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Facts
The assessee, Jeewandeep Health Education Charitable Trust, filed an application for approval under Section 80G(5) of the Income Tax Act, 1961, in Form No. 10AB. The CIT(E) rejected the application, stating that some of the trust's objects were religious in nature and thus it was a composite religious-cum-charitable trust, violating the condition of being purely charitable. The assessee appealed this decision.
Held
The Tribunal noted that the assessee-trust has objects that are religious in nature, which violates the condition of Section 80G(5) of the Act for being a purely charitable trust. The assessee's claim that such expenditures were incidental and within limits was not substantiated with evidence. The Tribunal directed the CIT(E) to examine the financial statements to ascertain the expenditure on religious/spiritual activities.
Key Issues
Whether the trust's objects, which include religious aspects, disqualify it from being considered purely charitable for the purpose of Section 80G approval. Whether the assessee provided sufficient evidence to prove that religious expenditures, if any, were incidental and within the permissible limits.
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, AM. &
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.
Grounds of Appeal: 1) Unjust Rejection of Form 10AB Application The Learned Commissioner of Income Tax (Exemption) ("CIT(E)") erred in rejecting the appellant's application for approval under Section 80G(5)(iii) of the Income Tax Act, 1961 without properly appreciating the charitable nature of the trust's objects and activities. 2) Misinterpretation of Charitable and Religious Objects. The CIT (E) erred in holding that certain objects of the trust are religious in nature, thus rendering the trust a composite religious and charitable trust. The CIT (E) failed to appreciate that the trust is established solely for charitable purposes, as evidenced by its activities and submissions. 3) Failure to Consider Activities of the Trust. The CIT(E) failed to consider that the appellant has been conducting charitable activities in accordance with the conditions specified under Section 80G of the Income Tax Act. The trust's records, financials, and activities were not adequately appreciated or considered. 4) Failure to Consider Replies and Submissions of the Appellant. Despite detailed replies and clarifications submitted by the Appellant, the CIT (Exemptions) summarily dismissed the application, indicating a lack of consideration of the material on record.
5) Misinterpretation of the Term "Religion" in the Trust Deed. The CIT (Exemptions) wrongly interpreted the phrase "in the field of religion" as indicative of a wholly or substantially religious purpose, contrary to the specific provisions of Section 80G(5B) of the Act, which allow for incidental religious expenditure up to 5% of total income. 6) Violation of Section 80G (5B) of the Act. The order disregards Section 80G (5B), which expressly permits a charitable trust to incur incidental religious expenditure not exceeding 5% of its total income. The CIT (Exemptions) neither verified the Trust's accounts nor provided evidence of religious expenditure exceeding this threshold.
Facts of the Case: Mandatory Re-Registration for Charitable Institutions: The Income Tax Act, 1961 in India has undergone significant amendments regarding the registration of charitable and religious trusts. The changes aim to bring greater transparency and accountability to the functioning of such entities. According to the amendment following steps is to be taken Charitable institutions already approved under Section 80G must now reapply for approval under the revised provisions. Registration under Section 80G is now aligned with the new Section 12AB, requiring periodic re-validation (every 5 years). The re-registration process aims to verify the genuineness of the activities conducted by the trust and to ensure compliance with the terms of the trust deed or objectives.
The re-registration granted under Section 80G is now valid for 5 years, after which the trust must reapply for renewal. Applications for re-registration must be made in Form 10A through the Income Tax Department's e-filing portal. Considering the above amended law we have Applied for Provisional registration under Clause (iii) of first proviso to sub-section (5) of section 80G in FORM NO. 10A, Dated: 27/08/2021 vide Acknowledgement Number 372331630270821, and we have granted provisional registration Unique Registration Number: AABTJ2272QF20213, Dated: 24/09/2021. After that we have applied for Final Registration in FORM NO. 10AB, vide Acknowledgement Number 158138840290324 Dated: 29/04/2024 with all the necessary supporting documents.
On the application dated 29/04/2024 the Ld. CIT (E) has issued Show cause Notice on dated 06/09/2024 and the same is reproduced. “On perusal of such details, your attention is drawn towards the Constitution of the Trust, wherein para 4 contains the Aims/objects of Trust. The object therein at Sr. No.C-1 is found in the field of Religion. The said objects in the trust deed/instrument of creation of company/trust are religious in nature and not charitable in nature as per Section 80G (5) of the Income-tax Act, 1961. Therefore, please explain that as to how there is no violation of the Section 80G (5) of the Act. In this regard, You are requested to show cause as to why your application filed in Form 10AB under clause(iii) of first proviso to sub section (5) of Section 80G should not be rejected and also your provisional registration should not be cancelled for the reasons discussed in the above para 2.”
