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Facts
The assessee, Bhaktidham Seva Trust, applied for approval under Section 80G(5)(iii) of the Income Tax Act, which was rejected by the CIT(E). The rejection was based on the CIT(E)'s finding that one of the trust's objects was religious in nature, and it had incurred religious expenditure exceeding the prescribed 5% limit, leading to the cancellation of provisional approval.
Held
The tribunal held that the objects identified as religious by the CIT(E) (organizing Satsang, providing accommodation/food for "Vaishnavs") were not purely religious but served broader charitable purposes or were incidental to the main charitable activities. The tribunal also noted the CIT(E)'s finding on religious expenditure was based on mere presumption. Consequently, the matter was set aside to the CIT(E) to provide the assessee another opportunity to furnish details of religious expenditures for re-examination, with approval to be granted if the expenses are within the 5% limit under Section 80G(5B).
Key Issues
Whether specific objects of the trust were purely religious or incidental to charitable activities, justifying rejection of 80G(5) approval, and whether the religious expenditure incurred by the assessee exceeded the 5% limit specified under Section 80G(5B).
Sections Cited
80G(5), 80G(5)(iii), 80G(5B)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “C” BENCH, AHMEDABAD
Before: SHRI TR SENTHIL KUMAR & SHRI NARENDRA PRASAD SINHA
PER NARENDRA PRASAD SINHA, ACCOUNTANT MEMBER:
This appeal is filed by the assessee against the order of Commissioner of Income Tax, Exemption [in short “CIT(E)”] dated 16.12.2024 in the proceeding u/s 80G (5) of the Income Tax Act.
The brief facts of the case are that the assessee had filed an application for approval u/s 80G(5)(iii) of the Act. The Ld. CIT(E) found that one of the objects of the trust was religious in nature. Further, the assessee had also incurred religious expenditure in excess of prescribed limit of 5%. Therefore, the application of the assessee for approval u/s 80G(5) of the Act was rejected vide the impugned order.
Bhaktidham Seva Trust Vs. CIT(E) Asst. Year: NA 2 3. Aggrieved with the order of the Ld. CIT(E), the assessee is in appeal before us. The following grounds have been taken in this appeal:
1.1 The order passed by U/s.80G(5) on 16.12.2024 by CIT(Exem). Ahmedabad rejecting the application for approval of the appellant trust u/s 80G(5)(ii) of the Act and cancelling the provisional approval by holding that the appellant trust was a religious trust which is excluded from the benefits of sec.80G(5) is wholly illegal, unlawful and against the principles of natural justice.
2.1 The Id. CIT(Exem), has grievously erred in law and or on facts in not appreciating that the appellant trust was not a religious trust but a composite trust. The Id. CIT(Exem) has erred in not considering fully and properly the explanations furnished and evidence produced by the appellant trust.
2.2 That the in the facts and circumstances of the Id. CIT(Exem). ought not to have held that the appellant trust was a religious trust inclusive of religious objects.
3.1 The Id. CIT(Exem), has grievously erred in law and or on facts in rejecting the approval of the appellant trust u/s 80G(5)(ii) of the Act and cancelling the provisional approval.
3.2 That the in the facts and circumstances of the Id. CIT(Exem), ought not to have rejected the application for registration by ignoring the evidence on record with the application for registration.
Shri S N Divetia, Ld. AR of the assessee submitted that the assessee is a public charitable trust carrying out philanthropic activities in the fields of education, medical aid and relief to the poor. He explained that out of eighteen objectives, one of the objective referred to providing facility of accommodation and food for the “Vaishnavs” arriving from outside area, which was treated as religious in nature by the Ld. CIT(E).
Bhaktidham Seva Trust Vs. CIT(E) Asst. Year: NA 3 The Ld. AR explained that the term Vaishnav does not represent any community but were believers of Lord Krishna. He explained that the facility of accommodation and food for the Vaishnav was irrespective of their caste, creed, community or sex. Therefore, the Ld. CIT(E) was not correct in treating this objective as religious in nature. Similarly, the objective of organizing Satsang for benefit of common people also can’t be treated as religious in nature. As regards religious expense exceeding the limit of 5%, the Ld. AR submitted that the assessee could not furnish the detail of such expense before the Ld. CIT(E). He explained that all the celebration expenses, Granth Mahotsav printing expenses and decoration expenses were not religious in nature and the finding given by the CIT(E) was without correct appreciation of facts of the case. The Ld. AR requested that the assessee may be allowed another opportunity to explain the religious expenses by setting aside the matter to the file of the Ld. CIT(E).
