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Facts
The assessee, Akhil Kutch Rabari Samaj Seva Trust, filed an application in Form No. 10AB for registration under Section 80G(5) of the Income Tax Act, 1961. The CIT(E) rejected the application, stating that the trust's objects included religious activities and it had violated provisions of Section 80G.
Held
The Tribunal noted that while the trust had religious objects, no expenditure was incurred on religious activities in the preceding three years. Citing case laws, the Tribunal held that as long as expenditure on religious activities does not exceed 5% of the total income, the trust remains eligible for 80G benefits.
Key Issues
Whether the rejection of the application for approval under Section 80G(5) by the CIT(E) was justified, given the trust's objects included religious aspects but no expenditure was incurred on such activities.
Sections Cited
Section 80G(5), Section 80G(5B)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, RAJKOT BENCH, RAJKOT
Before: DR. ARJUN LAL SAINI & DR. DIESH MOHAN SINHA
आदेश / O R D E R PER Dr. DINESH MOHAN SINHA, JM:
Captioned appeal filed by the Assessee against order passed by the Ld. Commissioner of Income Tax (Exemption), Ahmedabad (in short Ld. CIT (E)) dated 17.12.2024 wherein Ld. CIT (E) rejected the application of the assessee in Form No. 10AB of the act u/s 80G (5) of the Income Tax Act, 1961 (in short ‘The Act’). 2. Grounds of appeal raised by the assessee, are as followed:
That, the learned CIT (Exemption) has wrongly rejected the application filed in form no. 10AB for granting approval u/s 80G(5) of the I.T Act, 1961.
That, the findings of the learned CIT(Exemption) are not justified in law as well as facts of the case and required to be deleted. 3. The appellant craves to add, alter, amend or delete any of the above grounds of appeal
.
3. Brief facts of the case that the appellant is a Trust namely Shri Akhil Kutch Rabari Samaj Seva Trust incorporated in the year 2006 at Bhuj-Kutch, Gujarat District. The trust has been carrying out charitable activities. The appellant Trust has been duly registered with Bombay Public Trust Act 1950 before Charity Commissioner Office, Bhuj - Kutch vide registration number F/1362/Kutch since 04/01/2006. The appellant Trust has already been granted provisional approval vide Form no. 10AC dated 04/11/2022. The appellant Trust has applied for the registration u/s 80G of I.T. Act, 1961 vide form no. 10AB on 05/06/2024. The appellant Trust, at the time of filling of the 80G application and during the course of 80G proceedings before the Id. CIT(E) has furnished the following documents in compliance with the statutory requirements on dated 25.02.2023 and further details vide letter dated 11/11/2024 and 12/12/2024. However, the Ld. CIT (E) Ahmedabad has rejected the said application on the under-mentioned remark. “In view of the above, the applicant has violated existing main conditions of sub- section (5) of section 80G being religious cum charitable trust i.e. it is not a purely charitable trust. Also it has violated the provision of clause (ii) of sub-section (5) of section 80G of the act and hence the applicant is not entitled to get approval u/s. 80G(5) of the Income Tax Act therefore the present application filed in Form 10AB is liable to be rejected. Looking to the above facts, the present application filed in Form No.10AB for approval under clause (iii) of first proviso to section 80G(5) of the Act is rejected and your provisional approval also stands Cancelled.”
4. That the assessee has challenged the validity and legality of order dated 17.12.2024 by way of filed the appeal before this Tribunal.
During the course of hearing the Ld. AR of the assessee has submitted that the assessee has filed all relevant details as asked for by Ld. CIT (E) in support of application that the authority of the trust is charitable as well as social. The assessee has not incurred any expenditure in religious activities. That the Ld. AR prayed that application of the assessee in u/s. 80G(5) (Form 10AB) of the Income Tax Act, may kindly be granted.
On the contrary, Ld. Dr has submitted, though it is a public trust, it is only for a particular community. Hence, the application was rightly rejected by the Ld. CIT(E).
We have heard the argument of both the parties and perused all the material available on record. It is pertinent to note that Ld. CIT(E) has rejected the application of the assessee on the ground that the assessee registration cum charitable trust has violated the provisions of law. The relevant section 80G(5B) is reproduced below:- "[(5-B) Notwithstanding anything contained in clause (ii) of sub-section (5) and Explanation 3, an institution or fund which incurs expenditure, during any previous year, which is of a religious nature for an amount not exceeding five per cent. of its total income in that previous year shall be deemed to be an institution or fund to which the provisions of this section apply."
We note that the Ld. AR stated that the objects of the Trust deed are not solely religious in nature but are significantly charitable in nature. The objects of the Trust are as follows: To remove evils and superstitions created in the society and to do useful work for the society and to carry out socially useful work such as group marriage etc. And help in such work. Also carry out all works of social upliftment and development and help other organizations in such works. To carry out educational and medical activities in the society as well as to the other people like to build and run kindergartens, school colleges etc. To open, manage and administer centers to provide basic necessities of life to the society and other people at cheap rates. All kind of activities for the social, moral and economic self-reliance and soul development of the society as well as other women.
