TaxTMI 
TaxTMI 
TaxTMI 
2024 (3) TMI 816
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.... Commissioner of Income Tax (Exemption) is erroneous on facts and in law. 2. The Learned CIT (Exemption) has wrongly concluded that mere mention of object of religious nature in trust deed is reason to deny registration u/s. 80G. The Learned CIT (Exemption) has failed to consider that Explanation 3 to Section 80G is to be read together with Section 80G(5B). 3. The Learned Commissioner of Income Tax (Exemptions) has erred in rejecting the application and not granting registration u/s 80G(5)(vi) of the Income Tax Act, 1961 without appreciating facts and circumstances of the case. 4. Appellant craves liberty to add, alter or delete any ground(s) either before or in the course of hearing of the appeal." 3. The brief facts of the case are....
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.... particular religious community or caste. The plain reading of said provisions of the Act makes it evident that the provisions of sec 80G(2)(a)(iv) of the Act is applicable only to such institution or fund which is established in India for Charitable purposes, there is no provision for transfer or application of fund for any purposes other than a charitable purpose. However, the sec 80G(5B) of the Act further prescribes that notwithstanding anything contained in clause (ii) of subsection (5) and Explanation 3, an institution or fund which incurs expenditure, during any previous year, which is of a religious nature for an amount not exceeding five per cent of its total income in that previous year shall be deemed to be an institution or fund....
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....idental to the primary or dominant purpose would not prevent the trust or the institution from being a valid charity. The judgment is of no assistance in construing Explanation 3 of section 80G. 10. To reiterate, 'Explanation 3 does not require the ascertainment of whether the whole or substantially the whole of the institution or fund's charitable purpose is of a religious nature. If it did, it would read differently. It requires the ascertainment of whether there is one purpose within the institution or fund's overall charitable purpose which is wholly, or substantially wholly, of a religious nature. There is little doubt that clause 2(h) of the trust deed which permits the trustees to support prayer halls and places of wors....
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....d and established for charitable purpose only and while incurring the expenditure during any previous year, which is of a religious nature for an amount not exceeding to 5% of its total income for that previous year, shall be deemed to be an Institution or fund to which the provisions of section shall apply. The benefit of section 80G(5B) is thus provided to limited extent to the Institution or trust or fund, established for charitable purpose only when it incurs expenditure on religious activities not exceeding 5% of its total income in that previous year. This provision did not say that the assessee trust or fund should not exist or established for charitable purpose." 9. As discussed above, the applicant/assessee, itself accepted that ....
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.... for the assessee drew our attention to the decision of Pune ITAT in the case Shri Sant Zolebaba Sansthan Chikhali vs. CIT(E) in ITA No. 381/Pun/2021 vide order dated 12.05.2022 in which the ITAT observed that Explanation 3 to Section 80G states that "charitable purpose" does not include any purpose the whole or substantially the whole of which is of a religious nature, which means that at least some part of the activities of the trust, which are of a religious nature, are permitted. Further, the ITAT observed that this fact is further fortified by sub-Section (5B) of Section 80G which provides that an institution / fund which incurs expenditure which is of a religious nature not exceeding 5% of it's total income shall be deemed to be an in....
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....r fund to which the provisions of this section apply." 10.1 Sub-Section (5B) provides that an institution or fund which incurs expenditure, during any previous year, which is of a religious nature for an amount not exceeding 5% of it's total income in that previous year, shall be deemed to be a institution or fund to which the provisions of this section apply. Further, notably sub-Section 5B starts with the words "Notwithstanding anything contained in Clause (ii) of sub-Section (5) and Explanation 3...". Therefore, on plain reading of sub-Section (5B) to Section 80G, it is evident that if any institution or fund incurs any expenditure which is of a religious nature for an amount not exceeding 5% of it's total income, in that previous year ....