Per contra, Shri Rignesh Das, Ld. CIT-DR supported the order of the Ld. CIT(E). He, however, had no objection if the matter was set aside to the file of the Ld. CIT(E) for examining the religious expense of the assessee.
We have considered the rival submissions. It is found that the Ld. CIT(E) considered the following two objects of the assessee as religious in nature:
“(1) To organise the Satsang, to construct/to take on rent the Satsang Halls, and/or to do all the ancillary activities related to the same, to renovate the same, to organize the camps etc for the uplifting of the human life, and, for these objectives, to assist the Bhaktidham Seva Trust Vs. CIT(E) Asst. Year: NA 4 other Organization, to perform or cause to perform worship work daily in Haveli for the upliftment of the human life and, to incur any expenditure for the daily worship work from the income of the Trust.
(2) To provide facility of accommodation and food for the Vaishnavs arriving from outside area and for that to open, and run the kitchens and to assist the running kitchens.”
The object to organise “Satsang” and to construct/take on rent satsang hall cannot be considered as religious in nature. The assessee by organising Satsang, does not intend to propagate any particular religion. Rather the purpose for organising satsang is uplifting of the human life which will benefit the public at large. Similarly, the objective to provide accommodation and food for Vaishnavs also cannot be treated as religious in nature as such facility will be available to all the believers irrespective of their caste, creed, community or sex. Even if there is some element of religious activity in the form of performing daily worship, this is only subsidiary to the main objectives which are educational, medical aid and relief to the poor. The assessee is running a dedicated educational institutional for girls viz. Shri Ballav Acharya International Girls School, providing medical assistance and health care services to the under- privileged by organising medical camps, organising cultural programs, sports activities and competitions to promote physical, mental and cultural development of individuals etc. Considering the overall activities of the trust, the Ld. CIT(E) was not correct in treating the two of the objects referred above, as religious in nature. Even if certain religious activity is enshrined in these objectives, the same is only incidental and the application of the assessee cannot be rejected for this reason. As per the provisions of the Act, the assessee is entitled to incur 5% of the Bhaktidham Seva Trust Vs. CIT(E) Asst. Year: NA 5 expenditure towards religious activities and, therefore, some tenant of religious activity is bound to be there in the overall objectives.
The application of the assessee could have been rightly rejected only if the religious expenditure incurred by the assessee exceeded the prescribed limit of 5%. The Ld. CIT(E) has given a finding that the assessee did not furnish the details of actual religious expenditures. The Ld. CIT(E) had suo-moto considered celebration expense, Granth Mahotsav printing expense and decoration expense totalling Rs. 58,48,350/- as religious in nature. This finding of the Ld. CIT(E) is based on mere presumption and not on proper examination of facts of the case. The contention of the assessee is that all these expenses were not religious in nature. Rather the assessee has contended that its religious expenditure did not exceed the prescribed limit of 5%. In the interest of justice, therefore, we deem it proper to set aside the matter to the file of Ld. CIT(E) with a direction to allow another opportunity to the assessee to furnish the details of religious expenditures incurred by it. The Ld. CIT(E) should examine and verify the religious expenditure incurred by the assessee and thereafter grant the approval if the expense incurred is found to be not in excess of the limit specified u/s 80G(5B) of the Act. The assessee is also directed to make compliance before the Ld. CIT(E) in the course of set aside proceeding and furnish the details and clarifications as required by him. In case the assessee fails to make compliance, the Ld. CIT(E) will have liberty to pass the order on merits on the basis of the materials as available on record.
Bhaktidham Seva Trust Vs. CIT(E) Asst. Year: NA 6 9. In the result, the appeal of the assessee is allowed for statistical purpose.
Order pronounced in the Court on 08/01/2026 at Ahmedabad.