Modeshwari Devsthan Trust Ahmedabad Vs CIT (Exemption) (ITAT Ahmedabad)
Summary: The Ahmedabad Bench of the Income Tax Appellate Tribunal considered an appeal filed by Shree Modeshwari Devsthan Trust against the rejection of its application in Form 10AB for final approval under Section 80G(5) of the Income-tax Act, 1961. The Commissioner of Income Tax (Exemption) had rejected the application on 30 December 2024, treating the trust as a religious-cum-charitable institution whose objects included maintaining temples, installing idols, celebrating religious festivals, conducting spiritual programmes and providing facilities for devotees. The CIT(E) concluded that these objects violated Section 80G(5)(ii). The trust challenged the rejection, arguing that its explanations and supporting materials had not been properly considered and that expenditure incurred on religious activities was negligible.
The Tribunal observed that the CIT(E) had rejected the application solely by examining the religious nature of the trust’s objects, without recording any specific finding on whether its religious expenditure exceeded 5% of total income. Referring to Section 80G(5B), the Tribunal held that the statutory provision permits religious expenditure within the prescribed 5% limit. Accordingly, the decisive issue was the actual amount spent on religious purposes, rather than merely the existence of religious objects in the trust deed. The matter was remanded to the CIT(E) for the limited purpose of verifying whether religious expenditure exceeded the statutory threshold and reconsidering the application in accordance with law. The assessee was directed to cooperate with the proceedings and avoid unnecessary adjournments. The appeal was allowed for statistical purposes, without the Tribunal directly granting final Section 80G approval.
FULL TEXT OF THE ORDER OF ITAT AHMEDABAD
This appeal has been filed by the Assessee against the order dated 30.12.2024 passed by the Commissioner of Income-Tax (Exemption), (“the CIT(E) in short), whereby rejecting the application filed in Form 10AB seeking approval under Section 80G(5) of the Income-tax Act, 1961 (“the Act”).
2. The assessee has raised the following grounds of appeal:
1. The CIT(Exemption) has erred in law and in facts by rejecting application filed in Form 10AB of the Act vide Acknowledgment No.6670981803010124 seeking approval under clause (iii) of first proviso to Section 80G(5) and thereby cancelling the provisional approval granted in Form AC valid from 11.03.2023 to AY 2025-26.
2. It is therefore, prayed that the order passed by CIT(Exemption) rejecting Application may pleas be set aside and final approval u/s.80G may be granted for the sake of justice and equity.
3. Your appellant craves reserves his right to add, amend, alter, and/or withdraw any ground of appeal at the time of hearing of the appeal.
3. The assessee Trust filed an application in Form 10AB seeking final approval under Section 80G(5). The CIT(Exemption) rejected the application on the ground that the Trust’s objects are predominantly religious in nature, thereby treating it as a composite trust and holding that it violates Section 80G(5)(ii). The CIT(E) relied on clauses relating to establishment and maintenance of temples, installation of idols, celebration of religious festivals, and other spiritual activities. The relevant extract of the order is reproduced as under:
8. The reply of the applicant dated 16.12.2024 is considered; however, the same is not found acceptable. To begin with, on perusal of the objects of the applicant as stipulated in the instrument of creation of the Trust, it is observed that following objective of the instrument are religious in nature which put the applicant under the category of composite trust i.e. Religious-cum-charitable trust. The English version of the object is reproduced as under for ready reference:
(4) Objectives
(8) Authorized and canteen for boarding, lodging, dining arrangements for devotees coming to the temple, establish, performing and run pooja tiniya.
(9) Celebrating Patotsav and other Holy festivals and events every year.
(10) For the celebration of Holy events and festivals in temple of Modheshwari Mataji and to ensure it can be celebrated without any kind of doubt and if necessary also make arrangement for Alayadu fund.
(13) Serving or assisting Sadhus and Sandhvis and all such work.
(17) To carry out all the necessary activities for the overall development of the temple, to build and run wadis, halls so as to be useful in the celebration and social functions of the society.
(18) To organise get together for instilling spiritual knowledge without any kind of discrimination, celebrating religious events, organise Sneh Sammelan, Mass marriage, group Yagna, establishing Community Hall.
(19) to organise Religious events like Bhagavat Saptah, Ramayan Katha, Mahabharata Katha, Sunderakand, Bhajans, Satsang programs, Dayaro and related dramas.
(20) to establish Temples, Dharmashala, Ram Parayana, Gardens for the spiritual development of the people.
(21) To conduct foreign tours for the members of the Executive Committee to advocate for the preservation of the religious, linguistic and cultural heritage of the region and other countries.
(22) to establish idols of Sri Shankar Bhagwan, Goddess Ambe Ma, Hanumanji, Ganpatidada and God of all religion Devs without caste discrimination and Conducting Arapana, Sevapuja, Bhaktibhava, festivals, lectures and related development activities by hiring people and paying them remuneration.
On plain reading of the above objects, it is evident that the objects are religious in nature since it mandates “to establish run and maintain temples, install idols of various gods, celebrating religious festivals and many other religious activities” apart from other activities and hence, it clearly contravenes main condition of 80G(5) of the Act.
In respect of details of activities submitted by the applicant on 16.11.2024, the trust has undertaken several activities for the growth and belief of Kuldevi Shree Modeshwari M i.e Chaitra Havan, Patotsav, Annakut and navratri. Hence, it can be seen that the applicant is involved mainly in Religious activity.
4. Aggrieved by the said order, the assessee is in appeal before the Tribunal.
5. The Ld. Counsel for the assessee contended that the objects and activities were duly explained and that expenditure on religious activities was negligible. It was further submitted that the CIT(E) failed to properly consider the explanations and materials placed on record.
6. We have heard the rival submissions and perused the material available on record. In the present case, we observe that the learned CIT(Exemption) rejected the application solely on the ground that the objects of the Trust are religious in nature. However, the learned CIT(Exemption) has not recorded any specific finding as to whether the expenditure incurred by the assessee towards religious activities exceeds 5% of the total income, as contemplated under Section 80G(5B) of the Act. As per the statute, a trust is permitted to incur expenditure up to 5% of its total income for religious purposes. Therefore, the relevant aspect to be examined was whether the assessee had exceeded the statutory limit of 5% on religious expenses, as stipulated under the provisions of the Act. Having considered the facts on record, we are of the view that the interest of justice would be served by remanding the matter to the learned CIT(Exemption) for the limited purpose of examining whether the religious expenditure incurred by the assessee-trust exceeds the prescribed limit of 5% and accordingly reconsider the application of the assessee in accordance with law. The assessee is directed to comply with the notices issued by the authorities and shall not seek unnecessary adjournments.
7. In the result, the appeal filed by the assessee is allowed for statistical purposes.
The order is pronounced in the open Court on 20.02.2026.
