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Facts
The assessee-trust applied for final approval under Section 80G of the Income Tax Act. The CIT(E) rejected the application, observing that the assessee incurred religious expenditure beyond the permissible limit and provided a loan of Rs.10 lakhs without proper justification.
Held
The Tribunal held that the interests of justice would be served by giving the assessee an opportunity to present its case before the CIT(E) to clarify the nature of expenditure and the loan provided.
Key Issues
Whether the CIT(E) was correct in rejecting the Section 80G approval application based on alleged excess religious expenditure and an unexplained loan, and whether the matter should be remanded for further clarification.
Sections Cited
80G(5), 80G(5B)
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Income Tax Appellate Tribunal, “C” BENCH, AHMEDABAD
Before: Shri Sanjay Garg & Smt. Annapurna Gupta
"ी संजय गग", "ाियक सद" एवं "ीमित अ"पूण" गु"ा, लेखा सद" के सम&। ] ] Before Shri Sanjay Garg, Judicial Member And Smt. Annapurna Gupta, Accountant Member आयकर अपील सं /ITA No.337/Ahd/2025 िनधा"रण वष" /Assessment Year : N.A. C.L. Shah Charitable Trust The CIT (Exemption) बनाम/ A-1, Ganga Jamna Society Ahmedabad – 380 015 v/s. Opp. Golden Siler Apt. Subhanpura Vaodara – 390 023 "थायी लेखा सं./PAN: AAATC 5225 F (अपीलाथ)/ Appellant) (*+ यथ)/ Respondent) Assessee by : Ms. Rangoli GADA, AR Revenue by : Shri Rignesh Das, CIT-DR सुनवाई की तारीख/Date of Hearing : 08/09/2025 घोषणा की तारीख /Date of Pronouncement: 15/09/2025 आदेश/O R D E R Per Sanjay Garg, Judicial Member:
The present appeal has been preferred by the assessee against the order of the Learned Commissioner of Income Tax (Exemption), Ahmedabad [hereinafter referred to as ‘CIT(E)’] dated 28/12/2024.
The assessee, in this appeal, is aggrieved by the order of the CIT(E) in rejecting the application of the assessee for regular/final approval under clause (iii) of first proviso to sub-section (5) of Section 80G of the Income Tax Act, 1961 (in short “the Act”) C.L. Shah Charitable Trust vs. The CIT (Exemption)
2 2.1. The Ld.CIT(E) rejected the application of the assessee observing that from the accounts of the assessee, it revealed that the assessee has incurred religious expenditure, over and above, the permissible limit of 5% in violation of the provisions of sub-section (5B) of section 80G of the Act. The Ld.CIT(E) has further observed that on perusal of the accounts of the assessee for Financial Years (FYs) 2021-22, 2022-23 & 2023-24, revealed that the assessee- trust had also given an amount of Rs.10 lakhs as loan to Shri Pancheshwar Mahadev Trust, for which the assessee has not submitted any justification regarding the purpose for which such advance has been given since last three years. He concluded that the assessee had incurred expenditure on religious purpose more than the prescribed limit in violation of clause (ii) of Section 80G(5) of the Act. He, therefore, rejected the application of the assessee for final approval u/s.80G(5) of the Act.
Before us, the Ld. Counsel for the assessee has submitted that the ld.CIT(E) got the impression from the accounts of the assessee that the assessee had incurred expenditure on religious purpose more than the prescribed limit. She has submitted that the Accountant of the assessee has wrongly mentioned the head of expenditure as donation for religious, whereas, the donation made by the assessee was not for any religious purpose, rather for charitable purposes. That it was a case of accounting mistake only. She has requested that the assessee has a fair case on merits. She has submitted that the matter may be remanded to the CIT(E), so that the Ld.CIT(E) can be apprised about the true and correct facts of the case.
The ld.DR, on the other hand, has relied upon the findings of the Ld.CIT(E). C.L. Shah Charitable Trust vs. The CIT (Exemption)
Considering the rival submissions, in our view, the interests of justice will be well served, if the assessee is given an opportunity to present its case before the Ld.CIT(E) and to demonstrate that the alleged expenditure on account of donation for religious purpose was, in fact, not for religious purpose and further to explain the purpose of loan of Rs.10 lakhs given in last three financial years to Shri Pancheshwar Mahadev Trust. The assessee will furnish all the requisite details/documents and explain its case before the Ld.CIT(E) and the Ld.CIT(E), after considering the same, will decide the application of the assessee afresh within six months from the date of receipt of copy of this order.