ITAT Amritsar Confirms Denial of Section 12AA Registration for Village Gurudwara Society
Background of the Dispute
The matter in Gurudwara Sahib Parbhandhan Committee Vs CIT (Exemptions) came before the ITAT Amritsar Bench in relation to the assessee’s claim for registration under Section 12AA of the Income Tax Act 1961 for the Assessment Year 2019-20.
The assessee, a society running and maintaining a Gurudwara at village Balluana, had moved an application in Form No. 10A on 19.03.2019 seeking registration under Section 12AA. The Commissioner of Income Tax (Exemptions), Chandigarh (CIT(E)), by order dated 18.09.2019, rejected this application.
Aggrieved, the assessee filed an appeal before the Tribunal challenging:
- The factual correctness and legality of the
CIT(E)’s conclusion that its aims and objects were restrictive and not of a public charitable nature; and - The rejection of registration on the ground that the assessee allegedly did not furnish a certified copy of its Memorandum of Association (MOA) and bye-laws.
Assessee’s Core Contentions
Objects Claimed as Charitable and Public-Oriented
The assessee society asserted that its objects, as contained in clause 3 of the MOA, were inherently charitable and not confined to any particular caste or religion. The key stated objects were:
- Welfare of citizens of Balluana without discrimination on the basis of caste, creed or religion; and
- Development, repair, maintenance and expansion of the Gurudwara Sahib at Balluana for all types of religious and charitable purposes.
Further, the MOA empowered the society to:
- Establish branches at different locations;
- Adopt other institutions; and
- Open schools, reading rooms, dispensaries and undertake cultural or other allied social activities.
The assessee stressed that these broader objects demonstrated an intention to carry out activities of general public utility and not merely serve a narrow group.
Expenditure on Gurudwara Construction/ Renovation
The assessee argued that the CIT(E) incorrectly commented that no major expenditure (other than langar for certain persons) was incurred in line with its stated objects. It was explained that:
- Significant lease receipts shown in the income and expenditure account were substantially applied towards construction and renovation of the Gurudwara building; and
- The building account reflected a balance of Rs. 17,81,529/- on the asset side as on 31.03.2018, whereas the lease (rent) income for that year was only Rs. 6,50,000/-.
According to the assessee, this clearly evidenced that large sums were being ploughed back into the Gurudwara infrastructure for religious and charitable purposes.
Reliance on Judicial Precedent
To reinforce its stand, the assessee placed reliance on the judgment in:
CIT v. Guryani Brij Balabh Kaur Trust (1980) 125 ITR 381 (P&H)
It was contended that where samadhis of Gurus or religious places are revered and open to the public, maintenance of such places is a “public purpose of religious nature” and, therefore, a charitable activity. On the same reasoning, maintenance and development of a Gurudwara accessible to the public at large ought to qualify for charitable status, and the benefit of registration should not be denied.
Claim Regarding Filing of MOA
The assessee also disputed the factual finding of the CIT(E) that a certified copy of the MOA and bye-laws had not been furnished. It was asserted that:
- The MOA was filed along with the original application dated 19.03.2019; and
- A certified copy was subsequently uploaded through the e-proceedings portal.
On this basis, it was argued that the observation in paragraph 7 of the impugned order that the MOA was not filed was factually incorrect and baseless.