SHRI SWAMINARAYAN GADI TRUST-VADTAL (SVG),ANAND vs. THE CIT(EXEMPTION), AHMEDABAD

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ITA 305/AHD/2025Status: DisposedITAT Ahmedabad07 July 20267 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal held that the existence of religious objects alongside charitable objects does not disqualify a trust for Section 80G approval. However, the issue of whether the trust exceeded the prescribed expenditure limit on religious activities required further verification.

What were the facts?

The assessee trust was denied approval under Section 80G(5) of the Income Tax Act by the CIT(E) because some of its objects were religious and it allegedly spent more than the prescribed limit on religious activities. The assessee contended that the mere existence of religious objects does not disqualify a trust for charitable purposes.

What were the issues?

Whether a trust with religious objects can be considered for Section 80G approval and whether the trust exceeded the expenditure limit for religious activities.

Which sections of the Income-tax Act were involved?

Section 80G(5),Section 80G(5B)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “A” BENCH, AHMEDABAD

Before: SMT. ANNAPURNA GUPTA & SHRI SIDDHARTHA NAUTIYAL

For Appellant: Shri Manish J Shah & Shri Rushin, Shri Alpesh Parmar, CIT.DR
For Respondent: Shri Alpesh Parmar, CIT.DR
Hearing: 09/04/2026

PER ANNAPURNA GUPTA, AM:

The present appeal has been filed by the assessee against the order of the Ld. Commissioner of Income Tax (Exemption), Ahmedabad (hereinafter referred to as “CIT(E)”) dated 26.12.2024 denying grant of approval under Section 80G(5) of the Income Tax Act, 1961 (hereinafter referred to as the “Act”).

ITA No.305/Ahd/2025 [Shri Swaminarayan Gadi Trust-Vadtal (SVG) vs. CIT(E)] - 2 –

2.

The order of the Ld. CIT(E) reveals that the approval was denied noting some of the objects of the assessee trust being religious in nature and further finding the assessee to have expended in religious activities more than that prescribed in law i.e. 5% of the donations received. With respect to the finding of the Ld. CIT(E) that some of the objects of the trust were religious in nature and, therefore, the main condition of the assessee trust being for charitable purpose ,as prescribed u/s.80G(5) of the Act, being violated, Ld. Counsel for the assessee contended that there are various decisions, including that of the ITAT, Ahmedabad Bench, holding that the mere existence of religious objects would not render the trust to be not for charitable purposes. In this regard, our attention was drawn to the decision of the ITAT, Ahmedabad Bench in the case of Shree Sthanakvasi Jain Sangh Jivraj park vs. CIT(E) in ITA No.372/Ahd/2025, dated 08.10.2025, wherein the specific issue was dealt with at para 6 to 11 of the order as under:

“6. We have considered the contentions of both the parties and have gone through the order of the Ld. CIT(E) and also the decisions relied upon by the Ld. Counsel for the assessee before us. Undeniably, the approval sought by the assessee u/s.80G(5) of the Act has been denied by the Ld. CIT(E) noting the assessee to be a fund/institution established for religious purpose and not for charitable purposes and also noting the assessee to have expended for religious activities more than the limits specified u/s.80G(5B) of the Act so as to treat it as religious fund/institution and not a charitable fund/institution. Thus, as per the Ld. CIT(E), approval u/s.80G(5) of the Act is to be granted only to the fund/institution established for charitable purposes and the assessee has been noted to have violated the said condition on two counts: i. Its objects have been found to be religious in nature; &

ITA No.305/Ahd/2025 [Shri Swaminarayan Gadi Trust-Vadtal (SVG) vs. CIT(E)] - 3 –

ii. It has been found to have violated the conditions of 80G(5B) of the Act by expending more than the limit specified under the said Section for religious purposes. 7. It is relevant to consider the provisions of Section 80G(5) of the Act which are pertinent for adjudicating the issue before us. 8. Section 80G of the Act provides for deduction of donations made to certain Funds/Institutions while computing taxable incomes. Sub section (5) of the said section prescribes certain conditions to be fulfilled by funds/institutions for donations made to them being eligible for deduction under the section. The basic requirement is of the fund/ institution being established “for a charitable purpose” . “Deduction in respect of donations to certain funds, charitable institutions, etc. 80G. …………. ……………….. (5) This section applies to donations to any institution or fund referred to in sub-clause (iv) of clause (a) of sub-section (2), only if it is established in India for a charitable purpose.”

9.

