Prabandhakareni Committee Vs CIT (ITAT Delhi)
Delhi ITAT: Charitable Status Cannot Be Re-Characterised as ‘Religious-cum-Charitable’ Without Change in Objects or Cogent Evidence
The Delhi ITAT allowed the appeals of The Prabandhakareni Committee, Shree 1008 Bhagwan Parsavnath Digamber Jain Atishay Kshetra, Hansi, holding that the Commissioner (Exemptions) could not arbitrarily alter the institution’s status from “charitable” to “religious-cum-charitable” or reject approval under Section 80G in the absence of any change in its objects, activities or supporting evidence.
The assessee had enjoyed registration under Sections 12A/12AA and approval under Section 80G since 1993, which had been consistently renewed. While granting renewal under Section 12AB, the CIT(E) changed the nature of the institution to “religious-cum-charitable” and simultaneously rejected renewal under Section 80G by invoking Explanation 3 to Section 80G, alleging that the assessee was engaged in religious activities.
The Tribunal found that the assessee’s objects had remained unchanged since its incorporation in 1992, a fact not disputed by the Revenue. It also noted that the Department itself had consistently recognised the assessee as a charitable institution and had granted registration under the new regime in 2021. In such circumstances, the rule of consistency applied, and the Department could not re-characterise the institution without recording any adverse findings or producing cogent evidence.
The Tribunal further observed that the CIT(E) had failed to identify any object that was wholly or substantially religious and had made no effort to establish or quantify any expenditure on religious activities exceeding the permissible limit under Section 80G(5B). The Revenue also failed to rebut the assessee’s contention that none of its dominant objects was religious and that its benefits were not confined to any particular religious community or caste.
Holding that settled charitable status cannot be disturbed without cogent evidence, the Tribunal set aside the orders of the CIT(E), restored the assessee’s status as a “charitable” institution, and directed grant of registration under Section 12AB(1)(b) and approval under Section 80G. The appeals were accordingly allowed.
FULL TEXT OF THE ORDER OF ITAT DELHI
The above captioned appeals are preferred by the assessee are directed against the order dated 21.01.2026 and 16.01.2026 passed by the ld. Commissioner of Income-tax (Exemptions)-Delhi [hereinafter referred to as the Ld. CIT(E)] for seeking registration of trust under Section 12AB(1)(b) and 80G of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’).
2. Since the above captioned appeals were heard together and the facts in issues are identical, both the appeals are being disposed of by this common order for the sake of convenience and brevity.
3. The grounds of appeal raised by the assessee in ITA No.3391/Del/2026 are as under:
1. That the impugned order dated 21.01.2026, passed by the Commissioner of Income Tax (Exemptions), Chandigarh, rejecting the application of the assessee under Section 80G(5) of the Act, is illegal, arbitrary, non est, and contrary to the facts and provisions of law and thus is liable to be set aside.
2. That the learned Commissioner has gravely erred in rejecting the application of the assessee society under Section 80G despite having categorically recorded the nature of activities of the assessee society as “Charitable” in the impugned order itself, and thus, the impugned order is self-contradictory and liable to be set aside.
3. That the learned Commissioner further erred in holding that the assessee society is engaged in religious activities, which is contrary to and unjustified in light of the objects of the society as set out on 18.04.1992 in the object clauses of the MoA, particularly when there has been no change, modification, addition, alteration, and/or deletion in any of the object clauses of the assessee society since its inception.
4. That the objects of the assessee society fall squarely within the definition of “charitable purpose” under Section 2(15) of the Act, and none of the objects is wholly or substantially religious in nature.
5. That the impugned order suffers from a serious illegality and irregularity apparent on the face of the record, inasmuch as no specific object or activity has been identified by the learned Commissioner as being religious in nature.
6. That admittedly the assessee society has not applied any of its income towards religious activities; however, by virtue of Section 80G(5-B) of the Act, even if any incidental expenditure of religious nature is incurred up to the prescribed limit, the same does not -7-Page 7 of 8 disentitle the assessee from approval under Section 80G, and without quantifying the amount allegedly spent on religious activities, the rejection of the application is non est, void ab initio, and liable to be set aside.
7. That the learned Commissioner has erred in law in rejecting the application merely on the basis of a presumed interpretation of certain clauses of the Memorandum of Association, without appreciating that the dominant purpose and activities of the assessee society are charitable in nature and benefit the public at large.
8. That the impugned order has been passed without bringing any adverse material or cogent evidence on record, without confronting the assessee with any such material, and without affording any reasonable opportunity of being heard, and thus the same is bad in law and liable to be set aside.
9. That the impugned order is liable to be set aside and the assessee society is entitled to approval under Section 80G(5) of the Act. The assessee craves leave to add or amend any ground of appeal at the time of hearing.”
4. The grounds of appeal raised by the assessee in ITA No.3392/Del/2026 are as under:
1. “That the impugned order dated 16.01.2026 passed by the Commissioner of Income Tax (Exemptions), Chandigarh, to the extent of changing the nature of the assessee society from “Charitable” to “Religious-cum-Charitable” is illegal, arbitrary, non est, and contrary to the facts and provisions of law and thus is liable to be set aside to this extent.
2. That the learned Commissioner has gravely erred in recording the nature of activities of the assessee society as Religious-cum Charitable, despite the clear declaration made in the application that the activities are purely charitable, and thus, the impugned order is liable to be modified to this extent.
3. That the learned Commissioner further erred in describing the assessee society as a Religious Entity, which is contrary to and unjustified in light of the objects of the society as set out on 18.04.1992 in the object clauses of the MoA, particularly when there has been no change, modification, addition, alteration, and/or deletion in any of the object clauses of the assessee society since its incorporation and commencement of activities till date.
4. That the objects of the assessee society fall squarely within the definition of charitable purpose under Section 2(15) of the Act.
5. That the impugned order suffers from a serious illegality and irregularity apparent on the face of the record.
6. That admittedly the assessee society has not applied any of its income towards religious activities; however, by virtue of Section 80G(5-B) of the Act, it is authorised to spend up to 5% of its gross receipts towards the attainment of religious objects, and without quantifying the amount spent on religious activities, recording the finding that the assessee society is a “Religious Entity” is non est, -8-Page 8 of 9 void ab initio, and is liable to be set aside, and the impugned order is required to be modified to this extent.
7. That, vide the impugned order, the nature and character of the assessee society have been illegally and arbitrarily changed, without confronting the assessee with any adverse material or bringing any cogent evidence on record, and without granting any opportunity of being heard to the assessee society regarding such change in its classification, nature, or character; thus, the impugned order to this extent is bad in law and is liable to be set aside to this extent.
8. That the impugned order is liable to be modified so as to record the assessee as a Charitable Institution correctly. The assessee craves leave to add or amend any ground of appeal at the time of hearing.”
5. Brief facts of the case are that the assessee society was registered on 20.11.1992 under the provisions of the Societies Registration Act. The assessee society filed an application for renewal of registration u/s 12AB(1)(b) and renewal of approval under Section 80G(5)(ii) of the Act in Form No. 10AB on 26.09.2025, respectively. The ld CIT(E), Chandigarh, passed an order dated 21.01.2026 in Form No. 10AD granting registration u/s 12AB(1)(b) but rejecting the application of the assessee under Section 80G. While granting registration u/s 12AB(1)(b), the CIT(E) has recorded the nature of activities of the assessee society as “Religious-cum-charitable” instead of “Charitable”; whereas while rejecting the approval u/s 80G, the CIT(E) records its activity as “charitable” but rejected the application on the ground that the assessee is engaged in religious activities, invoking Explanation 3 to section 80G of the Act.
6. The assessee is aggrieved and is before us. The ld counsel of the assessee vehemently submitted that the assessee society primary object is of undertaking charitable activities, including relief of the poor, advancement of education, medical relief, promotion of social welfare, and advancement of objects of general public utility, as defined under Section 2(15) of the Act. The assessee society, has been regularly carrying on charitable activities object in accordance with clauses set out in its MoA. It is stated that registration under Section 12AA of the Act was granted for the first time in 1993 and, ever since the grant of initial registration under Section 12A and approval under Section 80G of the Act, it has consistently been treated by the Income Tax Department as a charitable institution. Such registration and approval have been duly renewed from time to time. Furthermore, under the new regime, the assessee society has also been granted re-registration under Section 12AB as well as approval under Section 80G(5) of the Act, vide orders dated 24.09.2021. These orders constitute conclusive evidence that the assessee society has been a charitable institution since its inception.
7. The ld AR stated that since the date of incorporation on 18.04.1992 till date, there has been no change, modification, addition, alteration, and/or deletion in any of the object clauses of the assessee society. It is submitted that in the absence of any change whatsoever in the object clauses, activities, or factual position of the assessee society, and without recording any adverse finding, the character and nature of the assessee society could not have been altered, modified, changed, or re-characterised abruptly or unilaterally by the Department, particularly when the Department itself has, over the years, consistently recognised and treated the assessee society as a charitable institution.
8. The ld AR further stated that even otherwise, the alleged conclusion that the assessee society is engaged in religious activities has neither been substantiated nor supported by any cogent material on record, and in the absence of any such material, the settled and accepted position could not have been departed from. The action of the Department in rejecting the application under Section 80G, despite the continued existence of identical objects and activities since 1992, is arbitrary, unjustified, and contrary to the settled principles of law. Accordingly, the rule of consistency squarely applies to the facts of the present case, and the impugned action of the Department is liable to be set aside.
9. Per contra, the ld DR relied on the order of the CIT(E).
10. We have heard the rival submissions and have perused the materials on record. It is an admitted fact that the society was registered under Section 12AA/12A and approval under Section 80G of the Act since 1993 and the Revenue has consistently treated it as charitable institution. It is also an unrebutted fact that the assessee’s primary object is of undertaking charitable activities, including relief of the poor, advancement of education, medical relief, promotion of social welfare, and advancement of objects of general public utility, as defined under Section 2(15) of the Act. Furthermore, under the new regime, the assessee society has also been granted re-registration under Section 12AB as well as approval under Section 80G(5) of the Act, vide orders dated 24.09.2021. To our mind, such approvals do qualify as evidences of charitable activities of the assessee society.
11. We also note that the assessee’s assertion that since the date of incorporation on 18.04.1992 till date, there has been no modification, alteration, and/or deletion in any of the object clauses of the assessee society, has not been rebutted by the Revenue. We are therefore inclined to agree with the assessee that in the absence of any change in the object clauses, activities, or factual position of the assessee society, and without recording any adverse finding, the character and nature of the assessee society cannot be re-characterised from “charitable” to “Religious-cum-charitable” institution.
12. We further find that the CIT(E) has not justified or substantiated his conclusion that the assessee society is engaged in religious activities with any cogent material on record. The clause 5B of section 80G, provides, notwithstanding the provisions of section 80G(5)(ii) and Explanation 3 of section 80G, that where the assessee expenditure on religious activities, is within the threshold of 5% of its total income, it shall be considered as “charitable” Institution. We find that the CIT(E) has made no effort to establish or quantify the application of assessee’s income towards religious activities vis a vis its financial statement, being more the prescribed limit.
13. In the instant case, from the perusal of the aims and objects of the society, we do not find any activity whose purpose is either wholly or substantially the whole, for religious nature. We are therefore of the view that Explanation 3 of section 80G is not applicable in the present case. Moreover, the assessee’s averment that the assessee society has not applied any income towards the religious activity, and that none of the objects of the assessee society authorises it to carry out religious activities as a dominant object, nor do the objects restrict the benefits of the society to any particular religious community or caste, remains unrebutted by the Revenue. It appears to us that the CIT(E) has arbitrarily altered the status of the assessee society which is unjustified and contrary to the settled principles of law. We are therefore of the considered view that in absence of any cogent evidence/material, the settled and accepted position cannot be disturbed. Accordingly, we set aside the impugned action of the CIT(E) and hold that the assessee is eligible for grant of registration u/s 12AB(1)(b) and 80G of the Act, as “charitable” organisation. The ground is allowed in aforesaid terms.
14. In the result, the appeal in ITA Nos.3391 & 3392/Del/2026 is allowed.
Order was pronounced in the open court on 06.08.2026.
