Registration under Section 80G(5) cannot be rejected without proper analysis of trust objects and adequate hearing opportunity

ITAT Rajkot allowed the appeal and restored the matter to CIT(E) for fresh consideration. The assessee's application for registration under Section 80G(5) was rejected on grounds that one object was religious in nature. However, ITAT found that CIT(E) summarily rejected the application without analyzing facts, failed to identify specific religious objects in the trust deed, did not examine actual expenditure on religious purposes, and denied opportunity of hearing. The trust deed mentioned objects like medical relief, education, public utility, and environmental preservation. ITAT directed CIT(E) to reconsider the application with proper hearing.

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Issues Involved:
The appeal against the order of the Ld. Commissioner of Income Tax (Exemption) rejecting the application for registration under Section 80G(5) of the Income Tax Act, 1961.

Details of the Judgment:

Issue 1: Contrary to Law and Erroneous on Facts
The Ld. CIT(E) rejected the application based on the observation that one of the trust's objects was "religious" in nature, which is not in line with the provisions of Section 80G(5) of the Act. The rejection was made without specifying which specific object was considered "religious" and without analyzing whether any expenditure was actually incurred for religious purposes. The applicant trust had submitted written submissions and there was no non-compliance, yet the rejection was summary. The Tribunal observed that the rejection lacked proper analysis and opportunity for the trust to respond, leading to the decision to restore the matter to the Ld. CIT(E) for reconsideration.

Issue 2: Interpretation of Provisions
The provisions of Section 80G(5) of the Act require that an institution or fund must be established only for charitable purposes, without any transfer or application of funds for non-charitable purposes. The law also allows for a concession of up to 5% of total income for religious activities. The Tribunal referred to precedents and highlighted that if any object of the trust is wholly or substantially of a religious nature, it falls outside the scope of Section 80G. The Tribunal emphasized the need for proper ascertainment of purposes within the trust's overall charitable purpose to determine eligibility for Section 80G benefits.

Conclusion:
The Tribunal allowed the appeal for statistical purposes, directing a de-novo consideration by the Ld. CIT(E) with a proper opportunity for the trust to be heard in accordance with the law.

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