Section 80G Approval Cannot Be Denied Merely for Puja Expenditure: ITAT Delhi

Dwarka Kalibari Vs Assessing Officer (ITAT Delhi)

Summary: The Delhi Bench of the Income Tax Appellate Tribunal allowed Dwarka Kalibari’s appeal against rejection of its Form 10AB application for approval under section 80G for assessment year 2026–27. The Commissioner of Income Tax (Exemption), Delhi, had rejected the application on 20 March 2026 after treating daily puja and Durga puja expenses exceeding 5% of total income over the preceding three years as religious activity. On the same date, the Commissioner had granted the society registration under section 12AB while describing its activities as charitable.

The society argued that its dominant purpose was charitable, that its activities were open to people irrespective of caste, creed or religion, and that it also undertook relief operations during natural calamities. It contended that the extent of any expenditure requiring disallowance was for the Assessing Officer to examine during assessment, rather than a reason for refusing approval. The Revenue relied on the Supreme Court decision in Upper Ganges Sugar Mills Ltd. to argue that the society’s objects concerning temples and worship were substantially religious.

The Tribunal followed its coordinate Bench decisions in Baba Banda Singh Vs. CIT(E) and Om Welfare Society Vs. CIT(E). It held that an object concerning a temple or puja was not, by itself, the society’s sole dominant purpose; the Commissioner had overlooked its relief objective. The Tribunal also adopted the view that evaluation of expenditure exceeding the applicable threshold belongs in assessment proceedings. It considered the refusal inconsistent with the section 12AB approval granted on similar objects by the same authority. Allowing the appeal, it directed the Commissioner to grant section 80G approval within four weeks of receiving the order. The Tribunal did not remand the application for another examination.

Cases Discussed

• Baba Banda Singh Vs. CIT(E) — ITAT Delhi; ITA No. 1835/Del./2026; order dated 19.08.2026 — followed in holding that a temple-related object does not, by itself, justify refusal of section 80G approval; the Tribunal adopted its direction to grant approval within four weeks.
• Om Welfare Society Vs. CIT(E) — ITAT Delhi; ITA Nos. 8278 & 8279/Del./2025; order dated 06.08.2026 — followed on the distinction between examining eligibility for registration and considering expenditure during assessment. The quoted order directed the CIT(E) to evaluate section 80G approval as per law.
• Upper Ganges Sugar Mills Ltd. vs. CIT — Supreme Court; (1997) 93 Taxman 645 — cited by the Revenue for its objection to an institution with a substantially religious object; also considered in the quoted Baba Banda Singh order.
• Assistant Commissioner of Income Tax (Exemption) Vs. Ahmedabad Urban Development Authority — Supreme Court; Civil Appeal No. 21762/2017 — cited by the assessee on the dominant-purpose test.
• CIT (Exemptions) Vs. Tulshishyam Mandir Society, Junagadh — Gujarat High Court; (2026) (6) TMI 832 — cited by counsel in the quoted Baba Banda Singh order concerning religious expenditure and section 80G.
• Shri 108 Gupti SagarDham Jain Society Vs. CIT (Exemption), Chandigarh — ITAT Delhi; ITA No. 7551/Del/2025; order dated 26.05.2026 — cited by counsel in the quoted Baba Banda Singh order on section 80G eligibility.
• Shri Baba Balakpuri Ji Charitable Society Vs. ITO Exemption — ITAT Delhi; ITA No. 5833/Del/2025; order dated 18.02.2026 — cited by counsel in the quoted Baba Banda Singh order on section 80G eligibility.
• Anjuman-E-Himayath-EIslam Vs. CIT, Exemption, Chennai — ITAT Chennai; ITA No. 3951/Chny/2025; order dated 10.04.2026 — cited by counsel in the quoted Baba Banda Singh order on section 80G eligibility.
• Shree ModeshwariDvsthan Society Ahmedabad Vs. CIT (Exemption) — ITAT Ahmedabad; ITA No. 145/Ahd/2025 — cited by counsel in the quoted Baba Banda Singh order on section 80G eligibility; the supplied text states no order date.
• BhatidhamSeva Society Vs. CIT (Exemption) — ITAT Ahmedabad; ITA No. 33/AHD/2025; order dated 08.01.2026 — cited by counsel in the quoted Baba Banda Singh order on section 80G eligibility.
• Sri Guru Nanak Devji Religious And Charitable Society Vs. CIT (Exemptions) — ITAT Cuttack; ITA No. 384/CTK/2018; order dated 24.05.2021 — cited by counsel in the quoted Baba Banda Singh order on section 80G eligibility.
• Shirur Mutt case — Supreme Court; AIR 1954 SC 282 — cited in the quoted Baba Banda Singh order for the Essential Religious Practices test.
• Yadvindra Public School Association — Punjab and Haryana High Court; citation not stated in the supplied text — referred to in the quoted Om Welfare Society order on the scope of the registration inquiry.
• Ananda Social & Educational Trust — Supreme Court; citation not stated in the supplied text — referred to within the quoted Om Welfare Society order on registration.
• CIT(E) vs. Rajkot Jilla Gayatri Parivar Trust — Gujarat High Court; [2020] 117 taxmann.com 121; SLP dismissed, [2020] 117 taxmann.com 122 (SC) — relied upon by the assessee concerning section 80G approval where charitable registration had been granted.
• CIT vs. Lok Sewa Sansthan Samiti Sonebhadra — Supreme Court; [2019] 105 taxmann.com 203/263 Taxman 495 — cited within the Rajkot Jilla Gayatri Parivar Trust extract reproduced in the order.
• Sonepat Hindu Educational and Charitable Society vs. CIT — Punjab and Haryana High Court; (2005) 278 ITR 262 — cited by the assessee.
• Zindagi Society v. CIT(E) — ITAT Delhi; ITA No. 3716/Del/24 — cited by the assessee; the supplied text states no order date.

