May 2008
S. 11 r.w. S. 2(15) and S. 13 — Objects for benefit to a section of public are charitable
By C. N. Vaze, Shailesh Kamdar, Chartered Accountants
Reading Time 2 mins
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19 (2008) 111 ITD 238 (Rajkot) (SMC)
Rajkot Visha Shrimali Jain Samaj v. ITO
A.Y. 2002-2003. Dated : 1-6-2006
S. 11 r.w. S. 2(15) and S. 13 — In order to serve a
charitable purpose, it is not necessary that the object of the assessee trust
should be to benefit the whole of mankind or all persons in a country. It is
sufficient if the intention is to provide benefit to a section of the public as
distinguished from specified individual.
Facts :
The assessee-trust was incorporated on 11-8-1960. The
charitable nature of the activities of the trust was limited to Vishwa Shrimali
Jains, which was a small community. For A.Y. 2002-03, it claimed deduction of
expenditure incurred by it towards earthquake relief. The AO as well as the
CIT(A) disallowed the claim u/s.13(1)(b) on the ground that :
(1) the assessee’s charitable nature of activities was
limited to the benefit of a small religious community;
(2) the CIT(A) also declined to accept the assessee’s
contention that the trust is incorporated before the commencement of the Act,
on the ground that this was an additional ground and this plea was not before
the AO. It is pertinent to note that the documentary evidence with regard to
incorporation was very much on record. On further appeal, the ITAT allowed the
exemption by referring to the following :
(a) An object which is beneficial to a section of public is
an object of general public utility.
(b) The section of the community sought to be benefited
must be sufficiently definite and/or identifiable by some common quality of
public or impersonal nature.
(c) The additional ground which raises a purely legal plea
and which goes to the very root of the matter, the same deserves to be
admitted.
Cases referred to :
(i) National Thermal Power Co. Ltd. v. CIT, (1998)
229 ITR 383 (SC)
(ii) CIT v. Maheshwari Agarwal Marwari Panchayat, (1982) 136 ITR 556
10 Taxman 183 (MP)
