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Facts
The assessee, Sri Sarvajaink Ganpati Ustav Fund, applied for approval under Section 80G(5) of the Income-tax Act, 1961. The CIT(E) rejected the application, observing that the trust's primary objects were religious and that expenditure on religious activities exceeded the permissible limit of 5% of total receipts.
Held
The Tribunal held that the assessee-trust's main objects were religious in nature, which is a contravention of Section 80G(5)(iii). The expenditure on religious activities significantly exceeded the 5% limit stipulated in Section 80G(5B), making the trust ineligible for approval.
Key Issues
Whether the assessee-trust is eligible for approval under Section 80G(5) when its primary objects are religious and expenditure on religious activities exceeds the prescribed limit.
Sections Cited
80G(5), 80G(5)(iii), 80G(5B)
AI-generated summary — verify with the full judgment below
Before: MS. SUCHITRA RAGHUNATH KAMBLE & SHRI BIJAYANANDA PRUSETH
आदेश / O R D E R
PER BIJAYANANDA PRUSETH, AM:
This appeal by the assessee emanates from the order passed by the Ld. Commissioner of Income-tax (Exemptions), Ahmedabad [in short, ‘Ld.CIT(E)’] rejected application in Form No.10AB of the Income-tax Act, 1961 (in short, ‘the Act’) for approval u/s 80G(5) of the Act dated 27.09.2024.
Grounds of appeal
raised by the assessee are as under:
1. Ld. CIT(E), Ahmedabad erred in rejecting the final approval u/s first proviso to section 80G(5)(iii) of the assessee trust by wrong interpretation of principle object of the trust in provision of Section 80G(5) of the Act.
2. Ld. CIT(E), Ahmedabad erred in rejecting the final approval by wrongly invoking the provision of section 80G(5B).
Sh. Sarvajaink Ganpati Ustav Fund Hira Mention 3. On the facts and circumstances of the case and in law, Ld. Principal CIT(Exemption), Ahmedabad erred in treating the matter under first proviso to section 80G(5)(iii) as main object treating as a religious nature.
4. On the facts and circumstances of the case and in law Ld. Principal CIT(Exemption), Ahmedabad erred in interpreting without observing the first para of the object of the trust as “This Trust run its activity for the objects mentioned below without discrimination by any caste, creed, religion, sex or boundary as per prevalent law. There is/will no use of fund/assets of the trust for particular person/s or group of person” which clearly state that Trust will work for benefit of society at large and to celebrate “Ganesh Utsav” is one of the activity and not sole object hence order passed by Principal CIT(Exemption), Ahmedabad must be set aside.
5. The appellant craved leave to add, alter, delete, amend or rescind any of the above grounds of appeal as and when necessary with the permission of ITAT, Surat.”
The present appeal is barred by 10 days in filing appeal before Tribunal. The assessee has filed affidavit stating that physical copy of order was never served. The assessee-trust filed the appeal immediately after knowing the order of CIT(E) for which counting in aggregate stipulate time for filing appeal before Tribunal. The delay was neither intentional nor deliberate. Considering the request of the assessee, the delay is condoned and the appeal is admitted.
Brief facts of the case are that the appellant electronically filed an application for approval under clause (iii) of first proviso to sub section (5) of section 80G of the Act in Form No. 10AB. The CIT(E) observed that objects of the assessee-trust were religious in nature, which contravene the main condition of 80G(5) of the Act. It was further observed on perusing the details of expenditure incurred on religious expenses that those were more than 5% of the total receipts of assessee during FYs 2020-21, 2021-22 and 2022-23. This Sh. Sarvajaink Ganpati Ustav Fund Hira Mention was in clear violation of the provisions of sub-section (5B) of section 80G of the Act. In view of the same, the aforesaid application filed by the assessee-trust for approval under clause (iii) of first proviso to sub section (5) of section 80G of the Act, in Form No. 10AB, was rejected by CIT(E) vide the impugned order.
Aggrieved by the order of rejection for wrongly invoking the provisions of section 80G(5B) of the Act, the assessee-trust has filed present appeal before this Tribunal. The Ld. A.R. submitted a paper book containing copy of trust deed, audit reports, ledger accounts of expenses with supporting bills, vouchers (on sample basis), write up on Ganesh Utsav, copies of invitation card of Ganesh Utsav/Patostav, copies of case laws relied upon. It was contended by Ld. A.R. that assessee-trust runs its activities without discrimination of any caste, creed, religion, sex or boundary as per prevalent law, which shows that the assessee-trust works for benefit of society at large. Celebration of the “Ganesh Utsav” is one of its activities and not sole object and hence, order passed by CIT(Exemption), Ahmedabad may be set aside.