FULL TEXT OF THE ORDER OF ITAT DELHI

The appeal of the assessee is directed against the order dated 20.03.2026 of ld. CIT(Exemption), Delhi wherein the Form 10AB for approval u/s 80G of the Income Tax Act 1961 (hereinafter referred to as “the Act”), was rejected on the ground that the appellant has spent more than 5% of the total income during the last three years on daily puja expenses and durga puja expenses, which cannot be held to be a charitable activity as the same being necessarily a religious activity.

2. Aggrieved by the said order, the assessee is in appeal before the Tribunal and has raised the following grounds of appeal:

“1. That on the facts and circumstances and in law, the Order of the Learned COMMISSIONER OF INCOME TAX (EXEMPTION),NEW DELHI in rejecting the application of the Appellant for registration u/s 80G (5) (i) of the Income Tax Act 1961 is bad in law.

2. That the Order of the Learned COMMISSIONER OF INCOME TAX (EXEMPTION),NEW DELHI is against the principles of natural justice as no query was raised during the proceedings u/s 80G (5) (i) for the reasons given in rejection order dated 20/03/2026.

3. That the Order of the Learned COMMISSIONER OF INCOME TAX (EXEMPTION), NEW DELHI is not sustainable in law inasmuch as the Learned COMMISSIONER OF INCOME TAX (EXEMPTION), NEW DELHI in Col. 2A in Form 10AD has admitted the nature of activities as Charitable.

4. That the Order of the Learned COMMISSIONER OF INCOME TAX (EXEMPTION),NEW DELHI is not sustainable in law inasmuch as the Learned COMMISSIONER OF INCOME TAX (EXEMPTION),NEW DELHI vide Order dated 20/03/2026 has granted the Appellant registration u/s 12AB (1)(b) for the assessment year 2027 28 to assessment year 2023-37 by holding the activities of the Appellant on identical facts.

5. That the Order of the Learned COMMISSIONER OF INCOME TAX (EXEMPTION).NEW DELHI is not sustainable in law on facts and law in holding that the activity of mandir and worship of Kali mata, Durgamata and other gods and goddesses is religious in nature without appreciating that the Society does not put any restriction of any kind on the religion , caste on the devotes for these activities. The mandir or the place of worship is in the nature of mediation center and does not distinguish people of different religion, caste or creed.

