Trust's Ramkatha events held charitable, not religious; approval under Income Tax Act section 80G(5) directed for donations

ITAT Ahmedabad allowed the assessee-trust's appeal against rejection of approval under s.80G(5). It held that the dominant objects of the trust are charitable, including education, skill development, blood donation, medical aid, shelter and food for the poor, and welfare of animals. The sole objection of CIT(E) was to one object concerning organisation of Ramkatha, Bhagwat Katha and Yagna. ITAT held this object is not wholly or substantially religious, as such events are for the benefit of the public at large and intended primarily for fundraising to support other charitable activities. Finding no legal justification for treating the trust as religious, ITAT directed grant of s.80G approval.

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1. ISSUES PRESENTED AND CONSIDERED

(1) Whether the existence of an object permitting organization of religious programmes such as "Ramkatha, Bhagwat Katha, Navchandi Yagna, Gayatri Yagna etc." for raising funds renders the trust's objects "wholly or substantially religious" so as to disentitle it from approval under Section 80G(5) of the Income Tax Act.

2. ISSUE-WISE DETAILED ANALYSIS

Issue (1): Character of objects and eligibility for approval under Section 80G(5)

Legal framework (as discussed)

The Tribunal referred to Section 80G(5) of the Income Tax Act, noting that approval cannot be granted if any of the objects of the assessee is "wholly or substantially religious in nature". It was also noted that the bar under Section 80G(5B) relating to expenditure exceeding 5% on religious purposes was not attracted on the facts.

Interpretation and reasoning

(a) The Tribunal examined the trust's objects, which included: establishing and maintaining educational institutions, distributing educational material to needy students, developing computer skills, establishing blood bank, eye bank, burn centre and providing health-related support, providing help to poor persons and those affected by natural calamities, running water and food centres, providing shelter for widows, deserted women and orphans, and establishing "cow house (Panjrapole)" and helping animals through a diagnosis centre.

(b) The Tribunal held that these objects are charitable in nature, focused on education, medical relief, relief to the poor, welfare of public at large, and welfare of animals.

(c) With respect to object no. 9, which contemplated organizing "religious program like Ramkatha, Bhagwat Katha, Navchandi Yagna, Gayatri Yagya etc." for raising funds, the Tribunal observed that: (i) the stated purpose of these programmes was to raise funds for the charitable objects of the trust; (ii) the programmes such as Ramkatha and Bhagwat Katha are organised for the benefit of the public at large, irrespective of religion; (iii) such programmes, through preaching and narration of historical events, are intended to guide society towards a moral, spiritual, contented and happy life and away from sins and immoral conduct, thereby contributing to peace, progress and welfare of all.

(d) On this basis, the Tribunal concluded that the impugned object cannot be regarded as "wholly or substantially religious in nature" and does not amount to propagation of any particular religion in a manner attracting the embargo under Section 80G(5).

Conclusions

(a) The overall objects of the trust are charitable in nature and not wholly or substantially religious.

(b) The specific object of organizing religious programmes for raising funds, in the context of the trust's dominant charitable purposes and stated mode of utilization, does not disqualify the trust from approval under Section 80G(5).

(c) The rejection of approval by the authority on the ground of existence of a religious object was unjustified.

(d) The order rejecting approval under Section 80G(5) was set aside, and a direction was issued to grant approval under Section 80G(5) from the date of the application.

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