ARULMIGHU ILLUPPILI PERUMAL KOIL TRUST,NAMAKKAL vs. CIT EXEMPTIONS, CHENNAI

At the outset, it is noticed that the present appeal has been instituted by the assessee with a delay of one day beyond the period prescribed under the Act. The assessee has filed an affidavit setting forth the reasons and circumstances which occasioned the delay in preferring the appeal within the

It is a settled proposition of law that, while considering an application for condonation of delay, a liberal and justice-oriented approach is required to be adopted so as to advance substantial justice, particularly when no prejudice is shown to have been caused to the opposite party. In the present case, we are satisfied that sufficient cause has been demonstrated by the assessee for the delay in filing the appeal. Accordingly, the delay of one day in filing the present appeal is condoned, and the appeal is admitted for adjudication on merits in accordance with law.

The brief facts of the case are that the assessee is a Trust registered u/s.12AB of the Act, carrying on activities which, according to the assessee, include providing food (Annadhanam) to poor and needy persons, medical assistance and relief, educational assistance to the economically weaker sections, support to destitute and under-privileged persons and other public welfare activities, besides the administration and maintenance of places of worship. The assessee filed an application dated 27.09.2025 in Form No.10AB under clause (ii) of the first proviso to s.80G(5) of the Act seeking renewal of approval u/s.80G of the Act, describing the nature of its activities as “Religious cum Charitable”. The ld.CIT(E) called for details, in response to which the assessee filed its submission dated 10.03.2026. On consideration of the same, the ld.CIT(E) rejected the application vide order dated 22.03.2026, holding as under:

Aggrieved by the order of the ld.CIT(E), the assessee is in appeal before us by raising the following grounds of appeal:- “1] The Trust is Primarily Established for Charitable purposes within the meaning of Section.2(15) of the Income Tax Act 1961. Though Certain activities relates to Temple Administration and maintenance of places of Worship, the Trust also undertakes several Independent Charitable activities benefitting the General Public ir-respective of Caste, Creed, Religion or Community. 2] The main objects and activities undertaken by the Trust are the following Primary Activities. Providing Food (Annadhanam) to Poor and Needy persons, Medical Assistance and relief activities, Educational Assistance to economically Weaker Sections, support to destitute and under privilege persons and Public Welfare activities and community support programme. 3] It can be seen from the Financial Statements that the Trust has not conducted any Religious activities. "Expression Religious cum Charitable" in Old Form. 10A/10AC is not conclusive it is only a description in the Form.

At the time of hearing, the ld.AR for the assessee reiterated the grounds of appeal and submitted that the ld.CIT(E) rejected the application merely on the basis of the description “Religious cum Charitable” given in the Form and the reference to the maintenance of places of worship, without examining the objects of the Trust as a whole, the activities actually carried on by it and the extent of its religious expenditure, and prayed that the ld.CIT(E) be directed to grant approval u/s.80G of the Act. Per contra, the ld.DR supported the order of the ld.CIT(E).

We have heard the rival submissions and perused the material available on record. The short issue that arises for our consideration is whether the ld.CIT(E) was justified in rejecting the application of the assessee for approval u/s.80G of the Act merely on the ground that the nature of its activities was

Section 80G(5) of the Act lays down the conditions which an institution or fund must fulfil to be eligible for approval. Among them, clause (ii) requires that the instrument under which the institution is constituted does not provide for the transfer or application of its income or assets for any purpose other than a charitable purpose, and clause (iii) requires that the institution is not expressed to be for the benefit of any particular religious community or caste. Explanation 3 to section 80G of the Act provides that “charitable purpose” does not include any purpose the whole or substantially the whole of which is of a religious nature. Further, section 80G(5B) of the Act provides that, notwithstanding anything contained in clause (ii) of sub-section (5) and Explanation 3, an institution or fund which incurs expenditure of a religious nature during any previous year for an amount not exceeding five per cent of its total income in that previous year shall be deemed to be an institution or fund to which the provisions of section 80G apply.

A reading of the above provisions makes it clear that the Act does not exclude every trust having some religious objects or incurring some religious expenditure from the purview of section 80G of the Act. Explanation 3 excludes only a purpose the whole or substantially the whole of which is of a religious nature, and section 80G(5B) expressly saves an institution whose religious expenditure in a previous year does not exceed five per cent of its total income of that year. Therefore, the view of the ld.CIT(E) in para 4.2 of the impugned order that institutions established for religious and charitable purposes are, as such, not eligible for approval is not in accordance with the scheme of the section. Likewise, the description of the nature of activities as “Religious cum

In the present case, we find that the ld.CIT(E) has rejected the application only on the basis of the description given in Form No.10AB and the admission of the assessee that its activities include the maintenance of places of worship and the administrative expenses of a temple. The impugned order does not examine the objects of the Trust as a whole or the activities actually carried on by it, such as Annadhanam, medical assistance and educational assistance claimed by the assessee; it does not record any finding as to whether the whole or substantially the whole of the purpose of the Trust is religious; it does not ascertain the expenditure of a religious nature incurred by the assessee in the relevant previous years vis-à-vis its total income, so as to examine the applicability of section 80G(5B) of the Act; and it does not examine whether the Trust is expressed to be for the benefit of any particular religious community or caste. It is also noted that the application was filed under clause (ii) of the first proviso to section 80G(5) of the Act for renewal of the approval, and the impugned order does not consider whether there has been any change in the objects or activities of the Trust since the approval was earlier granted. A co-ordinate Bench of the Tribunal in Shree Sahajanand Gaushala Trust v. CIT(E) (ITA No.179/Rjt/2023, order dated 28.02.2024), on similar facts, restored the matter to the ld.CIT(E) for fresh examination of the religious expenditure of the trust with reference to the threshold in section 80G(5B) of the Act.

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