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Facts
The assessee, a trust, filed an application for registration under Section 80G(5)(iii) of the Income Tax Act, 1961. The CIT(E) rejected the application, citing that one of the trust's object clauses was religious in nature, and the trust had not replied to a show cause notice. The assessee contended that the trust deed had been amended to remove any religious objects, and they had provided a timely response with supporting documents.
Held
The Tribunal noted that the trust had amended its deed to ensure all objects were charitable and had provided evidence of not incurring religious expenditure. The CIT(E) had not considered these aspects and the amended deed.
Key Issues
Whether the rejection of the application for registration under Section 80G(5)(iii) by the CIT(E) was justified, considering the amendment of the trust deed and the evidence of charitable activities.
Sections Cited
80G(5)(iii), 80G(5B), 12AB(1)(b)
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Income Tax Appellate Tribunal, RAJKOT BENCH, RAJKOT
Before: Dr. ARJUN LAL SAINI & SHRI DINESH MOHAN SINHA
आदेश / O R D E R PER 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 19.12.2 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’).
Grounds of appeal raised by the assessee are as followed:
1. Based on the facts & circumstances of the case, Commissioner of Income Tax (Exemption) has erred in law as well as on facts in not granting the benefit available to the appellant U/s. 80G(5)(iii) of the Act without properly looking into the correct facts of the case and even when all the conditions for granting the exemptions U/s. 80G(5) (iii) of the Act have been duly satisfied by the Trust.
2. Based on the facts & circumstances of the case, Commissioner of Income Tax (Exemption) has erred in law as well as on facts in disallowing the Form 10AB Filed by passing the rejection order u/s 80G(5)(iii) dated 19.12.2024, on the grounds that "One of the Object Clause as mentioned in the Trust Deed is Religious in Nature". Such conclusion raised is completely baseless as there is no such object of the Trust as per the Deed submitted as executed dated 19.09.2022 which was ignored while passing the rejection order. As per the latest trust deed the object of the appellant trust is to undertake charitable activity without any kind of caste, creed, religion or gender discrimination and without any political motives. 3. Based on the facts & circumstances of the case, Commissioner of Income Tax (Exemption) has erred in law as well as on facts, Object Clause as mentioned in the order passed by the CIT (Exemption) wherein it is mentioned that the said object is religious in nature and not as per provisions of the section 80G(5)(iii). However, the trust have rectified and amended the trust deed which is approved by the charity commissioner, copy of the rectified trust deed in English and vernacular language have been already submitted which have been already submitted at the time of filing the response to the notice dated 02.12.2024 which have not been considered by the CIT (Exemption) which is bad in law as response submitted by the appellant required to be considered based on merits. 4. Based on the facts & circumstances of the case, Commissioner of Income Tax (Exemption) has erred in law as well as on facts, has mentioned in the Rejection order dated 19.12.2024 that the appellant trust have neither replied to the notice issued dated 02.12.2024 nor submitted any documents. In this regards, appellant trust would like to state that the trust have duly submitted the response to the above-mentioned notice along with the supporting documents as on 03.12.2024 against the due date of 06.12.2024. The copy of the Response along with the copy of the Acknowledgment have been duly enclosed for your reference. However, the above facts have not been considered by the CIT (Exemption) and hence the rejection order passed is required to be quashed. 5. Based on the facts & circumstances of the case, Commissioner of Income Tax (Exemption) has erred in law as well as he has not appreciated the fact of the case that appellant trust have already mentioned that the trust have not incurred any religious expenditure during the last three years which can be evident from the self- certified copy of the audit report submitted as a documentary evidence before the CIT (Exemption), which signifies that the appellant trust have not violated any provisions of the section 80G(5B) of the Act hence this establishes the fact that the Ld. CIT(A) has without considering the correct facts and documentary evidence of this case passed an order which is required to be quashed.
6. Based on the facts & circumstances of the case, Commissioner of Income Tax (Exemption) has erred in law as well as CIT(Exemption) has failed to appreciate the fact of the case that, the trust have been engaged into various charitable activities such as providing financial assistance and support to underprivileged students who are unable to afford quality education, to help the people to get access to good quality health care at most affordable cost, trust have enhanced green cover which to rehabilitate natural resources as well as preservation and conservation of natural resources and environment.However, the above facts have not been considered by the CIT (Exemption) and passed an order which is bad in as well as on the facts and therefore, the said order is required to be quashed.
7. Based on the facts & circumstances of the case, Commissioner of Income Tax (Exemption) has erred in law as well as on facts, that the appellant trust is constantly engaged in Jivdaya activities such as to prevent cruelty of animals and protect them from injury, to promote animal care, welfare and foster the human-animal relationship, to help the sick, the injured, the needy, the exploited, the handicapped and the starved to bring about 7 respect. The Jivdaya expense incurred by the trust mainly includes these expenses for the education and welfare of the society including medication of poor without looking into the religion of the people and animals which can be evident from the copy of the activity report already submitted and Thus, rejecting our application by the CIT (Exemption) would adversely impact the charitable and Jivdaya activities performed by the trust and therefore, the order passed is required to be quashed.