6. That the Hon’ble Calcutta High Court has categorically held that Durga Puja is not a religious function confined merely to worship or religious offering but a melting point of different cultures having element of ceremony, cultural programmes and cannot be narrowed down to a mere religious offering of a particular community. It is a ceremony of joyous nature and gaiety.

7. That the Learned COMMISSIONER OF INCOME TAX (EXEMPTION), NEW DELHI failed to call for and consider Form 10BD for any of the financial years which contains donations received by the Appellant from a large section of Society.

8. That the Appellant is engaged in charitable activities only without any profit motive which rules out business activity as held by ITAT Delhi in ITO Exemption vs Wrestling Federation of India. The emphasis was on substantive activity in determine institutions nature.

9. That Hon’ble Madras High Court in CIT Vs. Angel Education Trust (2022) 440 ITR 449 has held that predominant purpose is to be seen in determine institutions nature.”

3. We have heard the ld. AR who has argued that the approval u/s 12A of the Act was granted on the same grounds, vide order dated 20.03.2026 wherein the nature of the activities of the assessee has been held to be charitable, as mentioned in column 2A of the said order. It is therefore argued that the denial of registration u/s 80G is contrary to the approval granted u/s 12AB(1)(b) of the Act placed at page 13 of the paper book. With regard to the observation of the ld. CIT(E) that the expenditure incurred on religious activities are more than 5% of the total income during the last 3 years having been spent on daily puja expenses and durga puja expenses, it is submitted that the ld. CIT(E) cannot assume the character of Assessing Officer and in case there was any expenses beyond 5% of the total income, which is permissible limit, it is the job of the Assessing Officer to take necessary action during the assessment proceedings and the registration u/s 80G of the Act cannot be rejected on that ground. It is further argued that the activity of the assessee/appellant is necessarily charitable as stands recognized while granting approval u/s 12AB of the Act. It is further argued that one of the object of the trust is held to be religious in nature by ld. CIT(E), as it has the object to construct a mandir and secondly to arrange special and seasonal worship of Kali Mata, Durga Mata and other gods and goddesses. It is argued that the objects of the trust cannot take away its dominant purpose of charitable nature, which is charitable activity and one of object of trust, constructing a mandir cannot be assigned to any particular religion because the said activity is open to every caste, creed & community and not confined to only any particular religious community. The ld. AR has taken us to page 36 of the paper book, where one of the aim and objects as per Memorandum of Association is “(m) to organize religious operations amongst people without distinction of caste, creed or religion in times of natural calamities, etc.” In that regard, the ld. AR has relied the case of Hon’ble Supreme Court in Assistant Commissioner of Income Tax (Exemption) Vs. Ahmedabad Urban Development Authority in Civil Appeal No. 21762/2017, wherein the Hon’ble Apex Court applied the dominant purpose test “meaning of the primary objective is charitable, incidental commercial activity does not destroy the charitable nature”. It is further held by the Hon’ble Apex Court that only when the general public utility “GPU” is converted into “trade, commerce or business”, then the limits set out in section 2(15) of the Act are to be applied, adding that the provision is not clearly worded and does not provide precise definition of what is “in the course of carrying out such advancement”. It is argued before us that the dominant purpose of the trust is charitable and for that reason the approval u/s 12AB of the Act has been granted by the ld. CIT(E) and there is nothing on record that the appellant trust is not involved in any commercial activity.

4. The ld. DR on the other hand submitted that the Hon’ble Supreme Court in Upper Ganges Sugar Mills Ltd. vs. CIT (1997) 93 Taxman 645 (SC) has observed that even if one of the object of the society is wholly or substantially of religious nature, the society cannot be said to be established for charitable purposes. It is therefore argued by ld. DR that since one of the objectives of the trust is to establish temples and to make arrangements for daily worship of Kali Mata, Shivalinga and Radha Krishna in traditional manner in accordance with Shastric injunctions and to arrange special and seasonal worship of Kali Mata, Durga Mata and other Gods and Goddesses in accordance with Shastric ritual, therefore, one of the object of the society is wholly and substantially religious in nature and therefore, the approval u/s 80G of the Act has been largely rejected. However, the ld. DR is silent on the question of approval u/s 12AB of the Act where the nature of the trust has been held to be “charitable” in nature and approval has been granted by the same ld. CIT(E) without any objection.

