TaxTMI 
TaxTMI 
TaxTMI 
2025 (11) TMI 32
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....lant Trust are religious and that main condition of section 80G(5) were contravened. The order so passed is against the facts and sanction of law. It be so held now. 2. The ld CIT (Exemp) further erred in law and on facts in not appreciating that the objects of appellant were charitable and not religious and Trust was not for benefit of any particular religious community or caste and hence was registered on the basis of such objects as per provisional registration u/s. 12A and approved u/s. 80G. The refusal to grant final approval u/s. 80G(5) and cancelling provisional approval is patently wrong. It be so held now. 3. The ld CIT(Exemp) also erred in law and on facts in observing that expenditure incurred for religious purposes was in excess of 5% as provided in section 80G(5) of the Act since the funds received/ transferred to corpus funds are not income / expenditure for the purpose of section 80G(58) of the Act. It be so held now. 4. The ld CIT(Exemp) erred in law and on facts in not considering the entire deed of Trust and the objects, the Trust being not for benefit of any particular religious community or caste and objects were charitable only it be ....
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....he went on to hold that the assessee had expended on religious activities in excess of the limit specified u/s. 80G(5B) of the Act and, therefore, the assessee was not a fund/institution for charitable purposes and hence, not entitled to approval u/s. 80G(5) of the Act. Ld. Counsel for the assessee pointed out that in identical facts and circumstances as in the case of the assessee wherein only one of the objects was for religious purposes and the expenses incurred on religious activity did not exceed the limit specified u/s. 80G(5B) of the Act, the ITAT, Rajkot Bench had held the assessee entitled to grant of approval u/s. 80G(5) of the Act in the case of Jay Mataji Charitable Trust vs. CIT(E) in ITA No.116/Rjt/2023, dated 23.02.2024. Copy of the order was placed before us. 5. Ld. DR, on the other hand, supported the order of the Ld. CIT(E) contending that having religious objects and having expended on religious activity more than the limit specified u/s. 80G(5B) of the Act, the Ld. CIT(E) had rightly denied grant of approval to the assessee u/s. 80G(5) of the Act. He vehemently supported the order of the Ld. CIT(E) holding that the assessee had violated both the provisions of....
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....ld not provide for the application of any of its income for purpose other than a charitable purpose. The relevant subclause (ii) reads as under: "(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;" 10. The main Section 80G(5) and Sub-clause (ii) of the said Section repeatedly use the word "charitable purpose". The same has been explained in Explanation (3) to the Section to not include any purpose the whole or substantially the whole of which is of a religious nature: "Explanation 3.-In this section, "charitable purpose" does not include any purpose the whole or substantially the whole of which is of a religious nature." 11. In effect, reading Section 80G(5) of the Act and Sub-clause (ii) thereof along with Explanation (3) to the Section, it is clear that institutions or funds with purposes which are religious in nature are excluded from availing the benefit of Section 80G of the Act. ....
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....ed to be of a religious nature. 10. It would be further useful to reproduce sub-Section (5B) to Section 80G of the Act for ready reference:- "(5B) Notwithstanding anything contained in clause (ii) of sub-section (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 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....
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.... the above, we hold that for denying assessee's approval u/s. 80G(5) of the Act for being religious in character, the mere existence of some objects being religious in nature is not crucial. A trust or a fund can be of a composite character having both charitable and religious purposes. It is only if the application of income of such fund or trust of religious purposes exceeds 5% of total income, that such trust or fund would be treated as religious in nature and not eligible to benefit u/s. 80G of the Act. In the facts of the present case, the Ld.CIT(E) has categorically noted at para 8 of his order that the objects of the trust are composite in character and at the same time, he has found the expenses incurred on religious activities by the trust to have exceeded 5% of its income. Ld. Counsel for the assessee has, however, pointed out that by holding so the Ld. CIT(E) has not considered the explanation furnished by the assessee pointing out that the expenses identified by the Ld. CIT(E) as having been incurred for religious purposes were in fact charitable in character. Our attention was drawn to the submissions made by the assessee in this regard vide letter dated 29.11.2024, ar....