Section 80G deduction upheld where a trust's worship-related object was treated as secular and not religious in nature.

A donation to a trust remained eligible for deduction under section 80G because the trust deed, read as a whole, showed clause 2(h) as a separate object and not merely ancillary. Although that clause referred to public places of worship and prayer halls, it did not confine use to any religion, caste, creed, sect, or community, so it was treated as a secular facility open to all. Explanation 3 to section 80G, which excludes only purposes wholly or substantially of a religious nature, was therefore inapplicable, and the section 80G(5)(ii) condition was satisfied.

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Issues: Whether the donation made to the trust qualified for deduction under section 80G of the Income-tax Act, 1961, in view of clause 2(h) of the trust deed and Explanation 3 to section 80G.

Analysis: The trust deed had to be read as a whole, but the objects in the deed, including clause 2(h), were found to be separate and independent rather than merely ancillary. Clause 2(h) contemplated public places of worship and prayer halls, yet the deed did not restrict their use to any particular religion, caste, creed, sect, or community. The expression therefore denoted a secular facility open to all religions and could not be treated as a purpose of religious nature in the strict legal sense. Explanation 3 to section 80G excludes only a purpose the whole or substantially the whole of which is of a religious nature, and that exclusion was held not to apply on these facts. The statutory condition in section 80G(5)(ii) was thus satisfied.

Conclusion: The assessee was entitled to deduction under section 80G, and the Commissioner's contrary view was rejected.

Ratio Decidendi: A donation to an institution does not cease to qualify under section 80G merely because one of its objects concerns worship or prayer, if that object is secular in operation and is not of a religious nature within the meaning of Explanation 3.

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