New Delhi: Donations made to the Shiromani Gurdwara Prabandhak Committee (SGPC), which controls the functioning of most of the historical gurdwaras in Punjab, Haryana and Himachal Pradesh, will now be eligible for tax exemption.
The SGPC had filed an application calling for tax exemptions to its donors 12 years ago, but it was rejected by the then Income Tax Commissioner. However, an Income Tax Tribunal order Monday overturned the decision.
In its order, a two-member bench of judges Laliet Kumar and M.L. Meena said that the IT Commissioner had relied too much on the text of Sikh Gurdwaras Act, 1925 to conclude that the “dominant object of the SGPC is religious in nature”.
It noted that approval under the law must depend on how the funds of the institution or trust are being used rather than the text of the document through which the institution or trust was formed.
Therefore, the bench overturned the 12-year-old decision and now all donations to the SGPC are eligible for exemption under Section 80G of the Income Tax Act.
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‘Proceeds to SGPC do not benefit only one religion’
Section 80G (5) of the Income Tax Act enumerates the various preconditions required for charitable organisations for tax exemption.
One such precondition is that the institution or trust requesting approval under this section must not be functioning for the benefit of a particular religion or caste.
The provision allows applications from institutions that spend only up to 5 per cent of their total income on religious purposes.
In its order, the tribunal noted that besides managing the gurdwara, the SGPC also runs various schools, hospitals, community kitchens, relief camps and other such institutions for the benefit of all members of society.
The “four doors of famous Gurdwaras (including Darbar sahib/ Golden Temple), are open in four different directions to signify and welcome all without any discrimination of class or creed,” the order said.
It also cited extensively from one of the Sikh Codes of Conduct — the Sikh Rehat Maryada — to note that Sikh places of worship are open to all.
Therefore, the bench noted, the activities of SGPC could not be termed as benefitting only a particular community or religion.
Exemption after many years
The tribunal relied on the 2014 Supreme Court judgment on the Dawoodi Bohra Jamaat to arrive at its decision.
In the judgment, the top court had held that even when a trust or society has both religious and charitable objects, “it needs to be examined whether such religious-charitable activity carried on by the trust only benefits a certain particular religious community or class or serves across the communities and for society at large”.
The tribunal bench also observed that the accounts of the SGPC are being audited regularly by the Auditor General of India and other agencies and only a fraction — less than 5 per cent— of the total expenditure was being spent on religious activities.
SGPC’s plea for approval under Section 80G was rejected in 2009 by the IT Commissioner, after which it filed an appeal before the IT Appellate Tribunal in Amritsar.
The case was heard only in 2021, 12 years after the appeal was filed. The tribunal also ordered that the SGPC is entitled to the exemption from the date it filed its application before the IT department in 2007.
Tushar Kohli is an intern with ThePrint
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