5. We have considered the rival submissions and examined the material on record. In a case, where approval u/s 80G of the Act was rejected while relying the order of Hon’ble Supreme Court in Upper Ganges Sugar Mills Ltd. (supra), ld. co-ordinate bench of Delhi Tribunal in the case of Baba Banda Singh Vs. CIT(E) in ITA No. 1835/Del./2026 order dated 19.08.2026 had the occasion to deal the identical issue in detail and after detailed discussion on all aspects of a case of similar nature has decided in favour of assessee trust by directing the ld. CIT(E) to grant approval in four weeks u/s 80G of the Act. The relevant observations contained in Para 3 to 9 are extracted below as under: “

3. Ld. Counsel for the assessee has submitted that without examining the financials of the assessee ld. Prescribed authority has concluded about religious activities being conducted by the assessee while that is not the case. It was submitted that after decision of Upper Ganges Sugar Mills Ltd. Vs. CIT (supra) there has been amendment in the Act, and our attention was drawn to sub-section (5B) of Section 80G inserted by Finance Act, 1994 w.e.f 01.04.1994 which provides that wherein institutions make expenditure in the relevant year, which is of religious nature for an amount not exceeding 5% of its total income in that previous year then, for the previous year, the institution shall be deemed exempted u/s 80G. Ld. Counsel relied decisions in CIT (Exemptions) Vs. Tulshishyam Mandir Society, Junagadh (2026) (6) TMI 832 – Gujarat High Court; and Coordinate Bench decision in Shri 108 Gupti SagarDham Jain Society Vs. CIT (Exemption), Chandigarh vide ITA No.7551/Del/2025 dated 26.05.2026; and Coordinate Bench decision in Shri Baba Balakpuri Ji Charitable Society Vs. ITO Exemption vide ITA No. 5833/Del/2025 order 18.02.2026; Anjuman- E-Himayath-EIslam Vs. CIT, Exemption, Chennai vide ITA No. 3951/Chny/2025 dated 10.04.2026; and Shree ModeshwariDvsthan Society Ahmedabad Vs. CIT (Exemption) vide ITA No. 145/Ahd/2025; and BhatidhamSeva Society Vs. CIT (Exemption) vide ITA No. 33/AHD/2025 dated 08.01.2026; and Sri Guru Nanak Devji Religious And Charitable Society Vs. CIT (Exemptions) vide ITA No. 384/CTK/2018 dated 24.05.2021 to contend that Hon’ble Delhi High Courts and Coordinate Benches have consistently taken a view that if the religious expenditure are within the statutory limit, approval u/s 80G of the Act cannot be denied.

3.1 Ld. DR vehemently supported the impugned order of ld. CIT(E).

4. Appreciating the contention and after perusal of material on record we are of the considered view that ld. Prescribed authority has nowhere analysed financials of the assessee to draw inference with regard to the activities of the assessee being religious in nature and only on the basis of objectives in the memorandum of association such a conclusion has been drawn. In this regard, we are of the considered view that memorandum of association containing articles with regard to objects and scope of activities are generally framed keeping in mind the long term perspective of the Society and such institutions try to include and extend their activities to all spheres of charitable activities and also for the reason to avoid seeking amendments in the objectives.

4.1 Thus, without actually indicating as to what activities of religious nature have been taken up by institution, merely on the basis of reference to some objectives, mentioned in the objective documents, which may be religious too, the denial of approval is not justified. More so, when it is the case of renewal of approval and wherein it is merely necessary to examine the financials of immediately previous years to allege expenditure were made on religious activities.

5. In the case of assessee our attention has been drawn to the total computation of income and financials and reports for year ending 31.03.2021 to 31.03.2025 available at page No. 40-101 of the paper book and the same show that actually no expenditure on alleged religious activities has been incurred. Rather, it is established that the Society maintained two set of financials, one for Baba Banda Singh Bahadur Public School and another for remaining activities of the Society and the financials of the applicant Society do not show any expenditure was made for religious purposes. The decisions relied by the ld. Counsel with regard to benefit of sub-section (5B) of Section 80G of the Act certainly deserves to be relied by us.