Besides being established for a charitable purpose, the fund or institution is also required to fulfill certain other conditions one of which, pertinent to the issue of religious character of the trust, is specified in Sub-clause (ii) which says that the objects of the Trust should not provide for the application of any of its income for purpose other than a charitable purpose. The relevant sub-clause (ii) reads as under: “(ii) the instrument under which the institution or fund is constituted does not, or the rules governing the institution or fund do not, contain any provision for the transfer or application at any time of the whole or any part of the income or assets of the institution or fund for any purpose other than a charitable purpose;” 10. The main Section 80G(5) and Sub-clause (ii) of the said Section repeatedly use the word “charitable purpose”. The same has been explained in Explanation (3) to the Section to not include any purpose the whole or substantially the whole of which is of a religious nature:

ITA No.305/Ahd/2025 [Shri Swaminarayan Gadi Trust-Vadtal (SVG) vs. CIT(E)] - 4 –

“Explanation 3.—In this section, "charitable purpose" does not include any purpose the whole or substantially the whole of which is of a religious nature.” 11. In effect, reading Section 80G(5) of the Act and Sub-clause (ii) thereof alongwith Explanation (3) to the Section, it is clear that institutions or funds with purposes which are religious in nature are excluded from availing the benefit of Section 80G of the Act.” 3. Our attention was also drawn to another decision of the ITAT, Ahmedabad Bench in the case of Gurukrupa Foundation vs. CIT(E) in ITA No.2181/Ahd/2024, dated 06.03.2025, wherein at para 5.4 of the order, it was pointed out that the ITAT had categorically held that some of the objects being religious in nature would not render the trust to be not for charitable purposes as prescribed u/s.80G(5) of the Act. With respect to the application of assessee’s income in excess for religious purposes in excess of the limit prescribed u/s.80G(5) of the Act,he drew our attention to the findings of the facts recorded by the Ld. CIT(E) in this regard at page 13 of his order, wherein he noted from the financial statement of the assessee that the assessee had incurred religious expenditure to the extent of 29.05% of its income in F.Y. 2022-23 and similarly, 59.35% and 100% in F.Y. 2021-22 respectively. He pointed out that the Ld. CIT(E) had noted the said figures from Form 10AB submitted by the assessee himself. However, he contended that these figures were incorrectly noted. He pointed out from the financial statement for F.Y. 2022-23 placed before us at paper book page nos. 76 to 78 that while the Ld.CIT(E) had noted the income in the said year to the tune of Rs.98,27,060/-,the said amount in fact was

ITA No.305/Ahd/2025 [Shri Swaminarayan Gadi Trust-Vadtal (SVG) vs. CIT(E)] - 5 – the total expenses incurred by the assessee trust during the year. He further pointed out that even in financial year ending 2021 and 2022, the details of expenses incurred were placed at paper book page nos. 71 to 78 and the same clearly revealed that the assessee had not incurred any expenses for religious purpose. That clearly reporting in Form 10AB was contrary to the facts on record, he, therefore, pleaded that for the purpose of verifying the quantum expenses incurred for religious purposes, the issue be restored back to the Ld.CIT(E) and, thereafter, the issue of grant of approval be decided by him. The Ld. DR, however, relied on the order of the Ld.CIT(E).

4.

Having heard the contentions of both the parties and on going through the order of the Ld.CIT(E), we are in agreement with the Ld. Counsel for the assessee that the denial of approval u/s.80G of the Act to the assessee for the reason that some of its objects were religious in nature is contrary to law as interpreted by various decisions of the Co-ordinate Bench of the ITAT in the case of Shree Sthanakvasi Jain Sangh Jivraj park (supra), wherein we have noted it is clearly held that the religious objects can co- exist with charitable objects and subject to the application of income for religious purposes not exceeding the limit prescribed in law. Therefore, this reason for denial of grant of approval by the Ld.CIT(E) is rejected. As for the quantum of expenses incurred for religious purposes. Ld. Counsel for the assessee has fairly demonstrated before us that the correct figures of expenses

ITA No.305/Ahd/2025 [Shri Swaminarayan Gadi Trust-Vadtal (SVG) vs. CIT(E)] - 6 –

incurred for religious purposes has not been appreciated by the Ld.CIT(E) for the various years i.e. F.Y. 2021, 2022 & 2023. We, therefore, agree with the Ld. Counsel for the assessee that for the limited purpose of verifying whether the assessee had violated the purpose of Section 80G(5) of the Act by incurring expenses for religious purposes exceeding 5% of its income so as to be ineligible for grant of approval u/s.80G of the Act, We restore the issue back to the Ld.CIT(E). The Ld.CIT(E) is directed to grant due opportunity of hearing to the assessee and thereafter decide the issue in accordance with law.

5.

In the result, appeal filed by the assessee is allowed for statistical purposes.

Order is pronounced under provision of Rule 34 of ITAT Rules, 1963 on 07.07.2026

Sd/- sd/- (SIDDHARTHA NAUTIYAL) (ANNAPURNA GUPTA) JUDICIAL MEMBER ACCOUNTANT MEMBER Ahmedabad; Dated 07/07/2026 S. K. SINHA आदेश क� ��त�ल�प अ�े�षत/Copy of the Order forwarded to : अपीलाथ� / The Appellant 1. ��यथ� / The Respondent. 2. संबं�धत आयकर आयु�त / Concerned CIT 3. 4. आयकर आयु�त(अपील) / The CIT(A)- 5. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाड� फाईल / Guard file. आदेशानुसार/ BY ORDER,

ITA No.305/Ahd/2025 [Shri Swaminarayan Gadi Trust-Vadtal (SVG) vs. CIT(E)] - 7 –

उप/सहायक पंजीकार (Dy./Asstt. Registrar) आयकर अपील�य अ�धकरण, अहमदाबाद / ITAT, Ahmedabad

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