Commissioner Of Income-Tax Bihar-I, Patna v. Rastriya Swayam Sevak Sangh, Patna

K.S Paripoornan, C.J and Naresh Kumar Sinha, J.:—These are connected cases. The Commissioner of Income-Tax, Bihar-I, Patna, is the applicant in all cases. The same assessee is the respondent in all the cases. The matter relates to the assessment years 1967-1968 to 1975-1976. The Income Tax Appellate Tribunal in R.A Nos. 1 to 9 (Pat) of 1981 has referred to the following common questions of law for the decision of this Court in the above cases. The question referred to this Court are:

(i) Whether on the facts and in the circumstances of the case, the principle of mutuality exists in the R.S.S

(ii) Whether on the facts and in the cirucumstances of the case the amount received from members and devotees can be taken to be Gurudakshina and held to be exempt.

2. We heard counsel for the Revenue as also counsel for the respondent assessee. The facts of this case lie in a narrow compass. Assessments were made on the respondent assessee is the status of A.O.P for the years 1967-1968 to 1975-1976. The assessments were of a protective nature. The assessee's income is by way of receipt from members as Gurudakshina. It is also seen that Gurudakshina is also received from devotees. The Income Tax Officer held that Gunrdakshina received by the assessee is taxable under the provisions of the Income Tax Act. He computed the income of the assessee for the various years in the following figures for the respective assessment years 1967-1968 to 1975-1976:—

Rs. 48,000/-, Rs. 71,000/-, Rs. 50,000/-, Rs. 20,000/- Rs. 25,000/-, Rs. 20,000/-, Rs. 15,000/-, Rs. 20,000/- and Rs. 15,000/-.

3. The assessment orders are annexure A1 to A9. In appeal, it was noticed that R.S.S has its head office at Nagpur and hence assessment should be on the respondent assessee only as a protective measure. The Appellate Commissioner further held that the Gurudakshina receipts from a members of the organisation are exempt on the ground of mutuality. In coming to the said conclusion he placed reliance on instructions of Central Board of Direct Taxes contained in letter no. 290/26.M.O./I.M (Inv.) dated 19.12.78 On the above basis the assessments were cancelled. The orders passed by Appellate Commissioner dated 4.12.79 and 19.3.80 are annexures B1 and B2. The Revenue took up the matter in appeals before the Income Tax Appellate Tribunal, Patna Bench. Income Tax Appellate Tribunal heard and disposed of the appeals for all the nine years by a common order dated 8.10.80 evidenced by annexure-C2. Before the Income Tax Appellate Tribunal it was common grounds proceedings arising from the assessee's Kendriya Karjayalaya, Nagpur, was the subject matter of the decision by the Income Tax Appellate Tribunal, Bombay Bench, in I.T.A Nos. 202, 422 & 421 (Nag)/75-76 and I.T.A Nos. 315 & 355 (Nag)/7576 and same issues arose for decision therein. Therefore, in these cases, Patna Bench of the Income Tax Appellate Tribunal referred to the decision rendered by the Bombay Bench of the I.A.T in the aforesaid case dated 26.7.80, annexure-C1, and also placed reliance on the communication of the Central Board of Direct Taxes evidenced by no. 290/26.M.O./I.M (Inv.) dated 19.12.78 and concluded thus in para 9 of its order dated 8.10.80:—

“Gurudakshina from Swayamsevaks on the ground of mutuality cannot be subjected to tax in the hands of the assessee…”

4. Following the aforesaid conclusion of the Tribunal, Bombay Bench, the finding of appellate Assistant Commissioner was maintained by Patna Bench and the appeals preferred before it were dismissed. It is, thereafter on motion by the Revenue u/s 256(1) of the Income Tax Act, the questions of law formulated hereinabove have been referred by the Income Tax Appellate Tribunal, Patna Bench, for the decision of this Court.

