Tribunal grants appeal for tax approval to trust with public benefit objectives.

The Tribunal allowed the appeal filed against the denial of approval under section 80G(5) of the Income Tax Act, 1961. It was found that the trust's objectives were not religious in nature and aimed at benefiting the general public. The Tribunal acknowledged the trust's consistent spending on charitable activities, including staff salaries deemed essential for such operations. Consequently, the denial of approval was overturned, and the trust was directed to be granted approval under section 80G(5), ruling in favor of the assessee.

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Issues:
Denial of approval u/s 80G(5)(vi) of the Income Tax Act, 1961 for assessment year 2016-17 based on not being established solely for charitable purpose and spending meagre amount on charitable activities.

Analysis:
The appeal was filed against the order denying approval u/s 80G(5)(vi) of the Income Tax Act, 1961. The denial was based on the trust not fulfilling the requirement of being established solely for charitable purposes and spending insufficiently on charitable activities. The trust was registered as a charitable trust under section 12AA of the Act. The denial was due to the trust having purposes with religious contours, which was against the provisions of section 80G(5)(iii) and Explanation-3 to sub-section (5) of section 80G. The appeal raised grounds questioning the rejection of the application under section 80G(5)(vi).

During the hearing, the counsel for the assessee argued that the trust's objects did not benefit any particular religious community or caste. The counsel highlighted that the objects aimed at developing good character, promoting brotherhood, and providing education and healthcare to the public at large. The counsel referenced section 80G(5)(iii) and Explanation-3 to demonstrate that the trust's activities were not of a religious nature and thus eligible for approval under section 80G(5).

The counsel further contested the claim of spending meagre amounts on charitable activities by presenting financial statements showing consistent spending on charitable objectives. The counsel emphasized that expenses on staff salaries were essential for running charitable activities and should be considered part of the charitable expenses. Various charitable activities undertaken by the trust were also highlighted to support the argument that the trust was primarily engaged in charitable activities.

After considering the arguments and reviewing the trust's objects and financial statements, the Tribunal found merit in the assessee's contentions. It was observed that the trust's objects did not have religious contours and were aimed at benefiting the general public. The Tribunal also noted that the expenses incurred, including staff salaries, were essential for carrying out charitable activities. Consequently, the order denying approval under section 80G(5) was set aside, and the trust was directed to be granted approval under the said section.

In conclusion, the appeal of the assessee was allowed, and the order was pronounced in favor of the assessee in the open court.

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