TaxTMI 
TaxTMI 
2014 (2) TMI 654
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....0G(5) of the IT Act rejecting the application of the assessee of approval under the above provisions. 5. Briefly, the facts of the case are that the assessee moved application before the ld. CIT for approval u/s. 80G(5) of the IT Act. The ld. CIT on perusal of the trust deed of the assessee trust noticed that the dominant objects are for the benefit of Hindu Community only and purely religious in nature. The same were reproduced in the impugned order. It was, therefore, found that these objects contravene the provisions of section 80G(5)(ii), (iii) and Explanation 3 to section 80G (5) of the IT Act. The same are also reproduced in the impugned order. The ld. CIT was, therefore, of the view that dominant objects of the assessee trust are religious in nature and for the benefit of the Hindu Community. He has relied upon the decision in the case of CIT vs. Upper Gangage Sugar Mills Ltd., 154 ITR 308 (Calcutta), in which it was held that establishment or maintenance of public places of worship and prayer halls has been held to be a religious purpose. The aforesaid decision was confirmed by the Hon'ble Supreme Court in the case of Upper Gangage Sugar Mills Ltd. vs. CIT, 227 ITR 578. ....
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....on 10 : Provided that where an institution or fund derives any income, being profits and gains of business, the condition that such income would not be liable to inclusion in its total income under the 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 provision for the transfer or application at any time of the whole or any part of the income or assets of the institution or fund for any purpose other than a charitable purpose; (iii) the institution or fund is not expressed to be for the benefit ....
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....in which it was held - "Section 80G of the Income-tax Act, 1961, sets out the deductions to be made, in accordance with and subject to its provisions, in computing the total income of an assessee in respect of donations to certain funds, charitable institutions, etc. It applies, by reason of sub-section (5) thereof, to any other fund or any institution to which the section applies (sub-section (2) (a) (iv) if it is established in India "for a charitable purpose" and fulfils the condition, inter alia, that it is "is not expressed to be for the benefit of any particular religious community or caste". Explanation 3 states, "In this section, 'charitable purpose' does not include any purpose the whole or substantially the whole of which is of a religious nature." Explanation3 takes note of the fact that an institution or fund established for a charitable purpose may have a number of objects. If any one of these objects is wholly, or substantially wholly, of a religious character, the institution or fund falls outside the scope of section 80G and a donation o it does not secure the advantage of the deduction that it gives. Explanation 3 does not require the ascertainment of whether th....
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....This provision did not say that the assessee trust or fund should not exist or establish for charitable purpose. The assessee shall have to prove remaining expenses are incurred out of total income, other than 5%, on charitable activities. But the assessee failed to do so. Though, the ld. counsel for the assessee submitted that the accounts were produced before the ld. CIT to show that less than 5% expenditure were incurred out of total income on religious activities, but no such points have been raised before the ld. CIT, which also finds support from the fact that no such specific ground of appeal has been raised even before the Tribunal. The assessee never pleaded that it has incurred less than 5% of total income in previous on religious activities. However, we have gone through the income and expenditure account filed in the paper book. At page 20 of the paper book, income and expenditure account for the period 23.02.2012 to 31.03.2012 is filed showing receipt of donations at Rs.11,957/- and Gausewa expenses are incurred in a sum of Rs.10,450/-. At page 25, the income and expenditure account ending on 31.03.2013 is filed showing the donations of Rs.83,077/- and apart from other....