SHRI RAMBAG MANDIR TATHA RAMCHANDRAJI BHAGWAN SANSTHAN,PANDHARPUR vs. COMMISSIONER OF INCOME TAX (EXEMPTIONS), PUNE, PUNE

2. On the facts and in the circumstances of the case and in law the Learned Commissioner of Income Tax (Exemptions), Pune has interpreted the Explanation 3 to Sec. 80G erroneously when the religious activities of the assessee are not wholly or substantially forming part of the trust deed of the assessee.

3. On the facts and in the circumstances of the case and in law the Learned Commissioner of Income Tax (Exemptions), Pune has erroneously held that the registration of Trust under 'A' category with Charity Commissioner is fore temples only, hence, the assessee is a religious trust only.

4. On the facts and in the circumstances of the case and in law the Learned Commissioner of Income Tax (Exemptions), Pune has not considered the year wise details of charitable activities and financial evidence demonstrating compliance with Sec. 80G(5B) of the Income Tax Act, 1961.

5. On the facts and in the circumstances of the case and in law the Learned Commissioner of Income Tax (Exemptions), Pune has not granted adequate opportunity of being heard which is contrary to the principles of natural justice.

6. The assessee prays to add, amend, alter, withdraw or delete any of the grounds of appeal raised above, during the appellate proceedings in the interest of natural justice.”

4. The brief facts are that on receipt of the assessee’s application filed in Form No. 10AB under clause (iii) of first proviso to section 80G(5) of the Act along with annexures thereto, with a view to verify the genuineness of the activities of the assessee and fulfillment of the conditions laid down in clauses (i) to (v) of section 80G(5) of the Act, the Ld. CIT(E) issued notice on 19.07.2024 through ITBA portal requesting the assessee to upload certain information/clarification contained therein by 05.08.2024. On verification of the details/documents filed by the assessee, the Ld. CIT(E) noticed various discrepancies which were communicated vide issue of another notice dated 19.11.2024 duly served via e-portal/email, seeking compliance by 26.11.2024. The said discrepancies are reproduced below : "(i) Note on activities actually carried out, with details of date and place of each activity, details of beneficiaries, how they were identified, other relevant information has not been furnished. (ii) No supporting evidence viz bills/invoices of expenditure on each activity, photographs, cuttings etc has been furnished to prove the genuineness of activities. (iii) There has been addition to corpus/other earmarked funds. Nature and source of the same has not been furnished. In case the same being donations, please furnish full name, address, PAN of donors, date and mode of donation, amount, receipt no. issued and copies of directions from donors. (iv) In I&E account, details of object-wise expenditure has not been furnished. It is, however, seen that the expenditure on religious objects are more than 5% of the total income. Please clarify with supporting evidence. "

4.1 The assessee furnished its reply to the above notice on 25.11.2024. After considering the reply of the assessee, specifically with reference to the discrepancy point out by him in point 2(iv) above, the Ld. CIT(E) rejected the application of the assessee and also cancelled the provisional registration granted earlier by observing as under: “7 …..80G : Deduction in respect of donations to certain funds, charitable institutions, etc. (1)…..(2)…..(3)…..(4)….. (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 and if it fulfils the following conditions, namely :— (i) ..... (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; 7.1. The provisions of Explanation 3 to section 80G also excludes any purpose of religious nature from the definition of 'charitable purpose' for the applicability of section 80G(5) of the Act, which are reproduced below '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.' 7.2 Thus, the provisions of clause (ii) of sub-section (5) of section 80G do not allow any provision in the trust deed / MoA to transfer or to apply any income or assets for purposes other than charitable purposes and provisions of Explanation 3 to section 80G specifically exclude religious purpose from the applicability of section 80G. Whereas the object / objects of the assessee, as discussed above, are religious in nature and thus the instrument under which the assessee is constituted provide for application of income other than charitable purposes.

8. Further, the assessee in its reply not furnished any statistical bifurcation of religious expenses and charitable expenses for last three years. Whereas the financial statements shows expenses under the head "Expenditure on object of the Trust" for F. Y. 2021-22 and 2022-23. On verification of the expenses details there is not found any charitable expenses, all expenses were related to administrative / establishment and also religious. For the F. Y. 2023-24 the assessee has shown religious expenses only. On verification of activity note, it is seen that almost all activities are religious in nature like daily pooja, organizing satsang/ relidious discourses, distribution of prasad to devottes etc. This shows that no charitable activities have been carried out by the trust. Even on perusal of financial statements, it is seen that the entire expenditure shown as expenditure on objects is made towards various establishment purposes, salary to manager, staff, poojari, staff mess meals expenses, prasad and kirana etc. None of these expenses amount to expenditure of charitable nature. 8.1 Thus, it is observed that the applicant has made expenditure on religious activities, which is more than 5% of the total income. Therefore, the case is also not covered under the exception provided under the provisions of sub- section (5B) of section 80G of the Income Tax Act, 1961. The provisions of said section are reproduced below : '(5B) Notwithstanding anything contained in clause (ii) of subsection (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 percent of its total income in that previous year shall be deemed to be an institution or fund to which the provisions of this section apply.' 9. In view of the above, the application filed by the assessee is hereby rejected and the provisional approval granted on 23/06/2021 under clause (iv) for first proviso to section 80G(5) of the Income Tax Act, 1961 is hereby cancelled.”

