SHRI JAIN SWETAMBER TERAPANTHI SABHA, RAIPUR,RAIPUR vs. INCOME TAX OFFICER, WARD-4(1), RAIPUR, RAIPUR

The sole effective ground raised by the assessee reads as under: “That, on the facts and in law, the Ld. Commissioner of Income Tax (Exemption), Bhopal erred in rejecting the application u/s 10AB for grant of registration u/s 80G of the Income Tax Act, 1961. That the Ld. CIT(E) ought to have granted registration u/s 80G.

The relevant facts giving rise to this appeal are that the assessee is a registered society under section 12A of the Act. It applied for the approval under section 80G(5) of the Act by submitting Form 10AB of the Income Tax Rules. However, the approval under section 80G(5) of the Act was denied by the Ld. CIT(E), Bhopal vide impugned order on the reasoning that the assessee’s expenditure incurred for religious purposes were above the threshold limit of 5% of prescribed under section 80G(5B) of the Act. The relevant finding of the Ld. CIT(E) is reproduced as under:

Before us, Shri Ravi Agrawal, CA, Ld. Authorized Representative of the assessee contended that the expenditure of Rs.1,41,384/-, Rs.1,67,855/- and Rs.10,36,016/- under the head “Chaturmas Sewa and General Expense” in FY 2022-23, 2023-24 and 2024-25 respectively were incurred on sermons/‘pravchans of Jain Saint/Muni during ‘chaturmas’, which in general were exclusively on human values and in turn for benefit of the society at large. Such expenses were not incurred to propagate any particular religion. Therefore, “Chaturmas Sewa and General Expense”, did not fall in the purview of religious expenditure, contended the Ld. AR. Further, he submitted that there was no restriction on persons of any community and religion attending of such sermons/pravachans during chaturmas. It was further submitted that such sermons/pravachans were not confined exclusively for Jain Community; therefore, the said expenditure could not be held exclusively as religious expenditure. However, on specific query, he was not able to file any documentary evidence demonstrating the fact that sermons/‘pravchans during ‘chaturmas’ and other times were attended by the public at large. Further, on our specific queries, he showed his inability to bring any advertisement/notice, etc. by which the public at large were requested to attend such sermons/‘pravchans and any photograph showing the gathering of public at large representing different community and religion in sermons/‘pravchans delivered by Jain Muni and or non- Jain Muni. Another argument taken by the Ld. AR was that since the assessee trust had already got registration under section 12AA of the Act, therefore, the approval under section 80G(5) of the Act was automatic and in normal course> He placed reliance on the decisions of the Hon’ble Chhattisgarh High Court in the case of Dignity Education Society Tax Case No. 87/2022 and Adharshila Shikshan Sangh Tax Case No. 30/2019. 5. Shri Raghunath, Ld. CIT-DR, placing emphasis on various paragraphs of the order of Ld. CIT(E), argued the case vehemently. The Ld. CIT-DR drew our attention to various clauses of objects of the assessee trust, majority of which were religious in nature as the same were exclusively for Jain community. He therefore, prayed for dismissal of the appeal.

We have heard both parties and have perused the material available on the record. The solitary grievance of the assessee arises due to denial of granting of approval under section 80G of the Act. As per section 80G(5B) of the Act, charitable trusts/institutions incurring expenditure up to 5% of their “total income” on religious purposes can retain approval under section 80G of the Act. Section 80G(5B) of the Act overrides the strict prohibition in section 80G(5) of the Act to the extent of incurrence of religious expenditure up to 5% of “total income”. We do not find any force in the argument of the Ld. AR that the expenditure of Rs.1,41,384/-, Rs.1,67,855/- and Rs.10,36,016/- under the head “Chaturmas Sewa and General Expense” in FY 2022-23, 2023-24 and 2024-25 respectively are for benefit of the society at large and thus, the same does not fall in purview of religious expenditure particularly when any corroboratory evidence buttressing his argument was brought on the record. Thus, we are of the considered view that the expenditure of Rs.1,41,384/-, Rs.1,67,855/- and Rs.10,36,016/- under the head “Chaturmas Sewa and General Expense” incurred in FY 2022-23, 2023-24 and 2024-25 respectively are religious expenditure. Accordingly, we hold so.

We do not find any force in the argument of the Ld. AR that the approval under section 80G(5) of the Act is automatic and normal once the assessee trust got registration under section 12AA of the Act. We are of the considered view that the legislature in its wi om has brought out these two specific provisions i.e. 12AA & 80G of the Act for distinct purpose and object. In order to grant registration under 12AA, the Ld. CIT(E) is legally bound to look into the genuineness of the activity and objects of the trust and also look into whether the trust is complying with other laws applicable at the relevant time, so that the trust can fulfil its objects. Once the Commissioner is satisfied in these areas, then registration under section 12AA of the Act is granted. On the other hand, the approval under section 80G of the Act is granting looking into whether the trust is performing its activities as per the objects of the trust and what are the exact activities in which the said trust is incurring its expenses. Section 80G(5B) of the Act provides a limitation on incurrence of religious expenditure. Therefore, it is more necessary for the CIT(E) to look into the nature of expenses incurred by the trust before granting approval under section 80G of the Act. The Hon'ble Supreme Court in the case of Sant Girdhar Anand Parmhans Sant Ashram [2023] 452 ITR 52 has held that while there is no dispute that the assessee asserts that it continues to hold exemption u/sec.12AA, nevertheless, for the benefit under section 80G(5B) of the Act, the requirements of that provisions have to be satisfied separately. Therefore, the proposition of law emerges is that even if a trust is having registration under section 12AA of the Act still, in order to get approval under section 80G(5) of the Act, the conditions in this provision needs to be complied with also along with the conditions specified in section 80G(5B) of the Act separately.

We have perused the object clauses of the assessee trust and are in agreement with the Ld. CIT-DR that the assessee does exist mainly for religious purposes. In other words, the religious activities and expenses incurred therein has taken the front seat whereas the charitable activities and expenses which benefits the society in totality has been placed at the rear seat. As per section 80G(5B) of the Act, charitable trusts/institutions incurring expenditure up to 5% of their “total income” on religious purposes can retain approval under section 80G of the Act. We have taken note of the fact that the Ld. CIT(E), keeping in view the following tabular details drew the inference that the assessee’s religious expenditure in FYs 2022-23 to 2024-25 were above the threshold limit of 5% of total income and therefore, the condition laid down under section 80G(5B) of the Act did not get fulfilled:

In the result, appeal of the assessee, subject to above finding, is allowed for statistical purpose.