SHRI NANABHAI BHARVAD SEVA SAMAJ GUJRAT,RAJKOT vs. CIT(EXEMPTION), AHMEDABAD, AHMEDABAD

In response to the show-cause notice of the Ld. CIT(E), the assessee submitted its reply before the Ld. CIT(E) on 23.09.2024. The assessee pleaded before the ld. CIT(E) that trust is maintaining a dharmshala and a bhojanshala in village Dwarka, Gujarat for whole human being. The assessee-trust did not ask for consideration on account of stay and food in the dharmshala and bhojanshala. All the expenditure are being incurred /AY.N.A. Shri Nanabhai Bharvad Seva Samaj Gujrat through donations received. The boarding and lodging services are being provided to the whole society, since creation of the trust without discrepancy on cast, religion etc. Therefore, assessee`s objects relate to all religions; not for a particular religious community, whereas, the clause (iii) of section 80G(5) provides that the institute should not be expressly for a particular religious community. The assessee-trust has been considered charitable trust for these objects and had been granted provisional approval u/s. 80G(5) of the Act, vide order dated 28.10.2021. The assessee-trust has been created with total nine objects, having nature of educational, medical, natural disaster relief, held to poor & needy persons, removal of bad customs in society and upliftment of human being. The all activities are charitable without any discrimination. The assessee-trust had never incurred any expenditure towards the objects, which have been alleged to be of religious nature. Thus, assessee`s activities are of charitable nature but not of religious nature. As per the provisions of section 80G(5B) of the Act, which starts with non-obstacle clause, notwithstanding anything contained in; provides that where religious expenditure is not exceeding five percent of total income, the Trust shall not be hit by any other provisions of section 80G(5) of the Act and thereby the trust shall be eligible for approval u/s. 80G(5) of the Act. The objects of trust do not expressly provide for benefit of a particular religious community nor trust had ever incurred any expenditure towards religious objects.

However, ld.CIT(E) rejected the above contention of the assessee and observed that on perusal of the objects of the assessee, as stipulated in the instrument of creation of the Trust, the following objectives of the instrument are religious in nature which put the assessee under the category of composite trust that is, religious-cum-charitable trust. These objects are reproduced as under for the purpose of ready reference:

Hence, ld CIT(E) noticed that above said objects are religious in nature and hence, it clearly contravenes the main condition of 80G(5) of the which is a pre-requisite. Therefore, ld.CIT(E) observed that there is clear violation of clause (ii) of section 80G(5) of the Act, which put a bar on granting approval under section 80G(5) of the Act to the institution or fund set up for the benefit of any particular religious community or caste. The assessee has also not furnished the details of actual religious expenditure to enable ld.CIT(E) to verify the violation of sub-section (5B) of section 80G of the Act. The ld CIT(E) further noted that assessee- trust is not established only for charitable purposes. Whereas, the provisions of section 80G of the Act, makes it amply clear that the assessee has to be established only for charitable purposes and there is no transfer or application of funds for any purposes other than a charitable purpose, subject to concession granted under section 80G(5B) of the Act. Further, the provisions of section 80G(5B) of the Act, is not applicable to any institution/fund established for any purposes other than charitable /AY.N.A. Shri Nanabhai Bharvad Seva Samaj Gujrat purpose, that is, religious or charitable cum religious purposes. Similar law has been laid down by the Hon'ble ITAT Agra in the case of Yug Chetna Parmarth Trust, reported in 44 taxmann.com 446. In light of above discussion and having to the provisions of Section 2(15), section 80G(5), section 80G(5B) and Explanation 3 to section 80G(5) of the Act, it is inferred that: (i) Section 80G(5) of the Act, applies to the donations to any institution or fund only if it is established in India for a Charitable purpose only. Thus, the purpose or object necessarily have to be only charitable, not religious, for an institution or fund to aval benefits of Sec. 80G(5) of the Act. Even if one object is for religious purpose, approval u/s 80G of the Act cannot be granted as there is no way to stop assessee from incurring expenditure on that particular object in excess of 5% since occasion to renew such an approval will arise only after 5 years and any subsequent withdrawal of approval a will jeopardize the interests of donor who have made donations in good faith to the to the assessee- trust. (ii) Sub-section (5B) of Section 80G of the Act, merely further clarifies and qualifies the conditions laid down under clause (ii) of Section 80G(5) of the Act in terms of extent of expenditure of religions nature which could be incurred by trust while carrying out its charitable activities. Sub-section (5B) of Section 80G of the Act does not mandate religious object or allows religious objects to institutions/funds desirous of approval or approved u/s.80G(5) of the Act. (iii) Thus, for the purpose of section 80G(5) of Income Tax Act, 1961, the objects can be only of charitable nature and even not a single object can be religious in nature as unambiguously and explicitly provided for under Explanation 3 to Section 80G of the Act.

