AI Drafter 
TaxTMI 
TaxTMI 
2026 (1) TMI 306
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.... falling under the category of composite trust i.e. religious-cum-charitable. Object No. (Y) of the Trust is reproduced at page 15 para 8 of the Ld. CIT(E)'s order and reads as under: "(Y) To arrange and organize religious, social and cultural program from time to time" 3. When confronted with the same, the assessee had submitted to the Ld. CIT(E) that all its objects were charitable in nature for the benefit of the public at large without any discrimination on the ground of religion, race, caste etc. and did not involve the furtherance of any religious activity. The submissions of the assessee in this regard are reproduced at para 7.2 of the order. The assessee also contended that de hors its submissions regarding none of its object being religious in character, the assessee had not spent any amount on religious activities during the impugned year and, therefore, in terms of the provisions of Section 80G(5B) of the Act also, the assessee trust could not be categorized as being religious in nature so as to deny grant of approval u/s.80G(5) of the Act. The Ld. CIT(E), however, rejected all the submissions made by the assessee and held that being a composite trust, it had....
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.... fund/institution. Thus, as per the Ld. CIT(E), approval u/s.80G(5) of the Act is to be granted only to the fund/institution established for charitable purposes and the assessee has been noted to have violated the said condition on two counts: i. Its objects have been found to be religious in nature; & ii. It has been found to have violated the conditions of 80G(5B) of the Act by expending more than the limit specified under the said Section for religious purposes. 7. It is relevant to consider the provisions of Section 80G(5) of the Act which are pertinent for adjudicating the issue before us. 8. Section 80G of the Act provides for deduction of donations made to certain Funds/Institutions while computing taxable incomes. Sub section (5) of the said section prescribes certain conditions to be fulfilled by funds/institutions for donations made to them being eligible for deduction under the section. The basic requirement is of the fund/ institution being established " for a ch aritable purpose". "Deduction in respect of donations to certain funds, charitable institutions, etc. 80G. ............. .................... ....
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....mount 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." 13. Reading Section 80G(5)(ii) with Explanation (3) thereto and 80G(5B) of the Act, it is clear that even composite trusts with objects having religious character are eligible to benefits of Section 80G of the Act subject to the expenses incurred on the religious purposes being minimal, i.e. not exceeding 5% of their total income. Meaning thereby that whether the activities of fund or trust are primarily found to be undertaken for charitable purpose and only a very small / minimal component of the activities being carried out is for religious purposes, then such funds or trust are to be treated as of charitable nature eligible for benefits provided u/s.80G of the Act. This is exactly how the ITAT, Rajkot Bench in the case of Jay Mataji Charitable Trust vs. CIT(E) in ITA No.116/Rjt/2023, dated 23.02.2024 interpreted the provisions of the Section holding at para 7 to 10.1 of its order as under: "7. We have heard the rival contentions and perused the material on record. 8. It would be useful ....
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.... in nature, the character of the assessee trust would be religious and not charitable and the assessee would not be entitled to the benefits of Section 80G of the Act de hors the fact that it has not expended more than 5% of its income on religious activities as provided for 80G(5B) of the Act. 15. We have gone through the said decision and we find that the ITAT in the said decision had held that Section 80G(5B) of the Act does not override the provisions of sub-clause (iii) of the Section. The ITAT in the said case has not held Section 80G(5B) of the Act to override the provisions of Section 80G(5)(ii) of the Act, which has been interpreted above by us. The ITAT has referred Clause (iii) to Section 80G(5) of the Act reads as under: "(iii) the institution or fund is not expressed to be for the benefit of any particular religious community or caste;" The said sub-clause states that a fund institution established for charitable purposes should not be expressed to be for the benefit of any particular religious community or caste to be eligible for benefits provided u/s.80G of the Act. Sub-clause (iii) does not refer to the religious nature of the activity ca....
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....tributed through wide publication. The passes are taken by people from sangh for some token charges say Rs. 10 or Rs. 20 and they may distribute among their friends and neighbours irrespective of their caste and religion. All people get together on fixed day and venue and they meet each other and do networking and social activities. On this, the sangh has to incur majority expenses and this expenses are debited to Swamivatsalaya vahivati and therefore it is proved beyond doubt that all these expenses are not of religious in nature. The break up of Rs. 91525 is as under. Though this are stated under the head RELIGIOUS but they are not of religious in nature. This can be reflected from the break up as under: Chaitr a Mas Oli expense 28,258 Paryushan parv expense 3,050 Aasomas oli parna vahivati expense 2,410 Aasomas oli vahivati expense 22,878 Aayam bil General expense 210 Manavrahat expense 28,219 Upashray Vahivati expense 6500 TOTAL 91,525 It can be seen from the above that all the above expenses are of manav rahat and lunch expenses on particular dates and that date and tithi are co related and thus expenses are named accord....