VEDANTA SASTHRA PRACHARA TRUST,THENI vs. CIT(E), CHENNAI

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ITA 2254/CHNY/2026Status: DisposedITAT Chennai21 August 2026AY 2025-266 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal held that the mere description of activities as 'religious-cum-charitable' is not determinative of eligibility for Section 80G approval. The actual objects and application of funds are crucial, and a trust can be both religious and charitable.

What were the facts?

The assessee's application for approval under Section 80G of the Income Tax Act was rejected by the CIT(E) because the trust described its activities as 'religious-cum-charitable'. The assessee contended that its primary objects are purely charitable, such as education and medical aid.

What were the issues?

Whether a trust described as 'religious-cum-charitable' is automatically ineligible for Section 80G approval, and if the CIT(E) properly examined the trust's objects and activities.

Which sections of the Income-tax Act were involved?

Section 80G,Section 80G(5B)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘C’ BENCH, CHENNAI

Before: SHRI GEORGE GEORGE K & SHRI GAGAN GOYAL

Hearing: 20.08.2026Pronounced: 21.08.2026

आदेश/ O R D E R PER GEORGE GEORGE K, VICE PRESIDENT: This appeal filed by the assessee is directed against the order of the Commissioner of Income Tax (Exemption), Chennai dated 30.03.2026 rejecting the application dated 30.09.2025 seeking approval u/s.80G of the Income Tax Act, 1961 (hereinafter called ‘the Act’).

ITA No.2254/CHNY/2026 - 2 - Vedanta Sasthra Prachara Trust 2. At the very outset, we notice that the CIT(E) has rejected the application filed by the assessee seeking approval u/s.80G of the Act, on the ground that, in Form No.10AB, the assessee had itself stated that its activities were “religious-cum-charitable” in nature. The CIT(E) was of the view that a trust established for religious or religious-cum-charitable purposes is not eligible for approval u/s.80G(5) of the Act. Accordingly, the CIT(E), vide the impugned order, rejected the assessee’s application for approval u/s. 80G of the Act.

3.

Aggrieved by the impugned order, the assessee is in appeal before us. The Ld. AR submitted that the main objects of the assessee-trust are to provide education, medical aid and public relief, which are purely charitable and not religious in nature. He further submitted that the object clause of the trust deed clearly specifies the charitable objects of the Trust. The Ld. AR contended that the CIT(E) erred in drawing an adverse inference merely on the basis of the description in Form No.10AB, without examining the actual activities of the Trust and application of its funds. Accordingly, he prayed that the impugned order be set aside and approval u/s.80G of the Act be granted.

ITA No.2254/CHNY/2026 - 3 - Vedanta Sasthra Prachara Trust 4. The Ld.DR supported the order of the CIT(E).

5.

We have heard the rival submissions and perused the material available on record. The CIT(E) rejected the assessee’s application primarily on the ground that, in Form No.10AB, the assessee had stated that its activities were of “religious-cum-charitable” nature. However, the mere description of the activities as “religious-cum- charitable” in the application cannot, by itself, be determinative of the assessee’s eligibility for approval u/s.80G of the Act. What is relevant is the nature of the objects of the Trust and the manner in which its activities and funds are actually applied. In the present case, the assessee has contended that its principal objects relate to education, medical aid and public relief, which are charitable in nature. Therefore, the CIT(E) ought to have examined the objects of the Trust and its actual activities before rejecting the application solely on the basis of the description contained in Form No.10AB.

6.

We find that the Hon'ble Bombay High Court in CIT(E) vs. Shree Sai Baba Sansthan Trust, Shirdi reported in (2024) 167 taxmann.com 304 (Bombay) has held that there is no legal bar for a trust to be both religious and charitable and that a narrow interpretation excluding every religious-cum-charitable trust from the ambit of

