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Income Tax Appellate Tribunal, “ A” BENCH, AHMEDABAD
Before: SHRI SIDDHARTHA NAUTIYAL & SHRI NARENDRA PRASAD SINHA
आदेश/O R D E R
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”).
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2 2. 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 u/s 80G(5)(11) of the Act and cancelling the provisional approval by holding that the appellant trust was a composite trust i.e. both religious and charitable which is excluded from the benefits of sec.80G(5) is wholly illegal, unlawful and against the principles of natural justice. 2.1 The Id. CIT(Exem), has grievously erred in law and or on facts in not appreciating that the appellant trust was a charitable trustand not a composite trust inclusive of religious objects also. The Id. CIT(Exem) has erred in not considering fully and properly the explanations furnished and evidence produced by the appellant trust. 2.2 That the in the facts and circumstances of the Id. CIT(Exem), ought not to have held that the appellant trust was a religious trust inclusive of religious objects. 3.1 The Id. CIT(Exem), has grievously erred in law and or on facts in rejecting the approval of the appellant trust u/s 80G(5)(ii) of the Act and cancelling the provisional approval. 3.2 That in the facts and circumstances of the ld.CIT(Exem), ought not to have rejected the application for registration by ignoring the evidence on record with the application for registration.
Shri S. N Divatia, Ld. AR appearing for the assessee submitted that the Ld. CIT(E) had rejected the application of the assessee on the ground that the assessee-trust was not purely charitable trust. He explained that the Ld. CIT(E) had picked up one of the objectives wherein reference to maintaining/running temple was made & the activities relating to functioning of the temple was described and on that basis he had held that provision of section 80G(5)(ii) and Explanation 3 to section 80G was contravened. The Ld. AR explained that the assessee had as many as 36 objectives out of which only one, wherein mentioned of running a temple was appearing, was picked up to deny the registration. Further, the Asst. Year NA
3 religious activities described in the object pertained to functioning of the temple only and no other religious activity was mentioned therein. The Ld. AR submitted that no religious expenses were incurred at all by the assessee in any of the years. Therefore, the rejection of the application by the Ld. CIT(A) was not correct.
Per Contra Shri Alpesh Parmar, Ld. CIT. DR supported the order of the Ld. CIT(E).
We have carefully considered the submissions of the assessee and also gone through the documents brought on record in the paper book. The assessee is primarily engaged in setting up schools, colleges, lecture halls, hospitals, dispensaries, maternity homes and other institutions for advancement of education and also providing medical relief along with also setting up/running temples. As per the copy of the trust deed brought on record, the assessee had as many as 36 objectives. The clause (a) of the objective, based on which the instrument of the assessee was held as religious in nature, is found to be as under: “(a) To open, fund, establish, promote, set-up, run, maintain, assist, finance, support and/or aid or help in the setting up and/or maintaining and/or running temples, schools, colleges, lecture halls and other establishments or institutions for advancement of education knowledge.”
An identical reference of “temples” was also appearing in clause (d) wherein object of hospitals, dispensaries, maternity homes and other medical relief centre appears. Further, there is a separate discussion of “5. Religiuous Activities” wherein timing of temple, modality of Pooja, expenses relating to temple, repair & renovation of temples etc. were discussed and Asst. Year NA
4 prescribed. It is thus found that the maintenance/running of temple was part of advancement of educational and healthcare activities. As explained, temple is a common feature in hospitals and healthcare facilities. Therefore, merely on the basis that a reference of temple was appearing in two of the objectives out of total 36 objectives of the trust, it cannot be held that the assessee was a religious trust. The Explanation 3 to section 80G defines “charitable purpose” as not to include any purpose the whole or substantially the whole of which, is of a religious nature. A mere mention of running/maintaining a temple in the objects, does make the object of the trust wholly or substantially wholly as religious in nature. Therefore, the action of the Ld. CIT(E) in rejecting the application of the assessee on this basis cannot be held as correct.
The provision of Section 80G(5)(ii) of the Act, on which reliance has been placed by the Ld. CIT(E) to deny the approval reads as under: (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 :— ….. (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;
We don’t find any clause in the instrument which stipulates that any income or asset of the trust will be transferred for other than charitable purposes. Further, as per the provisions of section 80G(5B) of the Act, the assessee was entitled to incur up to 5% of the expenditure on religious activities. In order to incur such expense, it was imperative that mention of certain religious activity would be there in the objectives of the trust. What
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5 was relevant to consider was whether the assessee had incurred any expenditure in excess of the permissible limit of 5% on the religious activities. No findings in this regard has been given in the order of the Ld. CIT(E). We, therefore, deem it proper to set-aside the matter to the file of Ld. CIT(E) with a direction to examine whether the assessee had incurred any expenditure on religious activities beyond the permissible limit of 5%. If not, the assessee should be allowed approval u/s.80G(5) of the Act, after ensuring that all other conditions as stipulated u/s. 80G(5) of the Act are complied. The assessee may also be allowed an opportunity of being heard in the matter.
In the result, the appeal filed by the assessee is allowed for statistical purposes.