SURAT PANJRAPOLE VS COMMISSIONER OF INCOME-TAX, 2000 PTD-GUJARAT-HIGH-COURT-INDIA 3516 (1999)

Income-tax---

----Donations---Charitable trust---Trust established and in existence for 200 years carrying on activities of protection and care of disabled and suffering cattle---Refusal by Commissioner to renew certificate on ground trust carrying on dairy business and not maintaining separate books of account-- Direction to Commissioner to consider application sympathetically---Indian Income Tax Act, 1961, S.80G.

The petitioner was a public charitable trust, in existence since 1796. It ran various activities for the preservation, protection and promotion of infirm, invalid and rejected cattle. In view of the rise and increase in the volume of activities of the petitioner-trust, it had been inviting donations from the members of the public from time to time. The petitioner had, therefore, applied for recognition under section 80G of the Income Tax Act, 1961, in 1989, which was granted by the Commissioner of Income-tax and renewed from time to time. However, in 1998, a show-cause notice was issued to the trust stating that the trust was running a dairy business on a large scale and no separate books of account were maintained and, therefore, the claim for exemption could not be granted. In its reply the petitioner had stated that out of the total number of cattle with it for the years 1994-95 to 1997-98, milk giving cattle came to hardly 2 to 3 per cent only and that since the petitioner-trust was unable to meet the expenditure incurred for the purpose of the objects, it had to dispose of milk obtained by it from the milk giving cattle. However, renewal of the certificate under section 80G was refused. The trust filed a writ petition and during the proceedings, in the Court, the trust undertook to prepare and submit accounts:

Held, that in view of the historical and long track record far upliftment and amelioration of weak, infirm, aged cattle since 1796 and considering the submissions advanced before the Court, the respondent authority should be directed to re-examine and reconsider the request of the petitioner-trust for certificate of recognition under section 80G(5) of the Act, sympathetically, as the petitioner-trust was predominantly engaged in utmost welfare of infirm, old, aged, and rejected cattle since more than two centuries.

[Order of Commissioner set aside. Matter remanded.]

K.H. Kaji for Petitioner.

B.B. Naik with Manish R. Bhatt for Respondent.

JUDGMENT

J.N. BHATT, J---The petitioner, which is a public charitable trust registered under the Bombay Public Trusts Act, 1956, and which has the history of its existence relating back to 1796, has assailed the impugned order of the respondent authority, dated October 13, 1998, under section 80G(5) of the Income Tax Act, 1961 (the "Income-tax Act"),

whereby, the request for renewal of recognition under section 80G of the Income-tax Act came to be rejected, by filing this petition, under Article 226 of the Constitution of India, inter alia, contending that the impugned order is arbitrary, contrary to law and unreasonable.

The petitioner-trust, as its name itself indicates, runs various activities for the preservation, protection and promotion of infirm, invalid and rejected cattle. The petitioner-trust is constituted for laudable objects which could very well be appreciated as they are highlighted in para.3 of the petition, as follows:

(1) To provide protection and maintenance of cattle and animals permanently handed over to the trust by any one from any portion of Gujarat irrespective of caste, creed and religion.

(2) To provide and arrange for treatment, medicine and food to animals admitted to Panjarapole which are disabled, old and suffering from diseases or not properly cared for.

(3) To take measures for cattle breeding and development of animal husbandry and to increase milk production and bumper of cattle of our nation.

(4) To meet the above referred objects, the trust is authorised to receive, purchase, sell and give on lease or to give land for cultivation and take measures in the interest of the trust and to purchase cattle and animals to expend money for treatment, protection of animals and to accept cash donation and material donation annually or occasionally or as may be decided.

The petitioner-trust has been carrying on its activities for the promotion and amelioration of the aforesaid objects. It also adopts measures for good cattle breeding, development and animal husbandry with a view to see that more quantum of production of milk is made available.

It is also very clear from the facts of the present case that from the very inception of the petitioner-institution, it has been treated as exempt from the Income-tax on the ground that its activities are only charitable. In view of the rise and increase in the volume of activities of the petitioner-trust, it has been inviting donations from the members of the public from time to time. The petitioner had, therefore, applied for the recognition under section 80G of the Income-tax Act in 1989, which was granted by the Commissioner of Income-tax for the period commencing from April 1, 1989 to March 31, 1990. It is not in dispute that again the recognition was renewed by the order, dated July 11, 1990, for the period commencing from April 1, 1990 to March 31, 1993. It was again renewed for a period from April 6, 1993 to March 31, 1998. It, therefore, becomes evident that the recognition under section 80G of the income-tax Act by the respondent authority has been enjoyed by the petitioner-trust since more than eight years. The petitioner's contention also has been that all along it has complied with the requirements of law for the grant of such recognition under section 80G of the Income-tax Act.