6.1 The Ld. AR submitted that since past 4 decades, the assessee trust was not managed properly. There were many disputes going on between the then trustees and the other members of the trust. Resultantly, a complaint was filed before the office of Asst. Charity Commissioner, Solapur by Mr. Vitthaldas P. Mundada and 430 other social workers against the then sitting trustees. This case was going on till 2020. Ultimately, an order was passed by Jt. Charity Commissioner, Pune Region, Pune on 25.08.2020 in which the application was allowed, the old trustees were removed, adhoc committee was set up for 3 months to identify the new trustees to carry out day to day activities of the trust and manage it as per the rules and regulations. Accordingly, a new scheme for management has been submitted and new trustees were appointed from year 2021 onwards. The new scheme contains various objectives of the trust. There are in total 9 objectives of the trust, out of which some of the objectives are purely religious in nature and some are other charitable objects. Referring to Page No. 105 of the Paper Book, the Ld. AR submitted that these objectives are forming part of the new scheme submitted to the Charity Commissioner, in Marathi. On Page Nos. 22 & 23 of the Paper Book, the assessee has submitted the activities undertaken in past 3-4 years as well as the future activities the trust is willing to undertake. None of these things are considered by the Ld. CIT(E) and he merely concluded that the assessee seems to be purely religious in nature. He further submitted that amongst the other objectives, the assessee is also intending to open and operate a Gaushala, start Aushadhalaya, Chikitsalaya and produce Ayurvedic Medicines and provide other medical facilities, run Vedang Schools and Colleges and provide other educational facilities, propagate teachings of Sanskrit language and encourage its study, and so on. However, none of these have been considered by the Ld. CIT(E). The objectives of the trust remained unchanged the years and hence in such circumstances, cancelling the provisional registration u/s 80G of the Act and rejecting the application for regular registration u/s 80G of the Act will put the trust in financial pressure to carry out its activities.

6.2 He also submitted the assessee trust is not solely a religious trust but also a charitable trust considering the objectives of the trust. Hence the observation of the Ld. CIT(E) that the trust is a religious trust is not completely true.

6.3 The Ld. AR further submitted that during the proceedings for registration u/s 80G of the Act, the assessee has submitted all the financials of the trust including the Schedules to the Balance Sheet and Income & Expenditure A/c. However, the same were not considered by the CIT(E). On the contrary, the Ld. CIT(E) observed in the impugned order that the assessee has not furnished any statistical bifurcation of religious and charitable expenses for last three years. The assessee trust has incurred expenses under various head to bring back the trust and its activities on the track, which includes repair of temple premises, pending electricity and municipal taxes for years, staff expenses etc. All these expenses had to be incurred in order to carry out the charitable activities in future as well. Also, the expense incurred on Prasad and Kirana (grocery) is towards a charitable activity and cannot be termed as expenses on religious activities as the same are distributed to all the persons who come to temple without any discrimination. However, the Prasad and Kirana expenses were inadvertently taken as expenses on religious activities for the year ended 31.03.2024.

6.4 Referring to page 66 of the Paper book, the Ld. AR submitted that the total amount of expenses on religious objectives debited is Rs. 1,39,786/- and total receipts for the year ended 31.03.2024 were Rs. 38,75,125/-. It is merely 3.61% of the total receipts. If the expenses towards the Prasad and Kirana are removed from the same which amounts to Rs. 52,382/-, the expenses on religious objectives will come down to Rs. 87,404.00 only, which is merely 0.22% of the total revenue of the trust. The Ld. CIT(E) concluded that the assessee has incurred expenditure on religious activities which are more than 5% of total income. The details of expenses on religious objectives and its percentage for last 3 years is as follows: - Particulars Assessment Years 2022-23 2023-24 2024-25 Expenses on Religious Objectives:- Function, Satkar Samarambh 1,350.00 1,460.00 4,296.00 Expenses Mandir Expenses - - 83,108.00 Prasad & Kirana Saman Expenses 90,018.00 83,496.00 52,382.00 Total 91,368.00 84,956.00 139,786.00 Total Income 1,048,065.00 2,928,553.00 3,875,125.00 % of total income 8.72 2.90 3.61 The above table clearly shows that expenses on the religious activities of the trust are not more than 5% of the total income of the assessee during the previous year. Hence, the conclusion of the Ld. CIT(E) is not appropriate.

6.5 He also filed certain additional evidence which could not be produced earlier before the Ld. CIT(E) due to its unavailability at the time of appellate proceedings before the Ld. CIT(E) (Page no. 84 to 104 of the Paper Book refers).

6.6 In light of his above submission, the Ld. AR prayed that the assessee may be granted one more opportunity to explain and substantiate its case before the Ld. CIT(E) by submitting all the necessary documents and information including the additional evidence which could not be filed earlier before the Ld. CIT(E) and hence the matter may be set aside to the file of the Ld. CIT(E) for adjudication afresh on merit after affording an opportunity of hearing to the assessee.

Order pronounced in the open court on 27th October, 2025.