TaxTMI 
TaxTMI 
2026 (9) TMI 1159
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....aged in activities related to running and maintenance of a temple and conducting religious ceremonies and rituals. 2. As per the provisions of Section 80G(5) of the Income-tax Act, 1961, read with the applicable rules, approval under Section 80G cannot be granted to institutions or funds if they are expressed to be for the benefit of any particular religious community or caste, or where the activities are predominantly religious in nature. 3. In the present case, the activities carried out by the assessee appear to be religious in nature, including but not limited to the management of temple premises, organization of religious events, and performance of rituals associated with the said temple. Accordingly, it appears that the assessee is engaged in religious activities which may not qualify for approval/renewal under Section 80G of the Income-tax Act, 1961 4. In view of the above facts, it is proposed to reject the application for renewal of approval under Section 80G filed by the assessee. 5. You are hereby requested to show cause as to why the application for renewal of approval under Section 80G should not be rejected on the above-mentioned gr....
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....the assessee in appeal before us on the following grounds of appeal: 1. On the facts and circumstances of the case and in law, the learned CIT(E) has erred in characterising the Appellant as an entity primarily engaged in temple management and religious activities and thereby rejecting the application for renewal of approval under Section 80G(5] of the Income Tax Act, 1961, without appreciating that over 78.70/o of the Appellant's total consolidated income of Rs. 1,01,14,186/- for Fy 2024- 25 is derived from Government grants for a recognised Vedic educational institution and a State Government-supported animal 'welfare centre, that the expenditure directly attributable to temple/religious activities is only Rs. 65,960/- being less than 0.65% of total receipts, and that the impugned finding is perverse for being contrary to the consolidated audited accounts, activity reports, and documentary evidence placed on record" 2. On the facts and circumstances of the case and in law, the learned CIT(E) has erred in misapplying Section 80G(5B) and Explanation 3 to Section 80G of the income Tax Act, 1961, by holding the Appellant ineligible on account of religious ac....
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....tion for renewal of approval under Section 80G(5) even assuming some portion of its activities is of a religious nature, inasmuch as the entire religious expenditure of the Appellant being Rs. 65,960/- constitutes less than 1% of total receipt of Rs. 1,01,14,1861- for FY 2024-25, which is well within the 5% threshold prescribed under Section 80G(5B) of the Income Tax Act, 1961, by virtue whereof the Appellant is statutorily deemed eligible for approval under Section 80G, and the impugned order rejecting the application without giving effect to this deeming provision is legally untenable. 6. On the facts and circumstances of the case and in Iaw, the order is passed in violation of Principle of Natural Justice and is liable to be quashed" 7. On tire facts and circumstances of the case and in law, the Ld. " Commissioner of Income Tax (Exemptions), Bhopal erred in rejecting to the application for approval u/s 80G(5) even registration under Section 12AB(1)(b) was granted on 16.03.2026 recognizing the appellant as a genuine charitable institution, while the two being complementary provisions under the same new registration regime introduced by the Finance Act, 2020" ....
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.....P. Gopalan Board, Bhopal; and (c) Shri Sankat Mochan Hanuman Mandir - a temple open to the general public without any restriction of caste, creed, sex, or religion, in addition to which Incidental socio-religious activities are conducted. 3. Appellant is also registered with the Ministry of Corporate Affairs, Government of India for CSR activities, bearing CSR Registration No. CSR00017488 dated 11.11.2021, and holds a prior Section 80G(5) approval vide Form No. 10AC dated 24.09.2021 (URN: AADTS4645QF20072), valid for AY 2022-23 to AY 2026-27. B. Financial Profile - Decisive Evidence of Charitable Character 1. The consolidated audited accounts for FY 2024-25 (Audit Date: 23.09.2025; UDIN: 25406186BMIXYM3074; Firm: Dinesh Nema & Associates, CA, Guna) disclose Total Income of Rs. 1,01,14,186/-. Of this: -Rs. 57,95,951/-(57.3%) - received from Maharshi Sandipani Rashtriya Veda Vidya Pratisthan (Ministry of Education, Gol body) for teacher salaries, student maintenance, and contingent grants; -Rs. 21,65,881/- (21.4%) received from M.P. Gopalan Board, Bhopal (State Government body) for animal welfare/Gaushala activities; -To....
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....g 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.' The non-obstante clause overrides both the Section 80G(5)(ii) requirement and Explanation 3 making this a mandatory deeming once the 5% threshold test is satisfied. PART III-ARGUMENTS ON GROUNDS OF APPEAL Ground No. 1- Erroneous Characterisation of the Appellant as Primarily Religious -The Finding is Factually Perverse and Unsustainable 1. The Ld. CIT(E) has characterised the Appellant as an entity 'primarily engaged in temple management and religious activities'. This finding is directly and conclusively contradicted by the consolidated audited accounts and Government records on file. 2. The FINANCIAL PROFILE of the Appellant for FY 2024-25 establishes beyond doubt: Head of Expenditure 2024-25 (Rs.) 2023-24 (Rs.) 2022-23 (Rs.) 2021-22 (Rs.) A. RELIGIOUS EXP....
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....n made the following prayer: "In view of the foregoing facts, submissions, consolidated audited accounts, and judicial precedents, the Appellant most respectfully prays that this Hon'ble Tribunal may be pleased to: a) QUASH AND SET ASIDE the impugned order dated 24.03.2026 passed in Form No. 10AD by the Ld. CIT(Exemptions), Bhopal (DIN: ITBA/EXM/F/EXM45/2025-26/1087834666(1)); and b) DIRECT the grant of renewal of approval under Section 80G(5) of the Income Tax Act, 1961 in favour of the Appellant; and/or c) In the ALTERNATIVE, SET ASIDE the impugned order and REMIT the matter to the Ld. CIT(Exemptions) with specific directions to: (i) examine the actual religious expenditure as a percentage of total income and record a categorical finding on the applicability of Section 80G(5B); (ii) examine and record findings on the charitable character and activities of the Vidyalaya and Gaushala; (iii) examine whether the substantive eligibility conditions under Section 80G(5) are satisfied; and (iv) pass a fresh speaking order after affording the Appellant a reasonable opportunity of being heard; and d) GRANT such other and further relief as th....
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....ion (1) shall be the following, namely :- (a) any sums paid by the assessee in the previous year as donations to- ......... (iv) any other fund or any institution to which this section applies; or (5) This section applies to donations to any institution or fund referred to in subclause (iv) of clause (a) of sub-section (2), only if it is established in India for a charitable purpose and if it fulfils the following conditions, namely :- (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; (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....