MOTI DAMAN HINDU SAMASHAN BHOOMI TRUST,DAMAN AND DIU vs. CIT(EXEMPTION), AHMEDABAD, AHEMDABAD

Appellant craves leave to add, alter or delete any ground(s) either before or in the course of hearing of the appeal.” Asst.Year –N.A. - 2–

The brief facts of the case are that in the order passed by the Commissioner of Income Tax (Exemptions), the application filed by the assessee for grant of registration under Section 80G(5) of the Income Tax Act, 1961 (Act), was rejected on the grounds of violation of the provisions contained in sub-section (5B) of Section 80G of the Act. The CIT(Exemptions) noted that this provision allows an institution or fund to incur religious expenditure only up to a limit of five percent of it’s total income while carrying out charitable activities. A show cause notice was issued to the applicant after the audit report for the Financial Year 2023-24 showed that the assessee had claimed expenses of ₹5,56,745 on a “Bhagwat Katha” event, which constituted 36.87% of total receipts amounting to ₹15,09,785. Accordingly, CIT(Exemptions) was of the view that this expenditure clearly exceeded the permissible limit and appeared to be of a religious nature, thereby violating Section 80G(5B) of the Act. In response to the notice, the assessee filed a reply on 27.12.2024 explaining that the Bhagwat Katha was not a religious event but rather a series of philosophical and spiritual lectures open to the general public and beneficial to all sections of society regardless of religion. The applicant emphasized that the Katha covered topics such as family values, mental wellness, and cultural promotion, and included expenses for logistical arrangements like food, sound systems, and stage setup etc. It was submitted by the assessee that these were not religious in nature and therefore should not disqualify the society from obtaining 80G registration. However, upon examining the reply and the financial records, the CIT(Exemptions) found the explanation to be unsatisfactory. CIT(Exemptions) held that the Bhagwat Katha, centered around the Shreemad Bhagwat scripture, is inherently religious in nature. Asst.Year –N.A. - 3–

The assessee is in appeal before us against the aforesaid order passed by Ld. CIT(Exemptions). Before us, the Counsel for the assessee submitted that Ld. CIT(E) while rejecting the application filed by the assessee / applicant trust has given an incorrect finding of fact that the assessee has incurred expenditure of religious nature in excess of more than 5% of it’s income for the relevant assessment year. The Counsel for the assessee submitted that though, admittedly, in the earlier assessment years, the assessee had incurred expenditure of religious nature in excess of 5% of it’s total income, but for the impugned assessment year, Ld. CIT(E) has given an incorrect finding of fact that the assessee incurred expenditure of religious nature in excess of 5% of it’s total income.

In response, Ld. D.R. placed reliance on the decision of ITAT Jaipur taxmann.com 221 (JP.), in which it was held that organizing ‘Bhagwat Katha’ is a religious activity and where expenditure incurred thereon by a trust exceeds 5% of it’s income of year, trust would not be granted approval under Section 80G for that year. Asst.Year –N.A. - 4–

We have heard the rival contentions and perused the material on record.

Before us, the Counsel for the assessee placed reliance on various judicial precedents on the proposition that expenditure incurred on supporting prayer halls at places of worship, which are open to the public at large are not expenses of a “religious nature”. Accordingly, in the interest of justice, the matter is restored to the file of Ld. CIT(E) for de-novo consideration and the assessee / applicant trust would be at liberty to place judicial precedents on the subject in support of it’s case.

In the result, the appeal of the assessee / applicant trust is allowed for statistical purposes. This Order pronounced in Open Court on 26/05/2025 (DR. BRR KUMAR) JUDICIAL MEMBER Ahmedabad; Dated 26/05/2025