VAISHNAV SANGH,AHMEDABAD vs. THE CIT(EXEMPTION), AHMEDABAD

ITA 80/AHD/2025Status: DisposedITAT Ahmedabad10 July 20255 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal held that the assessee's trust was not to be considered a religious trust merely because one of its 36 objectives mentioned the maintenance/running of a temple. The Tribunal noted that the trust's primary activities included setting up schools, colleges, hospitals, and dispensaries. It reasoned that a temple can be a common feature in healthcare facilities and that a mere mention of running a temple in objectives does not make the trust's purpose wholly or substantially religious, as per Explanation 3 to Section 80G. The Tribunal also referred to Section 80G(5)(ii), which requires the instrument not to contain provisions for transferring income or assets for non-charitable purposes, and Section 80G(5B), which permits up to 5% expenditure on religious activities. Since the CIT(E) had not examined whether the assessee incurred expenditure beyond the permissible 5% on religious activities, the Tribunal set aside the matter to the CIT(E) for this examination. If no excess expenditure was incurred, and other conditions of Section 80G(5) were met, approval should be granted. The assessee was to be given an opportunity of being heard.

What were the facts?

The assessee, Vaishnav Sangh, filed an appeal against an order dated 18.12.2024 passed by the Commissioner of Income Tax (Exemption), Ahmedabad (CIT(E)). The CIT(E) rejected the assessee's application for approval under Section 80G(5)(iii) of the Income Tax Act, 1961, and cancelled its provisional approval. The rejection was based on the finding that the assessee trust was a composite trust, encompassing both religious and charitable objectives, which is excluded from the benefits of Section 80G(5). The assessee contended that the CIT(E) erred in classifying it as a composite trust, arguing it was primarily charitable, with only one of its 36 objectives mentioning the running of a temple. The revenue supported the CIT(E)'s order.

What were the issues?

1. Whether the assessee-trust, having an objective to maintain/run temples among its 36 objectives, is a composite trust and thus excluded from the benefits of Section 80G(5)(ii) of the Act, as held by the CIT(E)? Assessee's Contention: The assessee argued that it is a charitable trust and not a composite trust. It submitted that only one out of 36 objectives mentioned running a temple, and the related activities were solely for the functioning of that temple, not broader religious activities. The assessee also stated that no religious expenses were incurred. It relied on the principle that a mere mention of a temple in objectives does not make the trust wholly or substantially religious. Revenue's Contention: The revenue supported the order of the CIT(E), implying it agreed with the finding that the trust was composite and thus ineligible for Section 80G approval.

Which sections of the Income-tax Act were involved?

Section 80G(5)(iii),Section 80G(5)(ii),Section 80G(5B)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “ A” BENCH, AHMEDABAD

Before: SHRI SIDDHARTHA NAUTIYAL & SHRI NARENDRA PRASAD SINHA

For Appellant: Shri S.N Divatia, with, Shri Samir Vora, ARs
Hearing: 02/07/2025Pronounced: 10/07/2025

PER NARENDRA PRASAD SINHA, AM:

This appeal is filed by the assessee against the order passed by the Commissioner of Income Tax (Exemption) Ahmedabad, (in short “the CIT(E)”) dated 18.12.2024, in the proceedings u/s. 80G(5)(iii) of the Income Tax Act, 1961 (in short “the Act”).

3.

Asst. Year NA

The assessee has taken the following grounds in this appeal:

1.

1 The order passed by U/s.80G(5) on 18.12.2024 by CIT(Exem), Ahmedabad rejecting the application for approval of the appellant trust

The order continues below.

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