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Facts
The assessee, Trilok Foundation Charitable Trust, applied for approval under Section 80G(5) of the Income-tax Act, 1961. The Commissioner of Income-Tax (Exemption) rejected the application, citing that certain objects in the Trust Deed were religious or composite in nature, violating the conditions for charitable purposes.
Held
The Tribunal noted that the CIT(E) had not specifically determined if the expenditure on religious activities exceeded 5% of the total income, which is a key condition under Section 80G(5B). Therefore, the matter was remanded back to the CIT(E) for a fresh consideration.
Key Issues
Whether the objects of the Trust are purely charitable, and if any religious expenditure exceeds the permissible limit under Section 80G(5B).
Sections Cited
80G(5), 80G(5B)
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Income Tax Appellate Tribunal, SURAT BENCH, SURAT
Before: DR. B.R.R. KUMAR, VICE-Ms SUCHITRA KAMBLE
PER DR. B.R.R. KUMAR, VICE-PRESIDENT:
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This appeal has been filed by the Assessee against the order dated 30.06.2025 passed by the Commissioner of Income-Tax (Exemption), (“the CIT(E) in short), whereby rejecting the application filed in Form 10AB seeking approval under Section 80G(5) of the Income-tax Act, 1961 (“the Act”), relating to the Assessment Year 2026-27. 2. The assessee has raised the following grounds of appeal:
The CIT(Exemption) has erred in law and in facts by rejecting application filed in Form 10AB of the Act vide Acknowledgment No.6670981803010124 seeking approval under clause (iii) of first proviso to Section 80G(5) and thereby cancelling the provisional approval granted in Form AC valid from 11.03.2023 to AY 2025-26. 2. It is therefore, prayed that the order passed by CIT(Exemption) rejecting Application may pleas be set aside and final approval u/s.80G may be granted for the sake of justice and equity. Asst. Year : 2026-27 - 2–
Your appellant craves reserves his right to add, amend, alter, and/or withdraw any ground of appeal at the time of hearing of the appeal.
The assessee is a Trust and had filed an application in Form No. 10AB seeking approval under Section 80G(5) of the Act. The learned CIT(E) rejected the application on the ground that the assessee failed to furnish a satisfactory explanation to establish that the objects of the Trust are purely charitable in nature. According to the learned CIT(E), certain objects contained in the Trust Deed, particularly Clause 4(2) and Clause 4(3), were either religious or composite in nature, thereby categorizing the assessee as a religious-cum-charitable trust. According to him, this violates the conditions laid down under Section 80G(5)(ii) of the Act. The disputed clauses, as reproduced by the learned CIT(E), are as under:
Clause 4.2: This Trust, without any kind of caste discrimination, shall undertake religious acts, cow shed, hospital, school, medical, educational activities, and activities regarding environment and animals. Clause 4.3: The Trust shall conduct religious and spiritual programs, celebrations, festivals, educational activities, notebook distribution, and activities for animals, helpless persons and needy students.
The learned CIT(E) observed that the above clauses are in violation of Explanation 3 to Section 80G, which clarifies that “charitable purpose” does not include any purpose the whole or substantially the whole of which is religious in nature. Accordingly, the application was held to be outside the scope of Section 80G of the Act.
Aggrieved by the said order, the assessee is in appeal before the Tribunal. Asst. Year : 2026-27 - 3–
Before us, the learned counsel for the assessee submitted that the learned CIT(E) has drawn adverse conclusions only on the basis of two clauses of the Trust Deed, whereas the remaining objects are purely charitable in nature. It was further submitted that Section 80G(5B) of the Act specifically provides that where a trust incurs expenditure of a religious nature not exceeding 5% of its total income during the previous year, such trust shall still be deemed to be an institution to which the provisions of Section 80G apply.
We have heard the rival submissions and perused the material available on record. In the present case, we observe that the learned CIT(E) rejected the application solely on the ground that the objects of the Trust are religious in nature. However, the learned CIT(E) has not recorded any specific finding as to whether the expenditure incurred by the assessee towards religious activities exceeds 5% of the total income, as contemplated under Section 80G(5B) of the Act. Ld. Counsel for the assessee prayed that given an opportunity, the same would be apprise to the Ld.CIT(E). Ld.CIT(DR) argued that the assessee-trust needs to furnish requisite details/explanations and submission before the Ld.CIT(E). Having considered the facts on record, we hold that interest of justice would be well served by remanding the matter to the ld.CIT(E) for consideration of the application afresh and to pass an order by taking into consideration the submissions/explanations submitted by the assessee.
In the result, the appeal filed by the assessee is allowed for statistical purposes.
The order is pronounced in the open Court on 04.02.2026. (SUCHITRA KAMBLE) VICE-PRESIDENT () Surat; Dated 04.02.2026 **mv Asst. Year : 2026-27 - 4–
आदेश की "ितिलिप अ"ेिषत/Copy of the Order forwarded to : 1. अपीलाथ" / The Appellant
""थ" / The Respondent. संबंिधत आयकर आयु" / Concerned CIT 3. 4. आयकर आयु" अपील / The CIT(A)- ( ) 5. िवभागीय "ितिनिध अिधकरण अपीलीय आयकर /DR,ITAT, Surat, , , 6. गाड" फाईल / Guard file. आदेशानुसार/ BY ORDER,
सहायक पंजीकार (Asstt.