Sudharma Prachar Mandal Vs CIT (Exemption)
Tribunal Holds Mention of Religious Activity in Objects Not Fatal – CIT(E) Must Verify Actual Expenditure Exceeds 5% Before Rejecting 80G
Assessee, a registered charitable trust, had already been granted registration u/s 12AA. However, CIT(E) rejected its application for 80G approval on 27.12.2024 holding that objects of the trust included religious activities like construction & maintenance of religious centres, publishing religious books, etc. On this basis, he invoked Sec. 80G(5)(ii) & Explanation 3 to deny approval.
Before Tribunal, Assessee explained that mere mention of religious purposes in objects does not make the trust “wholly or substantially” religious, especially when no such expenditure was incurred beyond permissible limit. It also highlighted that as per Sec. 80G(5B), up to 5% of total income may be applied for religious activity without disentitling approval.
Tribunal observed that CIT(E) had not recorded any finding that trust actually spent more than 5% on religious purposes. It held that presence of religious objects alone cannot be ground for rejection. What is material is whether expenditure exceeds permissible limit. Since this factual aspect was not verified, Tribunal set aside the order & remanded matter to CIT(E) to re-examine. If expenditure on religious activities is within 5% & other conditions are satisfied, approval u/s 80G(5) must be granted.
