SHRI JAIN SWATAMBER TERAPANTHI SABHA,BIKANER vs. CIT (EXEMPTION), JAIPUR

The assessee has raised the following grounds of appeal:

The CIT(E), in substance, rejected the application on three grounds. Firstly, it was observed that the assessee was not registered under the Rajasthan Public Trust Act, 1959 and, according to the CIT(E), such non-registration amounted to non-compliance with another law applicable to the assessee. Secondly, after examining certain clauses of the objects of the assessee, the CIT(E) concluded that the assessee was a religious trust and that some of its objects were intended for the Jain community. Thirdly, the CIT(E) noticed expenditure under heads such as Gyanshala, Chaturmas, Vihar and Prawas Vyavastha and expenditure

While dealing with the issue concerning the alleged religious character of the assessee, the CIT(E) referred to section 80G(5), section 80G(5B) and Explanation 3 to section 80G. The CIT(E) also referred to the decision of the Hon’ble Supreme Court in Upper Ganges Sugar Mills Ltd. v. CIT and to the order of the Ahmedabad Bench of the Tribunal in Shri Soudharma Brihad Tapogachchiya Tristutik Jain Sangha Samarpanam, ITA No. 1571/Ahd/2024 dated 03.01.2025. On the basis of the aforesaid reasoning, the CIT(E) concluded that the assessee was not eligible for approval under section 80G.

The CIT(E) further cancelled the provisional approval earlier granted to the assessee under clause (iv) of the first proviso to section 80G(5).

Before us, the learned Authorised Representative (AR) assailed the conclusions recorded by the CIT(E). The learned AR invited our attention to a subsequent order dated 26.06.2026 passed by the CIT(E), Jaipur in Form No. 10AD whereby the very same assessee has been

The learned AR submitted that the subsequent statutory order passed by the very same competent authority is fundamentally inconsistent with the premise adopted in the impugned order that the assessee is essentially a religious trust. It was submitted that there is no material to indicate that the assessee had changed its objects or constitution in the interregnum. Therefore, once the CIT(E), after examining the assessee for the purposes of section 12AB, has himself characterised the nature of its activities as charitable and granted registration accordingly, the earlier conclusion that the assessee is predominantly religious cannot be sustained.

The learned AR further invited our attention to condition No. 14 forming part of the subsequent registration order under section 12AB. The said condition records that the assessee had applied before the Devasthan Vibhag for registration under the Rajasthan Public Trust Act, 1959 and registration under section 12AB was granted subject to the

The learned DR, on the other hand, relied upon the impugned order and invited our attention to the findings recorded therein with regard to the religious nature of certain objects and activities of the assessee and particularly the expenditure incurred under the heads Gyanshala, Chaturmas and expenditure relating to Jain Sadhus and Sadhvis. The learned DR submitted that registration under section 12AB and approval under section 80G operate under different statutory provisions and, therefore, grant of registration under section 12AB cannot automatically result in grant of approval under section 80G.

We have considered the rival submissions and carefully perused the material available on record.

We agree with the learned DR to the limited extent that grant of registration under section 12AB does not automatically or mechanically

The impugned order proceeds substantially on the premise that the assessee is essentially a religious trust and that its objects and activities are predominantly religious. The subsequent statutory order dated 26.06.2026, however, has been passed by the same competent authority after examining the assessee for registration under section 12AB, and in that order the nature of activities has been expressly recorded as “Charitable”.

Nothing has been brought before us to indicate that there was any material amendment in the objects, constitution or basic character of the assessee between the passing of the impugned order and the subsequent order under section 12AB. In the absence of any such change, the subsequent classification of the assessee’s activities as charitable cannot be regarded as irrelevant. It directly affects the sustainability of the

The Revenue cannot, on the same underlying institutional character and without pointing to any intervening change in facts, treat the assessee as predominantly religious for the purpose of section 80G and, at the same time, subsequently record its nature of activities as charitable while granting registration under section 12AB. The subsequent statutory determination by the CIT(E) therefore materially weakens the principal factual premise adopted in the impugned order.

We further find that the objection relating to non-registration under the Rajasthan Public Trust Act, 1959 also does not survive in the manner in which it was originally relied upon. In the subsequent order dated 26.06.2026, the CIT(E) has specifically recorded that the assessee had already applied before the competent authority for registration under the Rajasthan Public Trust Act. Being aware of this position, the CIT(E) nevertheless granted registration under section 12AB subject to the condition that the assessee shall obtain and submit the requisite registration certificate on or before 31.03.2027.

We next examine the finding relating to religious expenditure. The CIT(E) has referred to expenditure under the heads Gyanshala, Chaturmas, Vihar and Prawas Vyavastha and certain expenses relating to Jain Sadhus and Sadhvis. On that basis, the CIT(E) concluded that the activities were religious and for the benefit of the Jain community.

However, section 80G(5B) itself contemplates that an institution may incur expenditure of a religious nature up to the statutory limit without losing eligibility under section 80G. Therefore, the mere identification of some expenditure as religious in nature is not, by itself, sufficient to deny approval. What is required is an examination of the

In the present case, the impugned order does not contain any such computation. No figure of total income has been compared with the amount treated as religious expenditure. There is also no quantified finding that the religious expenditure exceeded the permissible statutory limit. In the absence of such determination, the conclusion that the assessee violated section 80G(5B) cannot be sustained merely on the basis of the nomenclature of certain expenditure heads.

Similarly, insofar as section 80G(5)(iii) is concerned, the statutory inquiry has to be whether the institution or fund is expressed to be for the benefit of a particular religious community or caste. The existence of certain activities connected with Jain traditions or expenditure incurred in relation thereto cannot, by itself, lead to the conclusion that the institution as a whole is expressed to be for the exclusive benefit of a particular religious community. Such a conclusion has to emerge from the governing instrument read as a whole and from the actual manner in which the institution functions.

We also find that this is not a case where the relevant material was never examined by the CIT(E). The impugned order itself shows that the CIT(E) examined the objects of the assessee, its expenditure, replies and supporting material. Thereafter, the assessee was again examined in subsequent proceedings under section 12AB, culminating in grant of registration and an express recording that its activities were charitable.

Therefore, there is no useful purpose in restoring the matter to the CIT(E) for yet another round of examination. The relevant material has already been subjected to scrutiny by the competent authority on more

When the reasons recorded in the impugned order are examined in the light of the subsequent material, we find that none of them survives so as to justify denial of approval. The finding regarding the predominantly religious character of the assessee stands contradicted by the subsequent statutory classification of its activities as charitable. The objection regarding the Rajasthan Public Trust Act has subsequently been treated as a matter capable of compliance. The finding regarding religious expenditure is unsupported by any computation establishing breach of the statutory threshold. The conclusion that the assessee is for the benefit of a particular religious community is also not supported by an examination of the governing instrument as a whole sufficient to sustain an absolute bar under section 80G(5)(iii).

In these circumstances, we do not find merit in the submissions of the learned DR seeking to sustain the impugned order. The material presently available on record is sufficient to adjudicate the controversy and no further factual verification is called for.

Ground No. 1 raised by the assessee is accordingly allowed. Ground No. 2 being general in nature requires no separate adjudication.

In the result, the appeal of the assessee is allowed.