . (5) This section applies to donations to any institution or fund referred to in sub-clause (iv) of clause (a) of sub-section (2), only if it is established in India for a charitable purpose and if it fulfills the following conditions, namely:- (i) where the institution or fund derives any income, such income would not be liable to inclusion in its total income under the provisions of Sections 11 and 12 or clause (23aa) or clause (23c) of section10: Provided that where an institution or fund derives any income, being profits and gains of business, the condition that such income would not be liable to inclusion in its total income under the provisions of section 11 shall not apply in relation to such income, if- (a) the institution or fund maintains separate books of account in respect of such business; (b) the donations made to the institutions or fund are not used by it, directly or indirectly, for the purposes of such business; and (c) the institution or fund issues to a person making the donation a certificate to the effect that it maintains separate books of account in respect of such business and that the donations received by it will not used, directly or indirectly, for the purposes of such business; (ii) the instrument under which the institution or fund is constituted does not, or the rules governing the institution or fund do not, contain any provision for the transfer or application at any time of the whole or any part of the income or assets of the institution or fund for any purposes other than a charitable purposes. (iii) the institution or fund is not expressed to be for the benefit of any particular religious community or caste; (iv) the institution or fund maintains regular accounts of its receipts and expenditure; (v) the institution or fund is either constituted as a public charitable trust or is registered under the Societies Registration Act, 1860 (21 of 1860), or under any law corresponding to that Act in force in any part of India or under section 25 of the Companies Act, 1956 (1 of 1956), or is a University established by law, or is any other educational institution recognized by the Government or by a University established by law, or affiliated to any University established by law, or is an institution financed wholly or in part by the Government or a local authority; and (vi) in relation to donations made after the 31st day of March, 1992, the institution or fund is for the time being approved by the Commissioner in accordance with the rules made in this behalf; Provided that any approval shall have effect for such assessment year or years, not exceeding (five) assessment years, as may be specified in the approval. (5a) Where a deduction under this section is claimed and allowed for any assessment year in respect of any sum specified in sub-section (2), the sum in respect of which deduction is so allowed shall not qualify for deduction under any other provision of this Act for the same or any other assessment year. (5b) Notwithstanding anything contained in clause (ii) of sub-section (5) and Explanation 3, an institution or fund which incurs expenditure, during any previous year, which is of a religious nature for an amount not exceeding five per cent of its total income in that previous year shall be deemed to be an institution or fund to which the provisions of this section apply. 5c. . . . . (i ). . . . . . . . . (ii ). . . . . . (iii ). . . . . . . . . . (iv ). . . . . (v ). . . . Explanation 1:. . . . . . . . . . . Explanation 2:. . . . . . . . . . . . . (i ). . . . . . . . . (ii ). . . . . . . . . Explanation 3:- In this section "charitable purpose" does not include any purpose the whole or substantially the whole of which is of a religious nature. " Explanation 4:. . . . . . . . . Explanation 5:. . . . . . . . . . . . . The learned counsel for the petitioner also relied upon Rule 11aa of the Income Tax Rules, 1962 particularly Sub-Rule 4 to 6 of the said Rule 11aa, which are reproduced hereunder:      " Requirements for approval of an institution or fund under Section 80g. (1 ). . . . . . . . . . . 2 . . . . . . . . . . . 3 . . . . . . . . . (4) Where the Commissioner is satisfied that all the conditions laid down in clause (i) to (v) of sub-section (5) of section 80g are fulfilled by the institution or fund, he shall record such satisfaction in writing and grant approval to the institution or fund specifying the assessment year or years for which the approval is valid. (5) Where the Commissioner is satisfied that one or more of the conditions laid down in clauses (i) to (v) of Subsection 5 of section 80g are not fulfilled, he shall reject the application for approval, after recording the reasons for such rejection in writing: Provided that no order of rejection of an application shall be passed without giving the institution or fund an opportunity of being heard. (6) The time limit within which the Commissioner shall pass an order either granting the approval or rejecting the application shall not exceed six months from the date on which such application was made: Provided that in computing the period of six months, any time taken by the applicant in not complying with the directions of the Commissioner under sub-rule (3) shall be excluded".
(3.) NOW a scrutiny of relevant case laws on the controversy involved in the present case is considered expedient at this stage. From the side of the assessee - petitioner, following case laws are relied upon which are noticed with relevant extract from the same as below: In Addl. CIT, Gujarat vs. Surat Art Silk Cloth manufactures Association (1980) 121 ITR 1 (SC), the Hon'ble Apex Court held that where the main or primary objects are distributive, each and every objects must be charitable in order that the trust or institution may be upheld as a valid charity. But if primary and dominant purpose of the trust is charitable, another object which by itself may not be charitable but which is merely ancillary or incidental to the primary or dominant purpose would not prevent the trust or institution from being a valid charity. It was observed that the primary and dominant purpose in the present case was promotion of commerce and trade in art silk etc. , was an object of public utility not involving the carrying on of any activity for profit within the meaning of s. 2 (15); and that the assessee was entitled to exemption. In CIT, Bombay City - V, Bombay vs. K. H. Kusumgar (1988) 169 ITR 370 (Bom), the Bombay High Court observed that where the object of a charitable trust was, inter alia, imparting of education and encouragement and promotion of the study and practice of the Shewatamber Jain Murtipujak religion amongst students of ashrams, boarding - houses, gurukuls, vidyalayas, pathshalas and shravikashramas and also amongst all persons without distinction of sex, caste, creed, place or religion, a gift of immovable property made to such charitable trust could not be said to be for a purpose the whole or substantially the whole of which was of a religious nature and the gift would be entitled to exemption under s. 5 (1) (v) of the Gift Tax Act. ;