2024 (5) TMI 1636 - AT - Income Tax

Trust teaching Vedic education is charitable under s 2(15); allowed approval under s 80G for tax exemption (15)

ITAT held that a trust formed to teach and spread Vedic education engages in charitable, not religious, activity under s 2(15), finding propagation of ... Rejecting the application seeking approval u/s 80G - Trust was formed with the main object of teaching, imparting and spreading knowledge of vedic education - Scope of charitable activity u/s 2(15) - HELD THAT:- Propagation of vedic thoughts and philosophy cannot be attributed to any religion as same are more concerned with the life style of the human beings. Therefore, we hold that the activities carried on by the assessee trust is charitable in nature and not religious, hence, would be entitled to the grant of approval u/s 80G of the Act. Appeal filed by the assessee is allowed. ISSUES PRESENTED AND CONSIDERED 1. Whether teaching, propagation and preservation of Vedic knowledge (Vedic education, Vedic recitation, workshops, seminars, research and related activities) constitute a 'religious purpose' excluded from 'charitable purpose' for the purposes of Explanation 3 to section 80G of the Income-tax Act. 2. Whether an institution whose objects include teaching Vedas and allied non-commercial activities but which admits and benefits the general public without distinction of caste, creed, religion or sex can be treated as existing 'wholly or substantially' for a religious purpose so as to disentitle it to approval under section 80G (including the interplay with section 80G(5) conditions). 3. Whether authorities below erred in holding that the presence of Vedic teaching implies worship/prayer activities or invocation of religion, and whether Supreme Court authority on an object to maintain prayer halls (Upper Ganges type clause) is applicable to trusts engaged in Vedic education. 4. Ancillary: Whether cited judicial decisions that treat Vedic propagation as educational/way-of-life activity are applicable and compel grant of approval under section 80G in the facts of the case. ISSUE-WISE DETAILED ANALYSIS Issue 1 - Legal framework: Definitional scope of 'charitable purpose' and exclusion for religious purposes Legal framework: Section 80G approval requires that the institution be for 'charitable purpose'; Explanation 3 states that 'charitable purpose' does not include any purpose the whole or substantially the whole of which is of a religious nature. Section 80G(5) sets out conditions (i)-(v) (including non-benefit to particular religious community) that must be satisfied for approval. Precedent treatment: The Tribunal and High Courts have repeatedly examined the boundary between charitable and religious purposes; authorities hold that (a) teaching, propagation of Vedic thoughts, yoga and related activities may be regarded as charitable where they serve the public generally and are concerned with lifestyle, education or relief of the poor; (b) an object clause specifically enabling establishment/maintenance of places of worship/prayer halls has been held by higher courts to be a purpose that is 'wholly or substantially' religious (ratio in Upper Ganges). Other decisions (including constitutional-bench dicta) treat 'Hinduism/Hindutva' broadly as way of life rather than a narrow religion in this context. Interpretation and reasoning: The Court examined the trust deed objects (Veda Patashalas, research centres, libraries, publications, workshops, seminars, felicitation of scholars, support to students and scholars irrespective of caste/creed) and found the trust's activities educational and charitable in nature. The Court applied precedent holding that propagation of Vedic thoughts and Vedic education are not necessarily religious purposes and emphasized factual enquiry whether an object is to benefit a particular religious community or whether any one object within the trust is 'wholly or substantially' religious. Ratio vs. Obiter: Ratio - where an institution's dominant objects and actual activities involve teaching, research, dissemination and relief of poor, and benefits are available to the public without distinction, such activities are charitable and not excluded by Explanation 3. Obiter - general commentary on the nature of Hinduism/Hindutva as a way of life (from constitutional decisions) informs but is not the determinative test in every fact pattern. Conclusion: Teaching and propagation of Vedic knowledge, when conducted as education/research, open to general public and accompanied by charitable relief activities, do not amount to a purpose 'wholly or substantially' of a religious nature and therefore do not fall outside 'charitable purpose' for section 80G. Issue 2 - Whether the trust's objects/activities render it ineligible under section 80G(5)(iii) and related conditions Legal framework: Section 80G(5)(iii) bars approval where the institution is expressed to be for the benefit of any particular religious community or caste. Other conditions (regular accounts, form of constitution, etc.) must also be satisfied. Precedent treatment: Tribunals have held that a religious trust