5. The main complaint by counsel for the Revenue before us was that in these cases, the Income Tax Appellate Tribunal, Patna Bench, failed to consider the question that arose before it in detail and failed to render appropriate findings as to whether Gurudakshina received by the respondent assessee from its members is exempt from income tax. Counsel for the Revenue further submitted that the finding of the Appellate Commissioner was only to the effect that Gurudakshina received from the members of the organisation are exempt on the ground of mutuality and the Appellate Commissioner did not find that Dakshina and donation received from others is equally exempt. On the other hand counsel for the assessee submitted that it was common ground before the Tribunal, that the question that arose before it was similar to the one, that was considered by the I.A.T, Bombay Bench, in I.T.A Nos. 202, 422 & 421 (Nag)/75-76 and I.T.A Nos. 315 & 355 (Nag)./75-76. These cases were similar to one that arose for consideration before the Bombay Bench. It was on this basis that Patna Bench of I.A.T referred to the decision of the Bombay Bench and the findings and conclusions arrived at therein. The decision of the Income Tax Appellate Tribunal, Bombay Bench, was also referred to by the Appellate Commissioner in the present cases. The Bombay Bench of the Tribunal had occasion to deal in depth, and consider the constitution of the organisation, affidavits filed by parties and also the view expressed by C.B.D.T in their letter dated 19.12.78, and found that the Gurudakshina received by the respondent from its members is exempt from tax on the ground of mutuality. It was argued that in so adopting the said conclusion of the Bombay Bench of the Tribunal, the Patna Bench of the Income Tax Appellate Tribunal did not commit any error of law or jurisdiction.

6. We are clear in our mind that the Revenue as well as assessee proceeded on a common ground before the Tribunal to the effect that the matter that arose for consideration before the Appellate Tribunal, Patna Bench, was similar in content and scope to the one that arose before the Bombay Bench of the Appellate Tribunal. It was so dealt with by the Patna Bench. The decision of the Bombay Bench of the Tribunal was followed. The said decision of the Bombay Bench is based on an array of materials—constitution of the organisation, affidavits of parties and the C.B.D.T letter dated 19.12.78 The conclusion so reached is based on materials and was not shown to be wrong. The communication of the Central Board of Direct Taxes evidenced by letter no. F. 290/26/70 (Inv.) dated 19.12.78, quoted by the Income Tax Appellate Tribunal, Bombay Bench, at paragraph 34 of its appellate order (Page 89 of the paper book of T.C No. 42/82) is relevant. It is not permissible for the Revenue in the light of the above communication of C.B.D.T to contend that Gurudakshina received by the respondent assessee is liable to income tax. We hold so. It is categorically stated in the aforesaid communication of the Central Board of Direct Taxes that Gurudakshina received from members of the organisation will be exempt on the ground of mutuality. The said letter affords administrative relief to the assessee. The existence of such a communication of the Central Board of Direct Taxes, its contents and reliance placed thereon were never disputed before the Appellate Tribunal or before us. The said communication of the Central Board of Direct Taxes is quoted at pages 89-90 of the Paper Book in T.C No. 42/82. In the light of the definite stand taken by the C.B.D.T in its communication dated 19.12.78, Gurudakshina received by the respondents assessee from its members is exempt from tax on the principle of mutuality. The relief so afforded should be given effect to. The communication of C.B.D.T was with reference to the Gurudakshina received by the very same asssessee and, in our opinion, the said communication of the C.B.D.T clinches the issue. Both the Bombay Bench and Patna Bench of the Appellate Tribunal have relied on this communication of the Central Board of Direct Taxes. It cannot be said that reliance so placed by the Appellate Tribunal is wrong or unreasonable. We, therefore, hold that on the basis of the communication of C.B.D.T, the decision of the Appellate Tribunal is justified in law.

7. In the light of our above reasoning and conclusion we answer question no. (1) referred to us in the affirmative against the Revenue and in favour of the assessee. We reframe question no. (2) by deleting the word devotees occurring therein and reframe the question in the following manner. Whether on the facts and in the circumstances of the case, the amounts received from members can be taken to be Gurudakshina and held to be exempt? We answer question no. (2) so refrained in the affirmative, in favour of the assessee and against the Revenue.

8. The question referred to in the above Tax Cases are answered as above.

9. There will be no order as to costs.

10. The Registrar of this Court shall send a copy of this judgment under his signature and seal of this Court to the Income Tax Appellate Tribunal, Patna Bench.