6. Further, having perused the Bye Laws of assessee made available at page 14-39 of the PB and which are also reproduced in the impugned order, we are of the considered view that assessee sufficiently establishes that there is actually no case of alleged religious activities. The same reflect that the primary object is to enhance cohesion between different communities, to work for establishing religious sentiment in Indian children and to promote their allegiance towards Indian culture. Further they have objective of running hospital while keeping itself away from all political activities in every manner. Thus, without doubt primary objectives of the society are charitable in nature and only because it refers to construction or maintenance of Mandir & Gurudwara or other places of pilgrimage does not make its activity religious in nature as there is nothing that while constructing these places of worship or managing these places of worship or places of pilgrimage there is any indication of discrimination of the beneficiaries on the basis of their personal religion. More so when places of worship of different faiths are to be run along with educational institutions an medical facilities, there cannot be justification to allege that assessee before us is engaged in religious activity.

7. We are of the considered view that ld. Tax authorities while examining the scope of religious activities in context to grant of benefit of approval u/s 80G(5)(ii) of the Act should be circumspect to the predominant and actual intention of the applicant institution, as religions have in their foundation a philosophy of larger benefit to all forms of life and character building of individuals. Thus every religious activity cannot be looked with culpability to deny approval. Religion is a way of life intrinsically linked to the societal integration and peace and also dignity of an individual. It is only when there is an indication that intention of a religious activity is to segregate and benefit people on the basis of caste, creed, or their way of life or religious sentiment, or to propagate particular religious belief to exclusion of other or proselytisation then certainly the objective of establishing or maintaining any religious institution or place of worship and pilgimages, will make said religious activity, a prohibited activity, to deny approval. The activity, though emanating out of religious order cannot be alleged to be religious activity, while the colour actually is secular. A distinction must always be made between a practice which is religious and a practice in regard to a matter which is purely secular and has no element of religiosity associated with it.

8. In fact, to our mind, since the Act does not define ‘religious activity’, thus while examining the application of approval u/s 80G, to satisfy if the assessee is engaged or not, in religious activity, the Essential Religious Practices (ERP) test, doctrine settled by the Hon’ble Supreme Court of India in 1954 during the Shirur Mutt case AIR 1954 SC 282, to decide which religious rituals and activities receive protection under Articles 25 and 26 of the Constitution, should broadly be the parameters to examine if the said activity is religious, so as to deny the approval of benefit of section 80G of the Act. It is only in case of expenses on ERP are made, then that should be examined to establish that the predominant objective is religious activity. Activities like establishing and running hospital, educational institutions, places of rehabilitation of bovine or other animals, Dharamshala, maintaining amenities at religious places of worship or pilgrimages, and such like public utility activities, if are taken up by any institution, trust or society, which also serves any place of worship, by performing essential practices of a religion, then what is material is to examine what is the predominant object and proportionality of expenditures.

9. In the light of aforesaid, discussion made by us, we find that ld. CIT(E) has given a very narrow interpretation to scope of Section 80G, and has thus erroneously dismissed the application of the assessee. We thus, allow the appeal of the assessee. The ld. CIT(E) is directed to grant the approval, in a period of 4 weeks from receipt of this order.”

6. Regarding the exceeding of expenditure more than 5% on the religious activity, we have noticed that the similar issue was before the co-ordinate bench in the case of Om Welfare Society Vs. CIT(E) in ITA Nos. 8278 & 8279/Del./2025 order dated 06.08.2026 where one of us i.e. Hon’ble A.M. has delivered the order and has discussed that the ld. CIT(E) cannot assume the character of Assessing Officer for evaluating the relevant expenditure exceeding, if any, because it is essentially an exercise which can be looked into and carried out during the assessment proceedings by the Assessing Officer. Para 10 & 11 of the said order are relevant and extracted below as under:

10. Further, the Hon’ble Punjab & Haryana High Court in the case of Yadvindra Public School Association (supra) had relied on the decision of Hon’ble Supreme Court in the case of Ananda Social & Educational Trust case. We observed that the similar view was expressed by the various courts that at the time of granting registration, ld. CIT(E) has to satisfy himself on the objects of the trust and 19 ITA Nos. 8278 & 8279/Del/2025 Om Welfare Society genuineness of the activities, he cannot extend himself to the shoes of the Assessing Officer. At this stage if any activities carried on by an institution which is charitable in nature and its activities are genuine, unless there is any deviation which are not considered to be charitable, the relevant expenditure to the extent of non-charitable activities, the same can be disallowed at assessment stage. In the present case, looking at the substantial activities carried on by the assessee to impart the education merely on certain deviation of funds to other institution which are interest bearing funds, that itself cannot be the reason to reject the registration. The competent authority has to verify only charitable objects and its activities in terms of case objects to grant registration and should not indulge in finding reasons to reject the applications for grant of registration. Therefore, in our considered view the assessee has been granted registration over the years and it deserves to be granted registration therefore, we direct the ld. CIT(E) to grant registration and if there is any deviation, the Assessing Officer may be directed to do the needful at the assessment stage. Therefore, we are inclined to direct accordingly.

11. The other appeal relates to registration u/s 80G which were denied for the reasons that the application for registration u/s 12AB was denied. Since, we are directed to grant the registration u/s 12AB, we direct the ld. CIT(E) to evaluate the grant of registration u/s 80G as per law. In the result, the appeal filed by the assessee is allowed as per above terms.”

7. Respectfully following the judgments of the co-ordinate Bench in ITA No. 1835/Del/2026 and ITA Nos. 8278 & 8279/Del/2025 (referred supra), we have noticed that the facts and circumstances are identical before us in the appeal and therefore the denial of approval u/s 80G of the Act simply on the ground that one of the object of the trust is to construct a temple and to arrange for puja of some deity which cannot be said to be the only dominant purpose of establishing the trust or its activity. While denying the approval, the ld. CIT(E) has ignored the other important objective of the trust as contained in clause (3) sub-clause (3) of the Memorandum of Association placed at page 36 of the papal book stating “to organize relief operations amongst people without distinction of caste, creed or religious in times of natural calamities etc.” We respectfully agree with the observation of the ld. co-ordinate Bench in ITA No. 1835/Del/2026 (supra) in para No.7 observing that “thus every religious activity cannot be looked with culpability to deny the approval. Religion is a way of life intrinsically linked to the societal integration and peace and also dignity of an individual. It is only when there is an indication that intention of religious activities to segregate and benefit people on the basis of caste, creed or their way of life or religious sentiment or to propagate particular religious belief to the exclusion of others or proselytisation, then certainly the objective of establishing or maintaining any religious institution or place of worship and pilgrimages, will make said religious activity, a prohibited activity, to deny approval”. While respectfully following the observation of the ld. co-ordinate bench in the above order, we are of the considered opinion that the ld. CIT(E) has unjustifiably denied the approval u/s 80G of the Act, notwithstanding that the approval u/s 12AB on the similar objective of the trust was granted by the same authority. In that regard, the ld. AR has relied on the following case laws:

• CIT(E) vs. Rajkot Jilla Gayatri Parivar Trust [2020] 117 taxmann.com 121 (Guj.) [SLP dismissed by SC in [2020] 117 taxmann.com 122 (SC)] wherein it was held that “the issue is now squarely covered by a decision of the Supreme Court in the case of CIT vs. Lok Sewa Sansthan Samiti Sonebhadra [2019] 105 taxmann.com 203/263 Taxman 495. It is not in dispute that the respondent – assessee stands registered as a Charitable Institution under section 12-A of the Act. In such circumstances, as a natural corollary, the application under section 80G(5) of the Act would also beliable to be allowed.”
• Sonepat Hindu Educational and Charitable Society vs. CIT (2005) 278 ITR 262 (P&H)
• Zindagi Society v. CIT(E) (ITA No. 3716/Del/24) (ITAT Delhi)

8. For these reasons, we are of the considered opinion that the ld. CIT(E) has erroneously dismissed the application of the assessee. We accordingly allow the appeal of the assessee and direct the ld. CIT(E) to grant the approval within a period of four weeks from the receipt of this order.

9. In the result, the appeal of the assessee is allowed. Order Pronounced in the Open Court on 31/08/2026.