2025 (9) TMI 1397 - AT - Income Tax

Temple approved under s.80G(5) as daily feeding of 10,000 and open darshan qualify as general public utility

ITAT allowed the appeal and held the assessee eligible for approval under clauses (i)-(v) of s.80G. The tribunal found the temple's activities - including ... Grant of approval under clause (i) to (v) of section 80G - activities of the temple are not in the nature of general public utility and noted that the activities are not in line with the provisions of clause (i) to (v ) of section 80G - HELD THAT:- We noted that assessee has incurred expenses towards Annasantharpane for the year ending 31.03.2024 and has also incurred expenses towards educational and cultural purposes. As submitted by the assessee, more than 10,000 people are getting food every day on average basis and temple is open for general public without any restriction for having darshan on the basis of cast, creed and religion. Accordingly, we reject the observation of CIT(E) and we hold that assessee is eligible for grant of approval under clause (i) to (v) of section 80G - Appeal of the assessee is allowed and CIT(E) is directed to grant approval u/s 80G(5) of the Act. Appeal filed by the assessee is allowed. ISSUES PRESENTED AND CONSIDERED 1. Whether the trust (temple) carries out activities that qualify as charitable and for the general public within the meaning of clauses (i) to (v) of section 80G of the Act, thereby making it eligible for approval under section 80G(5). 2. Whether an approving authority's summary rejection of an application for 80G approval, without specifying which clause(s) of section 80G are not met or giving reasons for non-conformity, is permissible when the applicant has filed the documents and particulars called for. ISSUE-WISE DETAILED ANALYSIS Issue 1 - Eligibility under clauses (i)-(v) of section 80G and grant of approval under section 80G(5) Legal framework: Sections 80G and 80G(5) require that activities of an entity seeking approval be charitable and for the general public as contemplated by clauses (i)-(v) of section 80G. Registration under section 12AB is relevant to recognition of charitable status but is distinct from 80G approval. Precedent Treatment: No specific precedents were cited or applied by the authorities in the record before the Tribunal. Interpretation and reasoning: The Tribunal examined the financial statements and particulars on record showing significant recurring expenditures on annasantharpane (feeding) and on educational and cultural purposes. Quantified expenditure towards annasantharpane and evidence that the facility provides food on an average daily basis to a very large number of persons, together with open access without restriction by caste, creed or religion, were treated as indicia of activities directed to the benefit of the public at large. While certain receipts (seva receipts, rents, interest) are linked to temple operations, the Tribunal considered the nature and quantum of expenditures and the open-access character of services in assessing whether activities are charitable and for public benefit within clauses (i)-(v). Ratio vs. Obiter: The holding that the trust's provision of large-scale free food and engagement in educational/cultural activities satisfy the charitable/general public utility test of clauses (i)-(v) is a ratio directly applied to direct the grant of approval under section 80G(5). Observations about the character of particular income streams (seva receipts, rentals, interest) as components of temple income are factual findings supporting the ratio. Conclusions: On the material before it, the Tribunal concluded that the activities-in particular large-scale annasantharpane and educational/cultural expenditure, coupled with open access-meet the requirements of clauses (i)-(v) of section 80G, and directed the approving authority to grant approval under section 80G(5). Issue 2 - Validity of summary rejection without specific reasons Legal framework: Administrative action rejecting applications under tax statutes must be supported by reasons; the applicant is entitled to be informed of specific grounds on which statutory criteria are considered unmet so that the application can be meaningfully contested. The process is governed by the statutory criteria for 80G approval and by basic principles of reasoned decision-making. Precedent Treatment: No authority was cited by the parties or the Tribunal; the Tribunal relied on principles of reasoned administrative action as applied to the facts. Interpretation and reasoning: The Tribunal noted that the approving authority made a general observation that clauses (i)-(v) were not met but did not identify which activities or which clause(s) were deficient nor articulate the factual or legal basis for that conclusion. The Tribunal also noted that the assessee had filed the documents and particulars called for during the statutory process. Given the absence of specific findings explaining how the statutory criteria were not satisfied, the Tribunal found the rejection to be summary and unsupported by reasons. Ratio vs. Obiter: The Tribunal's statement that a rejection must specify the clauses of section 80G not met, and furnish reasons when all documents have been filed, is a binding procedural ratio applied to set aside the impugned rejection and to direct grant of approval. Remarks describing the approving authority's conduct as 'summary' are part of the reasoning supporting the operative direction. Conclusions: The Tribunal rejected the approving authority's summary rejection for want of specific reasons and factual/legal explanation. Because the record demonstrated charitable/public-directed activities and because the rejection lacked articulation of which clause(s) of section 80G were unmet, the Tribunal allowed the appeal and directed the grant of approval under section 80G(5). Cross-references and final operative determination 1. The procedural impropriety (Issue 2) and the substantive satisfaction of clauses (i)-(v) (Issue 1) were interconnected: the absence of reasoned findings by the approving authority undermined the rejection of an application whose record, on closer scrutiny, demonstrated activities of public utility. 2. The Tribunal's allowance of the appeal rests on both the substantive conclusion that the trust's activities meet clauses (i)-(v) of section 80G and the procedural requirement that adverse statutory decisions be reasoned; accordingly, the Tribunal directed the approving authority to grant approval under section 80G(5).