On the other hand, Ld. CIT-DR for revenue contended that CIT(E) has rightly denied the approval u/s.80G of the Act since the assessee-trust was primarily engaged in the religious activities and had incurred expenditure on religious activities over and above the permissible limit of 5%, which is a clear violation of the provisions of section 80G(5B) of the Act.
We have heard both the parties and have carefully perused the material available on record. We have also deliberated on the decisions relied upon by Sh. Sarvajaink Ganpati Ustav Fund Hira Mention both sides. Before deciding the issue, it would be proper to discuss the provisions of section 80G(5) and 80G(5B) of the Act: (i) Section 80G(5)(iii) of the Act allows deduction for contributions to entities whose main objects are charitable and not religious in nature, (ii) first proviso excludes entities whose activities are religious in nature unless they are incidental to charitable objectives and (iii) section 80G(5B) caps the proportion of religious expenditure to 5% of total receipts. 7.1 On perusal of the objects of the assessee-trust as stipulated in the instrument of creation of the trust, it is observed that they are religious in nature. These objects are reproduced as under: "....(a) To celebrate the Ganpati Utsav. Further organize for celebration of National, Cultural as well as Religious festival. (b) To undertake religious activity like worship of God, Bhajan Kirtan, Celebration, holy lecture and circulation, etc. To organize Katha, Holy discussion, Bhajan Kirtan, Yagna, Perpetual Dhuni, Holy get together, Meditation, Fitness school, etc. for absolute development for mankind........." 7.2 On perusal of the accounts submitted by the assessee-trust, it is observed that expenditure on religious activities exceeded 5% of total receipts, which is in clear violation of the provisions of section 80G(5B) of the Act. The same is evident from the following table: Sr. F.Y. Total Income Religious Religious Expenditure No. /receipts (Rs) Expenditure (Rs) Percentage 1 2020-21 19,70,977/- 16,03,173/- 81.34 2 2021-22 20,75,952/- 16,15,209/- 77.81 3 2022-23 24,96,900/- 6,36,408/- 25.49 Sh. Sarvajaink Ganpati Ustav Fund Hira Mention 7.3 The above figures have not been controverted by the Ld. A.R. Hence, the expenditure of religious nature incurred by the assessee was exceeding 5% of its total income. It may also be mentioned that approval u/s 80G(5) is denied if the main objects are religious in nature, even if charitable objects are mentioned in the trust deed. The object of celebrating a religious festival, where substantial expenditure was incurred, cannot be treated as incidental. Mere recital of charitable intent does not override actual pattern of activities, as held by Hon'ble Supreme Court in the case of Director of Secondary Education Vs. Pushpendra Kumar, AIR 1998 SC 2230. The appellant’s contention that celebrating “Ganesh Utsav” is only one of the activities is not substantiated by actual evidence. The ledgers clearly show that religious expenditure formed a major portion, making the Trust ineligible u/s 80G(5) of the Act. 7.4 Before us appellant has placed reliance on decisions of the ITAT, Nagpur in the case of Shiv Mandir Devsthan Panch Committee Sansthan vs. CIT in dated 11.10./2012 and the ITAT, Bangalore in the case of Sri Ashvalayana Vrunda vs. ITO(E) in ITA Nos. 1084-1085/Bang/2022 dated 04.01.2023 the facts of which are distinguishable. In these cases, religious activity was incidental to charitable purpose and the expenditure on religious activities did not exceed permissible limit. In the present case, religious expenditure is substantial and religious celebrations (Ganesh Utsav) dominate the actual activities. Therefore, the decisions relied upon by appellant are not Sh. Sarvajaink Ganpati Ustav Fund Hira Mention applicable to the facts of the instant appeal. Appellant’s reliance on incidental activity is distinguishable, as religious expenditure in case of the appellant is substantial and predominant. The same is evident from the table given above in the para no.7.2 of this order. 7.5 As per section 80G(5) of the Act, approval can be granted only if the principal object is charitable. Religious activities are permitted only to the extent they are incidental to charitable objectives. In the present case, religious celebrations (Ganesh Utsav) form a major portion of actual activities and the religious expenditure also exceeds the threshold limit of 5% u/s 80G(5B) of the Act. Therefore, the assessee-trust is not eligible for approval u/s 80G(5) of the Act. Accordingly, we do not find any infirmity in the order of CIT(E) and the grounds of appeal
raised by the appellant are, therefore, dismissed.
8. In the result, the appeal of the assessee is dismissed. Order pronounced in accordance with Rule 34 of ITAT Rules, 1963 on 25/08/2025 in the open court.