Now, it leads us to the period, which is under controversy in this petition for which the renewal of recognition for a further period of five years is rejected by the respondent. The petitioner-trust, as such had applied for renewal of recognition for a further period of five years, on April 7, 1998. A show-cause notice came to be issued on September 16, 1998, stating that the petitioner-trust was running a dairy business on a large scale and no separate books of account were maintained and, therefore, the claim for exemption cannot be granted and consequently the renewal of the certificate under section 80G(5) of the Income-tax- Act, came to be refused.

It is also, amply, manifest from the facts that pursuant to the show cause notice issued to the petitioner-trust, a reply was given to the respondent-authority, wherein; it was, specifically contended that out of the total number of cattle with it for the years 1994-95 to 1997-98, milk giving cattle came to hardly two to three per cent of the total number of cattle. Since the petitioner-trust was unable to meet the expenditure incurred for the purpose of the objects, it had to dispose of milk obtained by it from the milk giving cattle and, that too, mostly to a cooperative society known as Choryashi 'Taluka Dudh Utpadak Sahakari Mandli Ltd., and also supplied the same to its staff members and some customers.

It was also the case of the petitioner-trust that in order to carry out the activities for the promotion of the objects, despite the receipt from the sale of milk, huge annual deficit, on account of loss has been occurring and which has, as such, accumulated as on March 31, 1998 to Rs.72,30,920 as highlighted in the audited statement of accounts for that year. In short, it has been the contention of the petitioner-trust that there is no organised or planned dairy business as pointed out by the respondent-authority. Of course, the petitioner-trust has also raised the contention about the violation of principles of audi alteram partem.

At the stage of final hearing, learned counsel appearing for the petitioner-trust in his fair and candid submission, stated at the Bar, that the petitioner-trust is ready and willing to maintain and submit the accounts in respect of the sale of milk with effect from April 1, 1998, without entering into and admitting the controversy of existence of separate business with a view to cut short the controversy emanated from the impugned order which is nothing but a storm in the tea-cup and for the purpose of effective and efficient implementation of the laudable objects of the petitioner-trust wherein thousands of infirm, invalid, unmilching, injured, forlorn cattle are not only protected, served and maintained but are also reared by the petitioner-trust. It may also be mentioned that there is no dispute about the fact that the trust came into existence 1796 and it has been doing social services for the care, protection and maintenance of the infirm, invalid, old, etc., cattle since 1796. With a view to meet with the heavy expenditure of maintenance of almost 93 per cent of the unmilching cattle, the number of which runs into hundreds, the petitioner-trust had to resort to public donations for which certificate and recognition was granted by the respondent-authority under section 80G for almost a spell of eight years.

After having, dispassionately, examined the historical and long track record for upliftement and amelioration of weak, infirm, aged, etc., cattle since 1796 and considering the submissions advanced before us with all comity, we are of the opinion that the respondent-authority should be directed to re-examine and reconsider the request of the petitioner-trust for certificate of recognition under section 80G(5) of the Income-tax Act sympathetically, as the petitioner-trust is predominantly engaged in utmost welfare of infirm, old, aged, dejected and rejected cattle since more than two centuries so that the subsequent event in the form of oral undertaking before this Court on behalf of the petitioner-trust by its learned counsel for the petitioner that the petitioner shall prepare and submit the accounts with regard to the sale of milk, which is incidental to the main object, to the respondent and to see that the respondent-authority keeps into the mental focus all the relevant and material factors and aspects including the principles of natural justice, to the extent required, in the circumstances before re-examining and reconsidering the request for certificate of recognition of the petitioner-trust under section 80G(5) of the Income-tax Act, we deem it not only necessary, but expedient to remit the matter to the respondent-authority for a fresh look and appropriate decision, sympathetically. Our ultimate anxiety is to see that the designs and objects articulated by the petitioner-trust in the petitioner are implemented, sub-served in the societal and larger interest and also for the infirm, invalid, rejected, old, forlorn, and unhealthy cattle. Under the provisions of section 35 of the Prevention of Cruelty to Animals Act, 1960 (Act 59 of 1960), and the objects of the said Act, the petitioner-trust which is at Panjarapole is obliged to perform statutory duties as and when directed by the Courts and in view of the aforesaid facts and the objects of the trust, the matter is required to be remitted back to the respondent-authority for fresh consideration.

Accordingly, the matter is remanded to the respondent for reconsideration and readjudication by setting aside the impugned order of the respondent-authority. Since we are in the second half of March and one of the purposes of certificate under section 80G is to give incentive to the donors more so before the end of the financial year, the respondent authority is directed to rehear and readjudicate the matter, as early as possible, preferably within a period of four weeks from the date of receipt of the writ.

Accordingly, this petition stands allowed without order of costs in view of the sympathetic attitude of the Department. Rule is made absolute accordingly to the aforesaid extent.

M.B.A./102/FCCase remanded.