which is public (i.e., not benefiting a particular community) can still qualify for exemptions. Courts placed onus on the Revenue to prove that the trust's objects or application of funds are for a particular community or that a specific object is wholly/substantially religious (per Explanation 3 case law). Decisions cited include authorities that distinguished trusts having explicit clauses for places of worship (Upper Ganges) from trusts whose objects are educational/researchal. Interpretation and reasoning: The Court analyzed the trust deed and activities and found no clause restricting benefit to a particular religious community; activities (classes, workshops, financial assistance during COVID, felicitation irrespective of caste/creed/religion) demonstrated public-oriented charitable outreach. The Court held that mere subject matter (Vedas) does not automatically convert objects into benefits for a particular religion. Ratio vs. Obiter: Ratio - absence of object confining benefits to a particular religious community and evidence of public-facing charitable activities supports approval under section 80G; Obiter - observations on the burden shifting to Revenue to show dominance of religious purpose where factual material exists to the contrary. Conclusion: The trust met the condition in section 80G(5)(iii) (no benefit directed to a particular religious community) and other conditions; consequently, the CIT(E)'s rejection on that ground was erroneous. Issue 3 - Applicability of decisions treating certain objects as inherently religious (Upper Ganges) and whether Vedic teaching equates to worship/prayer Legal framework: Explanation 3 is concerned with whether any one purpose within the institution's overall objects is 'wholly or substantially' religious; Supreme Court authority applied this test to clauses enabling maintenance of places of worship and prayer halls and excluded such trusts from section 80G scope. Precedent treatment: Upper Ganges is authority for the proposition that a specific object enabling support for places of worship/prayer halls constitutes a purpose that is wholly/substantially religious. Other authorities have distinguished Upper Ganges where trust deeds lack such clauses and where activities are educational, impersonal and available to all. Interpretation and reasoning: The Court distinguished the present trust from Upper Ganges on facts: there is no object to establish/maintain places of worship or prayer halls; the trust teaches recitation and pronunciation of Vedas (methodology, swara, literary/linguistic training) without conducting worship/prayer or charging fees; evidence showed charitable relief and public outreach. The Court emphasized that CIT(E) was not entitled to assume that Vedic teaching necessarily involves worship or religious observance; factual matrix controls application of Upper Ganges. Ratio vs. Obiter: Ratio - Upper Ganges applies where a trust deed contains objects directed to places of worship/prayer halls; it is distinguishable where objects are educational and public in character. Obiter - remarks rejecting a narrow or pedantic approach to charitable status where occasional expenditures touch on religious institutions. Conclusion: Upper Ganges is inapplicable to the facts; Vedic teaching as presented is not equivalent to worship/prayer and does not trigger the Explanation 3 exclusion. Issue 4 - Weight of supporting precedents treating Vedic propagation as charitable and consequent conclusion on approval under section 80G Legal framework: Judicial precedent forms part of the test for characterizing objects and activities; consistent holdings that Vedic propagation, yoga, Vedanta and similar subjects have universal/cultural appeal and constitute education/lifestyle matters inform classification. Precedent treatment: The Court relied on several decisions of Tribunals and High Courts which held that propagation of Vedic thoughts, yoga and related activities are not confined to a religion and therefore can be charitable; such precedents also held that onus lies on Revenue to show the trust is for benefit of a particular community or that a specific object is substantially religious. Interpretation and reasoning: The Court applied these precedents to the facts - trust deed, activities, beneficiaries, financial records, vouchers, events and relief work - and concluded that the trust's dominant character is charitable (education and relief of poor). The Court found the CIT(E)'s reliance on contrary authorities was misplaced on facts or distinguishable. Ratio vs. Obiter: Ratio - where factual matrix shows public education and charitable relief without exclusivity to a religious class, authorities treating Vedic activity as charitable support grant of section 80G approval. Obiter - general observations on universal appeal of Vedas and cultural heritage underpin but do not override fact-specific inquiry. Conclusion: In light of authoritative precedents and the trust's recorded activities and objects, the trust is charitable and entitled to registration/approval under section 80G; the CIT(E)'s rejection was quashed and approval directed.