TaxTMI 
TaxTMI 
2011 (3) TMI 121
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....ctively on 31-3-2010. Ld. DIT(E) sought certain clarification and certain additional information. A reply was filed by assessee. It seems that ld.DIT(E) was not happy about object clause 5(xi) of the trust deed of the assessee. According to ld. DIT(E), this clause mentioned that the trust funds would be applied for religious activities on mutual consent of all the trustees. As per ld. DIT(E) Explanation 3 r.w. clause (ii) of Sec. 80G(5) of the Act would imply that the purpose for which a trust seeking Sec.80G approval was formed should not have any religious object. Though the assessee submitted that income utilisation for any religious activity would be restricted to 5% of the total income, ld. DIT(E) was of the opinion that reliance to su....
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....for religious activity. According to him, the restrictive clause of 5% appearing in sub-sec.(5B) of sec. 80G would apply only if all the objects were of charitable nature. It is therefore necessary for us to look into the objects of the trust. Objects appearing in clause 5 of the trust deed 22-03-2010 runs as under: "i) To provide financial assistance to the needy and poor towards: a. Education b. Medical Relief c. Relief of Poor Sports and culture ii) To honour scholars by presenting them with a purse and/or clothes and such other articles on occasions as the Trustees may choose from time to time. iii) To organize feeding of poor sickly persons or to contribute towards such poor feed....
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....of Trust's income as may be permitted by the Income Tax Act, 1961 from time to time. xii) To build up corpus out of the monies donated or use the said donation for any of the objects of the Trust hereinabove mentioned as the Trustees may deem fit. xiii) To adopt villages from rural areas, empower people and bring about all round economic and social development. xiv) To develop leadership qualities in the youth. xv) To assist in farm productivity by the introduction of latest technology including organic farming drip irrigation." 6. There cannot be any doubt regarding the charitable nature of the various objects mentioned above, except for cl. (xi). Clause (xi) does authorize the trustees to apply income of the trust for relig....
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....e provisions of section 11 shall not apply in relation to such income, if- (a) the institution or fund maintains separate books of account in respect of such business; (b) the donations made to the institution or fund are not used by it, directly or indirectly, for the purposes of such business; and (c) the institution or fund issues to a person making the donation a certificate to the effect that it maintains separate books of account in respect of such business and that the donations received by it will not be used, directly or indirectly, for the purposes of such business;]] (ii) the instrument under which the institution or fund is constituted does not, or the rules governing the institution or fund do not, contain any provi....
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....which is of a religious nature for an amount nor exceeding five per cent of its total income in that previous year shall be deemed to be an institution or fund to which the provisions of this section apply. " 7. A harmonious construction is required of of sub-cl. (ii) of sub-sec.(5) and subsec. (5B) of the Act. Here the assessee has not mentioned any particular community or caste as mentioned in clause (iii) of sub-sec.(5)of sec.80G. None of the prior clauses of clause (i) to (x) of the objects mention anything regarding any benefit accruing to any particular religious community. In our opinion, a mere mentioning of application of a limited part of the income for religious activity per se, will not render the trust a non charitable one, ....