Submission to SCN: We, the trustees of JEEWANDEEP HEALTH EDUCATION AND CHERITABLE TRUST, refer to the Show Cause Notice dated 05/09/2024 regarding the proceedings under section 80G (5) (iii) of the Income Tax Act, 1961, and humbly submit our response as follows:
1.
No Engagement in Religious Activities: Our organization is fully committed to operating in accordance with the provisions of the law, and we would like to affirm that JEEWANDEEP HEALTH EDUCATION AND CHERITABLE TRUST does not engage in or support any religious activities. As explicitly stated in Paragraph 1 of Page 2 of our Trust Deed, our organization endeavors to carry out its objectives without discrimination based on caste, religion, or political motives. We are fully aware of the legal requirement under Section 80G (5) of the Income Tax Act, 1961, and we comply with it.
2. Clarification on Object No. C-1 in the Trust Deed: The object mentioned at Sr. No. C-1 in our Trust Deed refers to "participating in religious, social, and legal programs for social development." This objective is entirely focused on promoting social inclusion, equality, and justice for marginalized communities, including women, scheduled castes, scheduled tribes, disabled individuals, and others. We would like to emphasize that while these objective mentions "religious programs," it does so in the context of fostering social development and not promoting any specific religion or religious activities.
Compliance with Section 80G (5): Our organization is dedicated to addressing issues of social injustice, and our primary focus is on activities such as women empowerment, elimination of dowry, and uplifting marginalized sections of society. We reiterate that all funds received by the Trust are exclusively used for charitable purposes and not for any religious activities, as per the requirements of Section 80G (SB) of the Income Tax Act, 1961.
Past Compliance with 80G Certificate: Our organization has previously been granted the 80G certificate, and we have consistently complied with all relevant provisions of the law. A copy of the earlier 80G certificate is enclosed for your kind reference. We also undertake that no funds have been, or will be, used for religious purposes, and that we remain fully committed to complying with all requirements under the Income Tax Act. In conclusion, we respectfully submit that our Trust has no violation of Section 80G (5) of the Income Tax Act. We hope that this explanation addresses your concerns, and we request you to kindly grant the renewal of our 80G registration.”
The reply of the applicant dated 12.09.2024 is considered; however, the same is not found acceptable. To begin with, on perusal of the objects of the applicant as stipulated in the instrument of creation of the Trust, it is observed that following objectives of the instrument are religious in nature which put the applicant under the category of composite trust i.e. Religious -cum - charitable trust.
In view of the above, the applicant has violated existing main condition of sub-section (5) of section 80G 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.
The assessee has filed an appeal before the tribunal against the order dated 26/09/2024 by Ld. CIT (E), Ahmedabad.
AR submitted that the aim and object of the Trust are as under: This organization endeavors to carry out its objectives without discrimination based on caste, religion, or political motives. A: Health related :- 1. Carry on activities for the development of Intellectual and Persons with Disabilities, Establish day and night care center, Skill Development training centers, educational institutions etc.
Establish Therapy centers and schools for Children with Cerebral Palsied, Intellectual Disabilities, Autism and Multiple Disabilities.
Establish Residential care centers, guidance & Information providing centers for Intellectual Disabilities and Establish other Disabilities hostel and Care Centers. 4. Organize Program of Prevention of Disabilities and Rehabilitation 5. Organize camps for prevention of Disabilities, Mother care centre, Antenatal care, provide information to mother for care to the new born babies etc 6. Co-Operate with Government programmes such as, cancer AIDS, Polio etc and vaccination Program. While construing the above objectives and activities, the broadest possible interpretation shall be made keeping in view the fundamental objectives of this organization and the decision of the Board of Trustees on the interpretation of the objectives shall be final.
B: Medicinal :-
1. 1. Endeavour to provide better medicinal facilities to all the public around the country.
2. Medical relief, free medical treatment, manage to help for operational treatment provide medicines instruments, establish Nursing home, hospital, X-ray clinic, laboratories etc. Help by all means.
Provide facilities of Ambulance service, health centers, Maternity homes, Hospitals, Laboratories, X-ray practical centers, Cardiogram etc. and help other organization working for the same.