Brief facts of the case that the Appellant is a Trust which have been engaged in the Charitable Activities registered under the Bombay Public Charitable Trust Act, 1950 having Registration No. E/1281/Jamnagar. The Trust is also registered under section 12AB(1)(b) of the act, the copy of the said certificate is enclosed herein from Page No. 06 to 08. The Trust has applied for Provisional Registration under section 80G(5)(iv) of the Act vide Form 10A dated 06.06.2022. The Trust has applied for Application under Section 80G(5) (iii) of the Act vide Form 10AB dated 08.06.2024. Further, the hearing notice in the form of Questionnaire was issued for proceedings u/s 80G(5)(iii) of the act. The Trust has filed response dated 18.10.2024 along with all the supporting documentary evidence such as list of Donations received or paid exceeding Rs. 10,000, Details of Income and Expenditure for last three years etc.
Moreover, show cause notice was issued dated 02.12.2024 wherein it was mentioned that one of the object clause of the trust is religious in nature in the trust deed and against the said show cause notice response have been by the appellant trust dated 03.12.2024 stating all the facts along with relevant documentary evidence which have not been considered by the CIT(Exemption) and issued order rejecting application for registration dated 19.12.2024 (Form 10AB). In view of the above, the applicant has violated existing main conditions of sub-section (5) of section 80Gi.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.
The Appellant Trust has filed an appeal against the impugned order dated 15.12.2024 before the Tribunal.
During the course of argument, the Ld. AR of the assessee submitted that the assessee has filed memorandum of trust duly registered with charity Commissioner. It is clear that the rejection of application for 80G (5) (iii) of the act in case of appellant is bad and against the provision of the Income Tax Act, 1961. Thus, the appellant prays before Your Honor to grant necessary relief in the matter.
On the contrary, the Ld. DR for the revenue submitted that the show cause notice issued dated 02.12.2024 was not complied with. A notice dated 02.12.2024 and the order raised the contention that one of the Object clauses as mentioned in the Trust Deed is Religious in nature which is contrary to the Provisions of the section 80G(5)(iii) of the Act. 4
We have heard 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 violated the object of charitable trust, simultaneously violated the provisions of law. The Trust have been engaged into various charitable activities such as providing financial assistance and support to underprivileged students who are unable to afford quality education, to help the people to get access to good quality health care at most affordable cost, trust have enhanced green cover which to rehabilitate natural resources as well as preservation and conservation of natural resources and environment. Further, the appellant trust is constantly engaged in Jivdaya activities such as to prevent cruelty of animals and protect them from injury, to promote animal care, welfare and foster the human-animal relationship, to help the sick, the injured, the needy, the exploited, the handicapped and the starved to bring about respect. The Jivdaya expense incurred by the trust mainly includes these expenses for the education and welfare of the society including medication of poor and animals.
The appellant trust has applied for Registration under Section 80G(5)(iii) of the Act vide Form 10AB dated 08.06.2024 bearing ARN: 407644390080624 wherein the trust has submitted the old Trust Deed at the time of filing of the Form 10AB.Further, Questionnaire was issued wherein the trust have submitted all the details along with the necessary documents have been submitted dated 18.10.2024 bearing ARN: 618173961181024.
The Appellant Trust has not incurred any religious expenditure during the last three years which can be evident from the copy of the audit report for the last three years (paper-book Page No. 88 to 123) which have not been considered by the CIT(E) while deciding the case.
Moreover, the show cause notice was issued dated 02.12.2024 (Paper-book Page No. 38 to 39) stating that one of the object of the trust is religious in nature. The trust have filed response mentioning the fact that the trust have amended and rectified the trust deed which have been approved by the charity commissioner wherein all the object are charitable in nature and the said response and along with the documentary evidence have not been considered by the CIT(Exemption). Over 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.
We note that the Ld. CIT(E) has noted that the object of trust were charitable cum religious. That a notice was issued by Ld. CIT(E) to the assessee-trust. The assessee-trust was immediately taken step to amend the Trust Deed. In amended Trust Deed all objects are charitable in nature and the same was duly registered with the charity Commissioner. We note that the Trust has the charitable activities such as providing financial assistance and support to underprivileged students, etc., which are clearly charitable in nature. Hence, while deciding the eligibility u/s. 80G(5) of the Act. The object and activities should be verified in totality registration should not be denied without considering all the aspect. We further note that the Ld. AR for the assessee states that assessee-trust has not incurred any expenditure on religious objects. In support of the evidence in the form of Paper book contrary application in the light of Audit Report and other relevant documents for verification of the fact that assessee-trust has not incurred any expenditure. 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.
In the result, the appeal filed by the assessee is allowed. Order pronounced in the open court on 18/08/2025.