Tribunal grants appeal for trust's charitable status under Income Tax Act

The tribunal allowed the appeal, directing the CIT(E) to grant approval under section 80G(5)(vi) of the Income Tax Act, 1961. The tribunal found the trust's activities to be charitable, emphasizing that they were not solely for the benefit of a particular religious community. The tribunal noted that the trust's registration under section 12A supported its charitable nature and that the trust's financial records and activities were in compliance.

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Issues Involved:
1. Rejection of approval under section 80G(5)(vi) of the Income Tax Act, 1961.
2. Assessment of the charitable nature of the trust's activities.
3. Examination of compliance with section 80G(5)(iii) regarding religious activities.
4. Consideration of the trust's registration under section 12A.
5. Evaluation of the trust's financial records and activities.

Issue-Wise Detailed Analysis:

1. Rejection of approval under section 80G(5)(vi) of the Income Tax Act, 1961:
The assessee appealed against the CIT(E) Hyderabad's order dated 29.6.2018, which rejected their application for approval under section 80G(5)(vi). The CIT(E) based the rejection on the grounds that the trust's main objective was religious, specifically to establish and maintain a Gurudwara, which violated section 80G(5)(iii).

2. Assessment of the charitable nature of the trust's activities:
The trust argued that its activities were charitable, including free distribution of food and water during the Sri Jagannath Rath Yatra, providing free meals to pilgrims, maintaining a children's park, and other public welfare activities. The trust provided agreements, financial records, and auditor's reports to support its claim. The trust emphasized that its activities were not solely religious but also included significant charitable work.

3. Examination of compliance with section 80G(5)(iii) regarding religious activities:
Section 80G(5)(iii) stipulates that an institution should not benefit any particular religious community or caste. The CIT(E) rejected the application on the grounds that the trust's activities were religious. However, the tribunal noted that the trust's activities, such as providing food and maintaining parks, were for the general public without discrimination. The tribunal referenced previous cases, such as Shiv Mandir Devsttan Panch Committee Sanstan, where it was held that activities like maintaining temples did not necessarily advance a particular religion.

4. Consideration of the trust's registration under section 12A:
The tribunal observed that the trust had been granted registration under section 12A since 22.8.2017, which indicated that the trust was recognized for its charitable activities. The tribunal cited several cases, including Hiralal Bhagwati vs CIT, where it was held that once registration under section 12A is granted, the application under section 80G(5) should not be rejected without substantial grounds.

5. Evaluation of the trust's financial records and activities:
The tribunal reviewed the trust's financial records and activities, noting that the trust had provided food to pilgrims, maintained parks, and engaged in relief work during natural calamities. The tribunal found that these activities were charitable and not limited to any particular religious community. The tribunal also noted that the CIT(E) did not find any defects in the trust's financial records or activities, other than the alleged religious nature of the trust.

Conclusion:
The tribunal concluded that the CIT(E) had erred in rejecting the trust's application for approval under section 80G(5)(vi). The tribunal found that the trust's activities were charitable and not solely for the benefit of a particular religious community. The tribunal directed the CIT(E) to grant approval under section 80G(5)(vi) of the Act.

Order:
The appeal of the assessee was allowed, and the CIT(E) was directed to grant approval under section 80G(5)(vi) of the Income Tax Act, 1961.

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