Arrange sanatorium and rest house for the patients quick recovery and provide free lodging. 5. Distribute food, fruits, nutrition's for the patients who are hospitalized, and help institutions working as similar. 6. Arrange beds for the needy patients for the hospitals caring on various disease treatment. 7. Provide better consulting by expert doctors to the people by organizing consulting centers, surgical camps and help for the same. 8. For the healthy and well-disciplined future citizens, and for encouragement of youths in every field, and their health, organize gymnastic classes, Arobic Training centers, Physical fitness, health education classes, home science training, yoga classes, arrange tours, and manage all types of training.
C: Social aims :- 1. Religions and social development, help the organization having similar aims, by all means. Improve socialism by fighting against women injustice, wicked behavior of depressed, problems of schedule tribe and cast, dowry system, widower problems to be solved.
Build check dams and provide water facilities, Be helpful to people during natural calamities, Build water ponds and supply butter milk and other such activities to be carried on.
To participate in Agricultural programmers taken by government, fodder supply, supply & distribute D: Education 1. Establish and maintain Balwadi, Aanganwadi, Balmandir, Primary education schools, Secondary Schools, Higher Secondary Schools, Colleges, Technical Schools, Industrial education centers, professional education and co- operate with other organization related with same work.
Establish and maintain boys hostel, girls hostels, Ashram Shala etc. Provide financial help to other organization.
Establish and maintain library and practical centers for students.
Arrange scholarships, and free books, and prizes for the students who are in need.
Honor the brilliant students, by giving medals prizes to encourage them.
Night classes for adult education, sewing classes in rural and Urban area, establish government approved educational centers and maintain as well.
Carry on activities for the development of Persons with Disabilities boys and girl.
Establish and maintain schools and colleges for the development of blind people.
Carry on activities of broadcasting educational knowledge such as, meeting, camps, educational tours, lectures, seminars, and help other organization such activities. 10. Intellectual development activities as education, literature, Art development encourage people and organization to participate in such artistic activities. 11. Establish and maintain, knitting and sewing classes, Beauty parlours, cooking classes, home science etc. 12. Provide latest educational technology such as computer classes. 13. Publish Monthly edition on education.
E: Other aims :-
1. 1. Fight against immorality if the soclety, Dowry system, gambling, prohibition, communalism, De-addiction etc. in co-operation with government.
2. Perform service in lok Adalat carried on by government.
3. Social service for education, activities etc. Environment 4. Provide employment by establishing Industries for the unemployed boys and girls.
(5) Properties of the Trust :-
The trust can settle moveable and immoveable assets.
The amount of Rs.500/- donated by the settler of this trust is now the only property of the trust. 3. A part of this the moveable and immoveable assets settled legally by the organization will be the property of the trust. 4. The moveable and immoveable property of the trust does not belong to any of the trustee personally.
On the contrary DR has relied on the order of CIT (E) and also drawn our attention towards the order. In view of the above, it is quite clear that assessee trust is not established only for charitable purposes. Whereas, the above referred provisions of sec. 80G of the Act makes it amply clear that the applicant/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.
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 violated the object of charitable trust, simultaneously violated the provisions of law. Hence, the assessee-trust is not 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. In these objects there are spiritual objects in sub-para-D, which contains object of religious in nature. Before us the Ld. AR submitted/ Prayed
1) We have amendment the Object Clause No. C-1 in the Trust Deed, the word Religions is deleted and approved with Charity Commissioner (Gir Somnath). 2) That the Hon'ble Tribunal may kindly quash and set aside the order passed by the Commissioner of Income Tax (E), Ahmedabad, dated 26/09/2024, denying/withdrawing the approval under section 80G of the Income Tax Act, 1961, on the grounds that the order is arbitrary, unjust, and contrary to the provisions of law. 3) That the Hon'ble Tribunal/Authority may direct the Commissioner of Income Tax (Exemption), Ahmedabad, to grant/restore approval under section 80G(5)(ii) of the Income Tax Act, 1961, in favor of the petitioner. The Ld. counsel for the assessee states that assessee-trust has not incurred any expenditure on those objects which are religious in nature. However, the assessee has not submitted before us any evidence, in the form of income and expenditure account and cash-flow statement 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 are inclined to direct the Ld. CIT(E) to examine the balance sheet, income and expenditure account and bank statement, in the light of the provisions of section 80G(5B) of the Act, to ascertain the expenditure made by the assessee-trust on religious/spiritual activities and adjudicate the issue as per law.
Appeal of the assessee, allowed for Statistical purposes.
Order pronounced in the open court on 02/07/2025. op
Sd/- Sd/- (Dr. A.L. SAINI) (DINESH MOHAN SINHA) ACCOUNT MEMBER JUDICAL MEMBER Rajkot िदनांक/ Date: 02/07/2025