SRI DIGAMBAR JAIN SAMMEDACHAL VIKAS COMMITTEE,INDORE vs. CIT EXEMPTION BHOPAL, BHOPAL

Per Paresh M Joshi, J.M.:

This is an Appeal filed by the Assessee under section 253 of

the income tax Act 1961, [hereinafter referred to as the Act

for the sake of brevity] before this tribunal as & by way of a

second appeal .The Assessee is aggrieved by the order

bearing No:-ITBA/EXM/F/EXM 45/2024-25/1075254671(1)

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dated 29.03.2025 passed by the Ld. CIT (E), which is

hereinafter referred to as the “Impugned order”.

2.1 That on 29.08.2024 the assessee filed form no. 10 AB for

the first time for seeking approval u/s 80G (5)(iv)(B) of

the act [PB pages 1 to 10]. The said application was

however rejected by the Ld. CIT (E) by the Impugned Order.

The relevant extracts of the “Impugned Order” of the Ld.

CIT (E) is reproduced below:- 2.2 That the assessee being aggrieved by the Impugned

Order of the Ld. CIT (E) has preferred the instant appeal

before this tribunal and has raised the following grounds of

appeal in the form no. 36 against the “Impugned Order”

which are as under:-

Ld. Commissioner of Income Tax (Exemptions), Bhopal erred in

rejecting the application made by the appellant under sub-

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clause (B) of clause (iv) of the first proviso to sub-section (5) of

section 80G of the Income-tax Act is unlawful as the same has

been passed by him beyond the time of six month (i.e. upto

28-02-2025) allowed under the provisions of the said section.

Ld. Commissioner of Income Tax (Exemptions), Bhopal erred in

concluding that the object no. 1, 2& 3 as mentioned in the

trust deed are of religious nature.

Ld. Commissioner of Income Tax (Exemptions), Bhopal erred in

not properly appreciating the provisions contained under sub-

section (5B) to Section 80G of the I.T. Act which resulted in

rejection of application of registration of appellant trust u/s

80G(5)(ii) of the I.T. Act.

4.On the facts and circumstances of the case and in law, the

Ld. Commissioner of Income Tax (Exemptions), Bhopal erred in

rejecting the application made by the appellant under sub-

clause (B) of clause (iv) of the first proviso to sub-section (5) of

section 80G of the Income-tax Act, the contention of the Ld.

CIT Exemption Bhopal that none of the objects of the appellant

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should have been religious in nature is wrong, when, the

provisions contained in Section 80G(5B) allowed incurring of

expenditure of religious nature to the appellant upto five

percent of its total income for the previous year and this is not

possible unless some of its objects had tenets of religious

nature.

Ld. Commissioner of Income Tax (Exemptions), Bhopal erred in

rejecting the application of the appellant for grant of approval

u/s 80G (5), was not justified in arbitrarily alleging that the

appellant Society is expressed to be for the benefit of a

particular religious community or caste, when, he himself

granted registration u/s 12AB (1)(b) to the appellant Society

after being fully satisfied that it was not expressed to be for

the benefit of any particular religious community or caste.

6、On the facts and circumstances of the case and in law, the

Ld. Commissioner of Income Tax (Exemptions), Bhopal erred in

rejecting the application made by the appellant for grant of

approval u/s 80G (5) by relying on the decision in the case of

Upper Ganges Sugar Mills Ltd vs. Commissioner of Income-tax

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[1997] 93 Taxman 645 (SC), when, this decision, being very

old, did not take into account the effect of relief provided to a

charitable institution or fund by the Finance Act, 1999 by

inserting sub-section (5B) in Section 80G with an over-riding

effect over Section 80G(5)(ii) and Explanation 3 to the said

section.

7.On the facts and circumstances of the case and in law, the

Ld. Commissioner of Income Tax (Exemptions), Bhopal erred in

rejecting the application made by the appellant for grant of

approval u/s 80G(5) of the Income-tax Act without properly

considering the submissions made to him by the appellant in

response to his notices, which adequately refuted his

contentions and also provided necessary clarifications

regarding the activities and expenditure actually incurred,

within the permissible ceiling of 5% of the total income for the

year, by the appellant Trust in the preceding years.

Ld. Commissioner of Income Tax (Exemptions), Bhopal erred in

rejecting the application made by the appellant under sub-

clause (B) of clause (iv) of the first proviso to sub-section (5) of

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section 80G of the Income-tax Act is unwarranted and

unsustainable in law, when, the appellant 'Trust meets the

criteria prescribed for grant of approval under Section 80G (5)

of the Income-tax Act.

passed.

delete all or to modify any of above grounds and to pursue

any other or further grounds as may be required.

