Rajesh Ravindran Charity Trust Vs CIT(Exemption) (ITAT Ahmedabad)
Composite Trust Eligible for Section 80G Approval if Religious Expenditure ≤ 5%—CIT(E) Directed to Grant Approval
In Shri Rajesh Ravindran Charity Trust v. CIT (Exemption), Ahmedabad (ITA No. 34/Ahd/2025), the ITAT Ahmedabad Bench examined whether a composite (charitable-cum-religious) trust is per se disentitled from approval under Section 80G(5) of the Income-tax Act.
The CIT(E) had denied approval solely on the basis that one of the trust’s objects referred to organizing religious, social and cultural programmes, treating the trust as non-charitable and holding that Section 80G(5B) does not permit approval to composite trusts. The assessee contended that its objects were charitable for the public at large, that it had not incurred religious expenditure, and in any case, Section 80G(5B) deems eligibility where religious expenditure does not exceed 5% of total income.
The Tribunal rejected the CIT(E)’s interpretation and held that the statutory scheme expressly permits composite trusts to obtain 80G approval, subject to the 5% cap on religious expenditure. It relied on a consistent line of ITAT precedents interpreting Section 80G(5), Section 80G(5)(ii), Explanation (3), and Section 80G(5B) harmoniously.
Key Principles Laid Down:
-
Mere presence of a religious object does not disqualify a trust from 80G approval.
-
Section 80G(5B) overrides Section 80G(5)(ii) and Explanation (3) to deem eligibility where religious expenditure is ≤ 5% of total income.
-
The bar is only where the whole or substantially the whole purpose is religious.
-
CIT(E)’s reliance on unrelated precedent was misplaced; composite trusts are permissible under the statute.
Decision:
