Contributions to SGPC qualify for 80G benefit, says I-T tribunal

The Income Tax Appellate Tribunal (ITAT) has permitted contributions made to Shiromoni Gurdwara Parbandhak Committee (SGPC) to be exempted from income tax as its activities are not restricted to one particular religion.

According to the tribunal, philanthropic or charitable work cannot continue without the contribution from the members of the community/society. The Sikhs Rehat Maryada (the code of conduct and conventions for Sikhism) also recommends contributing 10 per cent of one’s earning for charitable purposes. The basic concept of charity is to do it without disclosing one’s identity and knowing who would benefit from it.

“Analysing from any angle, in our considered opinion, the assessee is entitled to benefit under 80G (5)(iii) of the Income Tax Act, 1961, and it will go wrong to allege that the SGPC was constituted for the benefit of a particular religion,” the tribunal said in its order dated August 16, while allowing registration from the date of application. It further noted that the total expenditure incurred on religious activities was less than 5 per cent.

According to SGPC’s website, it is called as ‘Mini Parliament’ of Sikhs and set up under the Sikh Gurdwaras Act, 1925. It manages 83 historic and 200 other gurdwaras in the states of Punjab, Haryana, Himachal Pradesh and Chandigarh. It also operates, through trusts, over 100 educational institutions beside carrying out various kinds of charity works.

Section 80G of the Income Tax act allows deduction in respect of donations to certain funds and charitable institutions. To be eligible for benefits under the section, the institution or fund needs to be established in India for a charitable purpose. However, if the institution or fund is expressed to be for the benefit of any particular religious community or caste, then deduction will not be available.

SGPC moved the ITAT after the Commissioner of Income Tax (CIT) rejected an application filed under section 80G. While rejecting the application, the CIT had said: “The overwhelming objective of SGPC is management and administration of Gurdwaras i.e., purely religious affairs. Hence, dominant object of the SGPC is religious in nature. The institution is expressively established for the benefit of Sikh religious community.” The order also mentioned that granting deduction is not in accordance with the provisions of section 80G. However, the tribunal did not agree with these arguments.

“We have to keep in mind the distinction between management of Gurudwara properties, income and endowment, and discharging religious duties/ceremonies affair by the Committee of Gurudwaras,” it said.

It further said that running of schools, cancer hospitals, general hospitals, shelter homes, langar (community kitchen), flood relief camps and pandemic relief camps are for the benefit of the all communities/religions. It also noted that teaching, administrative and other staff of the institutions run by the assessee had been given employment on the basis of professional qualification, regardless of religion, caste, creed, colour, sex, race etc. Admissions to the educational institutions are also given on merit and not on the basis of religion, caste, creed, color, sex, race etc, it noted.

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