Charitable purpose: trust running schools and yoga held eligible for 80G approval as not substantially religious.

Whether a trust whose objects include education, social and spiritual activities qualifies for approval under Section 80G(5)(iii) was decided by applying the charitable purpose definition and Explanation 3 excluding purposes that are wholly or substantially religious. The tribunal applied the substantiality test and Section 80G(5B) principle that limited religious expenditure does not convert objects into religious purposes. On the facts the trust ran schools, showed no religious expenditure, and object language was neutral and non-discriminatory; therefore its yoga/meditation and related activities fell within charitable purpose and approval under 80G(5)(iii) was granted.

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Issues: Whether the assessee-trust, whose objects include educational, social and spiritual activities (including clause 5(D) referring to spiritual/meditation/yoga centres), is entitled to regular approval under Section 80G(5)(iii) of the Income-tax Act, 1961.

Analysis: Applicable statutory provisions include Section 80G(5), Section 80G(5B) and Explanation 3 to Section 80G of the Income-tax Act, 1961, and the definition of charitable purpose under Section 2(15) of the Income-tax Act, 1961. Explanation 3 excludes from "charitable purpose" any purpose the whole or substantially the whole of which is of a religious nature. Section 80G(5B) permits an institution to incur religious expenditure not exceeding five per cent of total income without losing applicability of Section 80G, but does not convert a religious object into a charitable object. The trust's activities since inception consist of running schools (educational and charitable) and audited financials show no religious expenditure. The object 5(D) begins with a non-obstante clause limiting benefit to no discrimination by religion or caste and does not direct benefits to any particular religious community. Yoga and activities such as publication of spiritual literature and meditation/yoga centres are covered by the statutory definition of charitable purpose in Section 2(15). The Explanation 3 threshold requires that an object be wholly or substantially religious to exclude the institution from Section 80G; mere presence of spiritual or devotional language in the objects does not satisfy that threshold where activities and expenditures are charitable and not targeted to a particular religion or community.

Conclusion: Approval under Section 80G(5)(iii) of the Income-tax Act, 1961 is to be granted; the decision is in favour of the assessee.

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