3.1 The hearing in the matter took place before this Tribunal

on 10.06.2026 when the Ld. AR for & on behalf of the

Assessee appeared before us & interalia contended that the

“Impugned Order” is bad in law, illegal & not Proper. It is

also in the violation of the principles of natural justice. It

therefore deserves to be set aside. The Ld. AR has placed on

the record of this tribunal a paper book containing pages 1

to 259. A synopsis containing 6 pages. An “arguments”

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containing 13 pages. The Ld. AR then contended that the

assessee in the form 10 AB filed on 31.08.2024 (PB page 1

to 10) had in column no.- 2 had claimed the section 80 G

(5)(iv)(B). The nature of activity in column no.-3 was stated

as “religious cum charitable”. The assessee is society

registered with registrar of firms and societies MP, with

incorporation no: - 03/27/03/08636/05 dated

18/08/2003 [PB page 37]. The object of the society is

religious, relief of poor, education, medical relief and

advancement of any other objects. The Ld. AR submitted that

the benefit of 80G (5)(iv)(B) was rejected by the “Impugned

Order”. 12A regd however is effective. It was contended

that 5% of application towards religious activities are

permissible. Out of 5% roughly about 1% is towards Pooja

Expenses. The assessee society however was not heard in

an effective and reasonable manner before the Impugned

Order was passed by the Ld. CIT (E). The Ld. AR then

invited our attention to the fact that the religious expenses

done by the assessee society was of Rs. 8960/- which was

expended as “Mandir poojan expenses”. Pilgrims and

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refreshment expenses were Rs. 52,579.00 only which too

was meagre. In this regard our attention was invited to PB

page 42 which was income & expenditure account for the

year ending 31.03.2023. The Ld. AR then invited our

attention to PB page 62 and basis that contended that the

percentage of religious expenses for 2021-22 was 4.37%, for

2022-23 it was 1.85% and for 2023-24 it was 2.36%

which were all below 5% [chart of percentage of religious

activities expenses incurred with respect to total income]

[page 62 of PAPER BOOK]. In the sum and substance it was

submitted that the religious activities were carried out by the

assessee are incidental and ancillary to main object and

the amount expended is less than 5%. Per contra the Ld. DR

appearing for and on the behalf of the revenue contended

that only charitable purpose is required to be considered

in law. Charitable cum religious activities and religious

activities are not allowed for 80G (5)(iv)(B). The

“Impugned Order” is therefore correctly passed and that the

“Impugned Order” should be upheld. The hearing was over

and closed.

4.1 We have to decide the legality, validity and proprietary of the

“impugned order” basis records of the case & the rival

submission canvassed before us.

4.2 We have carefully perused the records of the case and have

heard the submissions.

4.3 We basis records of the case & after hearing & further

upon examining the rival contentions of the Ld. AR & the Ld.

DR canvassed before us, are of the considered opinion that

the “Impugned Order” in the given facts and circumstances

deserves to be set aside as there in no analysis is done by the

Ld. CIT (E) about the nature of religious activities and

amount expended for same during last three years as is

demonstrated before us basis PB page 62. While it is true that

only the society or body or trust established solely for purpose of

charitable purpose is required to be granted registration for

section 80G (iv)(B) but that ipso facto does not mean in law that

such body or society or trust is prohibited to do any religious

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activities as and by way incidental and ancillary work in order to

achieve purpose of charitable nature. If assessee has advanced

contentions that they too are carrying out religious activities as

and by way of incidental and ancillary object then there such

contentions are required to be appreciated and considered

sympathetically by carrying out due diligence and some

prelim any inquiry in order to ascertain the gravity and nature

and the purpose of such activities. It is required to be tested

basis such an inquiry and/or from the reports of the field officers

whether such activities are incidental and ancillary to the main

objects or not. However upon inquiry etc. If it is found basis

material that such incidental and ancillary objects of religious

activities are dominant over the charitable purpose then the

authorities would be well within their rights to deny the

registration. The amount expended on such activities of

incidental and ancillary nature i.e. religious activities up to 5% of

application of income would be one of the yard stick. Be that as

it may without going into the merits of the case we set aside

the Impugned Order as and by way of remand with direction

to the Ld. CIT (E) to re-examine the above issue without

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being influenced by our observation and to re look the entire

affairs, objects and purpose of assessee once again and then

to pass a fresh and speaking order which should be a

reasoned one. The Ld. CIT (E) is directed to give personal hearing

to the assessee and assessee is directed to participate in such

hearing as we notice that there is nothing in the Impugned

Order with regard to opportunity of personal hearing being

afforded to the assessee before the Impugned Order was passed.

The assessee is directed to explain each and every charitable

purpose with tangible material/ evidences worth credence to

establish charitable nature of their society and so also other

incidental and ancillary objects i.e. religious activities.

4.4 In the premises laid down by us we set aside the Impugned

Order and direct the Ld. CIT (E) to decide the assessee

application in form no. 10AB on merits on De novo basis, by

passing a speaking and a well-reasoned order including on

religious activities being carried out by the assessee basis

material on record.

5 Order

5.1 In the result the “Impugned Order” is set aside as and by

way of remand back to the file of Ld. CIT (E) with directions as

aforesaid.

5.2 The appeal of Assessee allowed for statistical purpose.

Pronounced in open court on 30.06.2026.

Sd/- Sd/-

(DR. ARJUN LAL SAINI) (PARESH M JOSHI) ACCOUNTANT MEMBER JUDICIAL MEMBER

Indore Dated : 30/06/2026 Patel/Sr. PS Copies to: (1) The appellant (2) The respondent (3) CIT (4) CIT(A) (5) Departmental Representative (6) Guard File By order UE COPY Senior Private Secretary Income Tax Appellate Tribunal Indore Bench, Indore

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