Vaishnav Sangh Vs CIT (Exemption) (ITAT Ahmedabad)
The appeal by Vaishnav Sangh before the Income Tax Appellate Tribunal (ITAT), Ahmedabad, centered on the eligibility of a trust for tax exemption under Section 80G of the Income Tax Act, 1961. The core of the legal conflict was whether the presence of a religious objective within a trust’s deed was sufficient grounds to deny it the status of a purely charitable institution. The case emerged after the Commissioner of Income Tax (Exemption) (CIT(E)) rejected the trust’s application, branding it a “composite trust” with both religious and charitable purposes, which would make it ineligible for the exemption.
The CIT(E)’s Ruling and the Trust’s Response
The Vaishnav Sangh, which had filed its application for approval under Section 80G(5)(iii), was denied the exemption by the CIT(E). The rejection was based on a specific clause within the trust deed that mentioned the “setting up and/or maintaining and/or running temples.” The CIT(E) interpreted this provision as evidence that the trust was religious in nature, therefore contravening Explanation 3 to Section 80G(5), which specifies that a “charitable purpose” does not include any purpose that is “the whole or substantially the whole of which is of a religious nature.”
