Charitable trust approval under section 80G upheld where welfare objects and genuine activities outweighed incidental surplus concerns.

A trust with welfare-oriented objects, including socio-economic empowerment, relief to the poor, education, medical aid, self-help groups and micro-credit programmes, was treated as carrying out charitable activities rather than business. Its prior recognition under section 12A, together with the absence of commercial exploitation, profit-oriented conduct or distribution of surplus, supported genuineness of the activities. For approval under section 80G, the relevant enquiry is the nature of the objects and the genuineness of activities, and the proviso to section 2(15) was held inapplicable because the activities fell within relief to the poor. The trust was therefore considered eligible for section 80G approval.

---

---

Issues: Whether the assessee trust was entitled to approval under section 80G of the Income-tax Act, 1961, and whether its activities, including facilitative and micro-credit related functions, were charitable or in the nature of business.

Analysis: The trust deed authorised welfare-oriented objects such as socio-economic empowerment, relief to the poor, education, medical aid, self-help groups and micro-credit programmes. The record showed that the trust had already been recognised as charitable for registration purposes under section 12A of the Income-tax Act, 1961, and there was no material to show commercial exploitation, distribution of surplus, or profit-oriented conduct. The incidental surplus, financial statements and annual reports did not indicate an independent business character, and the activities were found to be in furtherance of the stated charitable objects. At the stage of approval under section 80G of the Income-tax Act, 1961, the relevant enquiry is the nature of objects and genuineness of activities, and the proviso to section 2(15) of the Income-tax Act, 1961 was held inapplicable on the facts as the activities fell within relief to poor.

Conclusion: The trust was held eligible for approval under section 80G of the Income-tax Act, 1961, and the rejection was unsustainable.

---