Anandavalli Kaingarya Sabha Vs CIT (ITAT Chennai)
Chennai ITAT Remands U/s 80G Rejection, Holds Religious Trust Cannot Be Denied Approval Without Verifying Nature of Expenditure
The Chennai ITAT set aside the rejection of approval under section 80G and remanded the matter to the CIT(E), holding that mere existence of religious objects or expenditure on pooja cannot, by itself, justify denial of 80G registration. The Tribunal observed that the trust’s objects included education, Vedic teaching, medical camps, relief to the poor, scholarships, cultural programmes, and other charitable activities benefiting the public without discrimination. It further noted that the CIT(E) had failed to examine the actual break-up of expenditure to determine whether the trust exceeded the limit prescribed under section 80G(5B) for expenditure of a religious nature. Relying on the Bangalore Tribunal’s decision that teaching Vedas is not necessarily a religious activity but may constitute a charitable activity, the Tribunal directed the CIT(E) to re-examine the expenditure in light of section 80G(5B), relevant judicial precedents, and the true nature of the trust’s activities after providing the assessee a reasonable opportunity of being heard. The appeal was allowed for statistical purposes.
Cases Discussed
- Ashvalayana Vrunda vs ITO (ITAT Bangalore), ITA No.1084 & 1085/Bang/2022 dated 04.01.2023
FULL TEXT OF THE ORDER OF ITAT CHENNAI
This appeal by the assessee is against the order of the Commissioner of Income Tax (Exemptions), Chennai (in short “CIT(E)”) dated 08.19.2025 rejecting claim of the assessee towards registration u/s. 80G of the Act.
2. The assessee is a charitable institution with main objects towards promoting spiritual well being, social welfare and community development for the general public without any discrimination based on caste, creed, gender or religion. The assessee was established pursuant to the trust deed dated 09.11.2016. The assessee made an application for approval u/s. 80G of the Income Tax Act, 1961 (in short “the Act”) on 07.01.2025 in Form-10AB. The CIT(E) during the course of proceedings called on the assessee to furnish details pertaining to the activities of the assessee, financial statements, governing documents and other relevant supporting materials. The CIT(E) also called on the assessee to submit details of activity report, photographic evidence etc. After considering the submissions of the assessee, the CIT(E) rejected the application stating that the assessee had religious objects and carried on religious activities. The assessee is in appeal before the Tribunal against the order of the CIT(E).
3. We have heard the parties, and perused the material available on record. The Ld. Authorized Representative (AR) of the assessee submitted that the assessee is a society carrying on religious and charitable activities and therefore is eligible for registration u/s. 80G of the Act. The Ld. AR further submitted that the activities of the assessee which is supported by the photographs as extracted in the order of the CIT(E) to prove that the assessee is engaged in charitable activities not specific to any caste, creed, gender or religion. The Ld. AR drew our attention to the financial statements of the assessee to submit that the charitable activities carried on by the assessee for the year under consideration is more than 22% which goes to prove that the assessee is carrying on religious as well as charitable activities. From the perusal of the financial statements, we notice that the assessee has received donations to the tune of Rs. 26 Lakhs and the assessee has incurred various expenses including pooja expenses to the tune of Rs. 7.7 Lakhs. Sub section (5B) of Section 80G provides that –
(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.
4. During the course of hearing the bench queried as to whether the assessee satisfy the above condition given that the financial statements reflect Pooja expenses which is in the religious nature. The Ld. AR submitted that the Pooja expenses also include the activities of charitable nature like teaching veda etc. The ld AR further submitted that if given one more opportunity before the lower authorities the assessee would be able to substantiate the fact that the assessee the expenses incurred towards charitable activities satisfy the condition as specified under sub section (5B) of Section 80G of the Act. We also notice that in the trust deed the objects of the Trust is stated to be:
“4. OBJECTS
I. To teach simpler and more natural way of life and systematically propagate spiritual knowledge to society at large and to educate all the people in the techniques of spiritual life in order to arrest the imbalances of the values of life and achieve real unity and peace in the world irrespective of caste, creed, religion, age or sex:
II. To erect and maintain holy places including temples and to propagate and perform Poojas, Homas, etc.,
III. To do such other things or engage in spiritual activities conductive or incidental to the attainment of furtherance of the objects of the Trust.
IV. To provide all assistance in the form of Donations, Advances or Loans to Charitable or Religious Trusts or Societies or Institutions or any other Charitable or Religious Trusts or Societies or Institutions.
V. To engage in providing education for promotion of moral, social, cultural, economic values of society/public at large and in furtherance of this object:
a. To assist, undertake or publish books, journals or any other literature on religion, philosophy, culture, history.
b. To conduct Vidvath Sadas, Cultural lectures, Vedic Upanyasas, Musical Concerts, Seminars, Conferences, workshops, discourses etc., to promote objects and ideals of trust and Indian philosophy.
c. To conduct vedic and vedanthic class and run schools for that.
d. To institute studentship, scholarship, stipends, medals, prizes etc., to help and encourage deserving students and to provide monetary aid to students.
e. To establish, maintain, develop and donate for the establishment, maintenance and development of book banks, libraries, muscums and recreation rooms for the benefit of public at large.
f. To assist other institutions or organizations engaged in furthering similar objectives.
VI. To engage in providing relief to the poor and in furtherance of this object:
a. To conduct regular Medical camps to improve the Health conditions of the village people.
b. To give food to the needy and deserving class of the society irrespective of the caste, creed or community.
VII. To engage in other objects of general public utility necessary and incidental for the purpose of attainment of the abovementioned objects and in furtherance of this object:
a. To establish, run and aid old age homes, community centers, public, halls, cultural centers, including auditoria.
b. To acquire properties and construct buildings in furtherance of the objects of the Trust.
c. To invest, re-invest any funds or to acquire, maintain any property or to construct, reconstruct, alter and maintain any building in order to carry out the objects of the Trust.
VIII. To carry out such acts which aids in up-liftment of downtrodden socially and economically, cure society from superstitions and social evils and also to collaborate assist and join with similar institutions for fulfilling the objects of the Trust.
IX. To accumulate the subscription, donations and other receipts of the Trust, and invest the same for the purpose of applying such accumulation towards the objectives of the Trust.”
5. It is also relevant to mention that the Bangalore Bench of the Tribunal in the case of Sri.Ashvalayana Vrunda vs ITO (ITA No.1084 & 1085/Bang/2022 dated 04.01.2023) has held that Hinduism is a way of life and teaching Vedas, it cannot be considered as a religious activity. In the present case, the Ld. AR submitted that the Pooja expenses as debited in the income and expenditure account includes expenditure towards teaching Veda and other charitable activities etc. We are of the considered view that the rejection of registration u/s. 80G of the Act on the ground that the assessee is a religious trust without examining the details of actual expenses incurred by the assessee as towards religious or charitable purposes is not correct. Considering that the CIT(E) has not examined the actual breakup of the expenditure incurred by the assessee we are inclined to give one more opportunity to verify the actual expenditure to determine the nature of activities of the assessee. Accordingly, we remit the appeal back to the CIT(E) to verify the breakup of expenses in the light of provisions of sub section (5B) of Section 80G of the Act keeping in mind the judicial precedence mentioned herein above with regard to religious and charitable institutions being eligible for registration u/s. 80G of the Act. The CIT(E) is further directed to call for the necessary details as may be required in this regard to decide the issue in accordance with law after giving a reasonable opportunity of being heard to the assessee. It is ordered accordingly.
6. In the result, the appeal of the assessee is allowed for statistical purposes.
Order pronounced on 21st day of July, 2026 at Chennai.