ITA No.2254/CHNY/2026 - 4 - Vedanta Sasthra Prachara Trust section 80G is not warranted. The Hon'ble High Court has further observed that section 80G(5B) of the Act itself recognizes that an institution may incur expenditure of a religious nature within the prescribed limit and yet continue to be eligible for the benefit of section 80G. The relevant finding of the Hon’ble Bombay High Court reads as follows: “24. At the outset, it needs to be observed that the basis, on which the Assessing Officer proceeded to tax the anonymous donations received by the assessee, is by applying the provisions of Section 80G of the Act which pertains to deduction in respect of donations to certain funds, charitable institutions, etc. It is not in dispute that the assessee is registered for the donors to be benefited u/s.80G qua the donations which would be made to the assessee. Section 80G confers a benefit of deduction being allowed in respect of donations inter alia to charitable institutions. Thus, the assessee by virtue of its establishment/registration as a public trust, which also provides for charitable objects, has obtained registration u/s.80G of the Act. The object of Section 80G is not only to provide a benefit to tax payers in availing deduction of the charity they would make, by offering donations to charitable institutions, but also to enable the charitable trust/entity to implement/carry out their objects of welfare and well being of the society at large. A charitable institution may achieve several objects which are intended for collective benefit of the society, and it is with such purpose charitable institutions receive donations to advance charitable and philanthropic purposes. This has been legislatively recognized in terms of Section 80G of the Act.

25.

In the context of the present proceedings, sub-section (5B) of Section 80G is relevant which provides that notwithstanding anything contained in clause (ii) of sub-section (5) and Explanation 3, an institution or fund which incurs expenditure, during any previous year, which is of a "religious nature" for an amount not exceeding five per cent of its total income, in the previous year shall be deemed to be an institution or fund to which the provisions of Section 80G apply. Thus, implicit in Section 80G is the recognition of a trust which has religious activities. This to the effect that insofar as the religious activities of such trust are concerned, if such

ITA No.2254/CHNY/2026 - 5 - Vedanta Sasthra Prachara Trust trust incurs expenditure during any previous year, of an amount not exceeding five percent of its total income, such institution would be regarded as an institution to which the provisions of Section 80G apply. Sub-section (5B) was inserted by the Finance Act, 1999 with effect from 01 April 2000, since then it has held the field. It is for such reason, it would not be acceptable that Revenue takes a position that Section 80G would exclude religious trust and/or Section 80G applies only to charitable institutions. In any event, in our opinion, such reading of Section 80G that it would exclude religious and charitable entities, would not be the correct reading of the said provision. As fairly stated on behalf of the Revenue, there is no bar for a charitable trust also to be a religious trust. In fact, a trust being both religious or charitable or vise-versa is well-accepted phenomena. There can be many examples of such combination. For such reason, a myopic reading of Section 80G would be wholly impermissible.”

7.

In the light of the above legal position, we are of the considered view that the CIT(E) was not justified in rejecting the assessee's application merely on the ground that the Trust had described its activities as “religious-cum-charitable”, without examining whether its predominant objects and actual activities are charitable in nature and whether the other conditions prescribed u/s.80G of the Act are satisfied. The impugned order does not reveal any proper examination of the trust deed, the actual activities carried on by the assessee or the applicability of section 80G(5B) of the Act. Accordingly, in the interest of justice, we set aside the impugned order and restore the matter to the file of the CIT(E) for fresh adjudication. The CIT(E) shall examine the objects of the trust, the nature of its activities and the applicability of the provisions of section

ITA No.2254/CHNY/2026 - 6 - Vedanta Sasthra Prachara Trust 80G of the Act, including section 80G(5B) of the Act, in the light of aforesaid judicial pronouncement and thereafter pass a speaking order in accordance with law after affording the assessee a reasonable opportunity of being heard. The assessee shall extend full cooperation and furnish all requisite details in support of its claim. It is ordered accordingly.

8.

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

Order pronounced in the open court on 21st August,2026 at Chennai.

Sd/- Sd/- (जॉज� जॉज� के) (गगन गोयल) (GEORGE GEORGE K) (GAGAN GOYAL) लेखा सद�य/ACCOUNTANT MEMBER उपा�य� /VICE PRESIDENT चे�नई/Chennai, �दनांक/Dated, the 21st August, 2026 RSR, Sr.PS आदेश क� ��त�ल�प अ�े�षत/Copy to: 1. अपीलाथ�/Appellant 2. ��यथ�/Respondent 3. आयकर आयु�त /CIT, Chennai 4. �वभागीय ��त�न�ध/DR 5. गाड� फाईल/GF. By Order Digitally signed by REKHA REKHA SENTHIL RAJ SENTHIL RAJ Date: 2026.08.21 17:09:46 +05'30'

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