Section 80G(5)(iii) of the Income Tax Act
Income-tax Act, 2025: s.133
Section 80G(5)(iii) falls under section 80G of the Income-tax Act, 1961, which corresponds to section 133 (Deduction in respect of donations to certain funds, charitable institutions, etc) of the Income-tax Act, 2025.
Read section 133 of the 2025 Act
Correspondence checked against the ICAI tabular mapping of the two Acts and the BharatTax.co section commentary.
The decision most relied on for Section 80G(5)(iii) is Sree Meenakshi Mills Ltd. v. Commissioner of Income Tax (31 ITR 28), cited in 137 of the 687 judgments on BharatTax that turn on this section.
Leading authorities on Section 80G(5)(iii)
Expenditure incurred for commercial expediency, even without a direct or immediate benefit but indirectly facilitating business, is deductible as laid out wholly and exclusively for trade. The scope of reference jurisdiction under Section 66 is limited to questions of law, allowing challenges to Tribunal findings of fact only if they are perverse, unreasonable, or lack evidence.
Whether there was sufficient cause for delay in making applications for registration under section 12A and 80G is always a question of fact, and contumacious conduct by the assessee must be established for levying penalty under section 271C for non-deduction of TDS.
An intention to benefit a section of the public, as distinguished from a special individual, is sufficient for a trust to be considered for charitable registration and exemptions. This applies even if the beneficiaries belong to a specific caste, community, or professional group, allowing the trust to qualify as serving a general public utility under Section 2(15).
The delay in filing an application for approval under section 10(23C) cannot be condoned by the CIT (Exemption) if it is filed beyond the prescribed time limit, as this decision was affirmed by the Kolkata Tribunal in Bishnupur Public Education Institute.
Registration under Section 12A or 12AB of the Income-tax Act is a mandatory pre-condition for obtaining approval under Section 80G of the Act. Consequently, if an assessee lacks valid registration under Section 12A/12AB, their application for approval under Section 80G is liable to be rejected.
The Income Tax Appellate Tribunal functions judicially and must decide all questions of fact and law before it. The Tribunal may act upon probabilities and use presumptions to bridge gaps in evidence, especially when conclusive proof is not available due to delays or the nature of transactions.
Registration of an institution under Section 12A of the Income Tax Act is sufficient proof that it was established for charitable purposes, and therefore, registration under Section 80G cannot be denied solely on the basis that the institution is not for charitable purposes.
An institution or fund is deemed to be one to which section 80G applies even if it incurs expenditure of a religious nature not exceeding five per cent. of its total income, overriding Explanation 3 to section 80G(5)(ii).
The requirement to explain each day's delay in filing an appeal must be interpreted pragmatically and with common sense, not pedantically. Refusing to condone delay can lead to a grave miscarriage of justice.
An existing trust that has previously been granted approval under sections 12AA and 80G should apply under clause (i) of the first proviso to section 80G(5) as an old entity, not under clause (iii) as a new trust. Applying under the incorrect clause may lead to unnecessary provisional certificates and delays.