ITAT Allows Section 80G Deduction To The Trust Which Is Not Substantially Religious

The Pune Bench of the Income Tax Appellate Tribunal (ITAT) has allowed the deduction under Section 80G of the Income Tax Act to the trust, which is not substantially religious.

The two-member bench headed by R.S. Syal (Vice President) and Partha Sarthi Chaudhury (Judicial Member) has observed that if a trust or institution incurs expenses for religious purposes, which are inclusive and only a small part of the income, and if the substantial work done by the trust is charitable in nature and benefits the public at large, then the institution or trust has to be granted exemption under Section 80G.

The assessee/appellant applied for approval under section 80G(5)(vi) and has given submissions in which the assessee has given details of charitable and social welfare work that it undertakes, such as schools for poor children, gaushalas, old-age homes, upliftment of weaker sections of society, etc. The assessee stated that since its inception, the activities of the assessee have been carried out by receiving donations for the fulfillment of the objects prescribed in the memorandum and article of association.

Broadly, the reason for the rejection of the grant of exemption under section 80G(5)(vi) by the CIT (Exemption) was that the assessee received donations of Rs. 13,50,00,000 from Ganapati Devasthan Trust to be used for the construction and maintenance of the temple of Gajanan Maharaj, but the construction and maintenance of the temple are not included in the objects of the assessee trust. Therefore, the assessee trust has not carried out its activities as per its objects.

The CIT (Exemption) observed that the administration and maintenance of the temple of Gajanan Maharaj is a purely religious activity. The assessee has not given complete head-wise details of the capital expenditure incurred during the financial years 2015- 16, 2016-17, and 2017-18. The CIT (Exemption) held that the assessee failed to substantiate the genuineness of charitable activities and therefore did not fulfill the conditions as required under Section 80G(5).

The assessee contended that once the registration under Section 12A has been granted to a trust, the approval under Section 80G cannot be rejected. CIT (Exemption) has satisfied himself regarding the genuineness of the objects and the charitable nature of the activities performed by the assessee-trust. So, therefore, there is no reason for denial of the grant of exemption.

The department contended that once it was found that the trust created for charitable purposes was engaged mainly in the construction of the religious temple, where no charitable activities were being carried out, the department was right in denying renewal of recognition under Section 80G(5) of the Income Tax Act.

The tribunal has observed that the department has not been able to make a case through facts that the assessee is substantially a religious trust.

Case Title: Santshreshtha Gajajan Maharaj Sevabhavi Sanstha Versus The Commissioner of Income-tax

Citation: ITA No. 2004PUN/2019

Date: 06.12.2022

Counsel For Appellant: Hari Krishan

Counsel For Respondent: Sardar Singh Meena

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