To carry out rehabilitation during natural and man-made calamities and to provide all kind of help to the needy and useful animals and birds and help other organization in this regard. To do medical activities like providing medicine to needy people free of cost and setting up medical units like blood bank, hospitals etc. To provide scholarships, stipends, fees, books to the needy students of the society. To carry out all kind of social, spiritual and culture activities without discrimination of caste and religion. To provide all the employment facilities to the people and do all the work to remove the poverty. To carry out all activities related to animal welfare. To carry out all activities of agriculture activities, agricultural improvement, land improvement, verification, agro-forestry, fruit growing. To carry out all the above activities and take all kinds of help to the people.
We note that the main activities of the Trust are to carry out all kinds of social, religious, spiritual and cultural activities without discrimination of caste and religion and to take help and be helpful to the organization in doing such activities. The appellant Trust has carried out activities in charitable nature related to group Marriage (Samuh lagna) for poor and needy families, also carried out major expenses for water pond renovation expenses. Therefore, the appellant trust has carried out all the expenses related to charitable nature for the general public at large. Therefore, from the above, it is clearly evident that the activity of the Trust is not intended for the benefit of any particular religious community or caste. It is stated that the fund received by the appellant Trust is exclusively utilized for Mass Marriage (Samuh lagna) expenses and major expenses for water pond renovation expenses. The appellant trust has not incurred any expenditure on religious activities during the financial year 2023- 24. The above facts are duly stated during the course of proceedings u/s 80G(5) (iii) of the act and appellant Trust has duly submitted the required documents to established the genuineness of the activity of the Trust. We further noted that, as per the sub-section (5B) to section 80G which states that a Trust which incurs expenditure during any previous year which is of a religious nature for an amount not exceeding 5% of its total income shall be deemed to be an institution or fund to which the provisions of this section apply. As per Section 80G (5B) of the Income Tax Act, "notwithstanding anything contained in clause (ii) of sub-section (5) and Explanation 3, an institution or fund that incurs expenditure of a religious nature during any previous year - provided such expenditure has not exceeded five percent of its total income for that year, shall be deemed to be an institution or fund to which the provisions of section 80G apply."
We observed from the above that the appellant Trust has not incurred expenditure for religious purpose in the preceding three years. Therefore, even though the appellant Trust has objects that are religious in nature but since no expenditure has been incurred for such activities therefore the appellant is eligible to avail the benefit of Section 80G(5). The Ld. AR further relied on the following decision i. Jay Mataji Charitable Trust v. CIT (E) 160 taxmann.com 276 (Rajkot - Trib.). Wherein the Hon'ble ITAT has held that Section 80G (5B) does not contravene section 80G(5) of the Income Tax Act. The Tribunal clarified that the provision under section 80G(58) states that if a charitable trust incurs expenditure on religious activities and expenditure is less than 5% of the total income, the trust will still be considered an institute or fund eligible for the benefits of Section 80G. ii. Vismruti Social And Charitable Trust vs CIT(E)
Wherein it has been held by the Hon'ble ITAT that merely when out of the several objects of the trust only a few objects are religious and the expenditure incurred on religious activities is within the threshold limit of 5% as specified under 80G(5) the Trust must be granted registration. iii. Shri Sant ZolebabaSansthanChikhali v. CIT(E) in [IT Appeal No. 381 (Pune) of 2021, dated 12-5-2022] The Hon'ble ITAT observed that Explanation 3 to Section 80G states that "charitable purpose" does not include any purpose the whole or substantially the whole of which is of a religious nature, which means that at least some part of the activities of the trust, which are of a religious nature, are permitted. Further, the Hon'ble ITAT observed that this fact is further fortified by sub-Section (5B) of Section 80G which provides that an institution/fund which incurs expenditure which is of a religious nature not exceeding 5% of it's total income shall be deemed to be an institution or fund to which the provisions of this section apply.
10.According to the case law and the provisions of sub-section (5B) of Section 80G of the Act, it is evident that if an institution or fund incurs expenditure of a religious nature amounting to not more than 5% of its total income for the previous year, then it is deemed to be an institution or fund to which the provisions of Section 80G apply. It is respectfully submitted that the rejection by the Ld. CIT (E) on the grounds that one of the objects in the Trust deed is of religious in nature. The mere inclusion of religious objects in the Trust deed has not, disqualified the Trust from being granted approval under Section 80G,
Hence, the assessee-trust is entitled to get approval u/s 80G(5) of the Act. We have reproduced the objects of the assessee trust (in Para 9) of this order. These objects there are spiritual objects in sub-Para D, which contains object of religious in nature. Before the Bench expenses details were file in the form of income and expenditure account and cash-flow statement etc. In the aforesaid circumstances and in the light of above discussion, we set aside the order dated 19.12.2024 and direct the Ld. CIT()E to verify the expense on account of religious activity if the expenses are below the threshold limit of 5% prescribed in the Act then registration should be granted as per the provision of law.
Order pronounced in the open court on 18/08/2025.