Aggrieved by the order of the ld. CIT(E), the assessee is in appeal before us.

Shri Rajendra Singhal, Learned Counsel for the assessee, argued that assessee under consideration belongs to Scheduled Tribe/caste, therefore, the said trust cannot be treated for the purpose of any specific community or caste and therefore registration should be granted to the assessee. That is, as per the notification of government of Gujarat, the assessee under consideration is a Scheduled Tribe and therefore, this trust is not made for any specific community and caste hence the registration u/s 80G(5) (iii) of the Act, should be granted to the assessee-trust. The learned Counsel for the assessee submitted before the Bench, the notification of government of Gujarat in English and in Gujarati language and notification of Central Government, which is reproduced below:

Therefore, learned Counsel submitted that “Bharwad, Motabhai Bharwad, Nanabhai Bharwad,” are classified by the government of Gujarat in the list of socially and educationally backward classes, therefore, as per Explanation-1 of section 80G of the Act, the registration should be granted to the assessee-trust under section 80G(5) (iii) of the Act.

On the other hand, Ld. CIT-D.R. for the Revenue submitted that the notification in relation to Scheduled Tribe or Scheduled Caste, (Gujarat /AY.N.A. Shri Nanabhai Bharvad Seva Samaj Gujrat State/Central government) should be examined by the ld. CIT(E) and thereafter approval under section 80G(5)(iii) of the Act, may be granted in accordance with law.

We have heard the rival contentions and perused the material available on record. We find that the undisputed facts are that the assessee trust has been created on 20.04.2013 and registered in the office of the Charity Commissioner of Gujarat. The trust has been created for a number of objects including social, cultural, medical, educational, human upliftment through spirituality, animal welfare etc. Only activity of the trust till date is maintaining a dharmshala and a bhojanshala in village Dwarka, Gujarat. The trust did not ask for consideration on account of stay and food in the dharmshala and bhojanshala. All the expenditure are being incurred through donations received. Necessary evidences in respect of the activity were produced and the Ld. CIT(E) had also not disputed the same. We find that after verification of objects and activities, the Ld. CIT(E) has granted regular registration u/s. 12AB(1)(b) of the Act, to the trust, vide URN no. AAJTS5253N23AD01 dated 23.01.2024 from AY 2022-23 to AY 2026-27.Besides, assessee had been granted provisional approval u/s 80G(5) of the Act and also in Form No. 10AC issued on 28.10.2021, in terms of section 80G(5)(iv) of the Act, for the period from 28.10.2021 to AY 2024-25. Thereafter, an application has been made, requesting regular approval u/s 80G(5) of the Act, with supporting documents including trust deed, photos of activities and audit reports & audited financial statements for FY 2020-21 to FY 2023-24. However, the application has been rejected, on the ground that two objects at sr.no. 1 & 7 as per clause 4 of the trust deed describes object of religious nature. We note that the trust has been registered u/s. 12A of the Act, after verification of the objects and activities, therefore, deserve approval under section 80G(5) (iii) of the Act.

We note that the trust has been created by the Shri Nanabhai Bharwad Samaj of Saurashtra region. The object 1 as pointed out in rejection order says that the trust shall undertake activities for the Temple of the Gods and Goddesses being worshiped by Nanabhai Bharvad Community. To create union of the whole Nanabhai Bharvad Community and to make work and activities for its development. Thus, the beneficiary of trust towards the object is Nanabhal Bharvad samaj. However, we note that this Nanabhai Bharvad samaj has been declared scheduled tribe by the Government of India in Gir area of Saurashtra region as well as the backward cast in rest of Gujarat. The relevant list and description of the Schedule Castes and Backword castes, were submitted before the Bench. This trust has been created by Nanabhai Bharwad Samaj, for Nanabhai Bharwad Samaj, which is a Schedule Tribe in the area of nesses of forests of Alech, Barada and Gir as well as a backward cast in rest of Gujarat State. Hence, even if the objects under consideration are being considered /AY.N.A. Shri Nanabhai Bharvad Seva Samaj Gujrat as religious, the provisions of section 80G(5) (iii) of the Act shall not be applicable to assessee- trust, as established for the Schedule tribe and backward cast, in terms of Explanation-1, appended below section 80G of the Act. The Explanation-1 to section 80G of the Act reads as under:

Based on these facts and circumstances, we state that objects for benefit of a backward community should not to be considered, as a religious object and therefore, the trust is eligible for approval under section 80G(5) of the Act, hence, we direct the learned CIT(E) to grant the approval under section 80G(5)(iii) of the Act, in accordance with Law.

In the result, the appeal filed by the assessee is treated as allowed for statistical purposes in above terms. Order is pronounced in the open court on 21/07/2025 Sd/- Sd/- (DINESH MOHAN SINHA) (Dr. A.L. SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER Rajkot �दनांक/ Date: 21/07/2025 Dkp Outsourcing Sr.P.S