OM Tapovan Charitbale Trust Vs CIT (Exemption) (ITAT Ahmedabad)
The Income Tax Appellate Tribunal (ITAT) in Ahmedabad has upheld the decision of the Commissioner of Income Tax (Exemption) [CIT(E)], rejecting the application of OM Tapovan Charitbale Trust for registration under Section 80G(5) of the Income-tax Act, 1961. The central issue revolved around whether a trust with explicit religious objects in its deed, alongside charitable ones, can qualify for the tax exemption benefits under Section 80G, which incentivizes donations by making them tax-deductible for the donors.
The trust, which runs an ashram and engages in activities like yoga and yagna, was already registered under Section 12A, a separate provision for charitable trusts. However, it applied for the more specific Section 80G registration, which requires an institution to be created and to exist “solely for charitable purposes.” The CIT(E) noted that the trust’s application form and its deed explicitly listed “religious” activities, including maintaining temples and celebrating religious festivals, among its objectives.
The CIT(E) argued that Section 80G(5)(iii) of the Act mandates that an institution’s objects should not be for the benefit of any specific religion or community. The trust’s express religious objects, therefore, disqualified it from eligibility. The trust’s legal representative countered by citing Section 80G(5B), an amended provision that states if a charitable institution incurs less than 5% of its gross receipts on religious purposes, it is not considered to have violated the Act. The trust argued it had not incurred any religious expenses and should therefore be granted the registration.
