Shree Vardhman Samaj Utkarsh Fund Vs CIT(Exemption) (ITAT Ahmedabad)
Minor Religious Activity Within 5% Limit Cannot Deny 80G Approval – Charitable Trust With Incidental Religious Activity Eligible for 80G, Rules ITAT Ahmedabad
The Trust, established in 1954, filed Form 10AB seeking approval u/s 80G to enable donors to claim deduction. CIT(E) rejected the application on 29.12.2024, holding that the Trust’s objectives were community-specific (benefiting Vardhman Samaj) & composite in nature, i.e., partly charitable & partly religious. Relying on Explanation 3 to s.80G, CIT(E) held that a Trust with religious/community-oriented objects is not eligible for 80G. Provisional approval was also cancelled.
On appeal, Assessee contended that its activities-scholarships, aid to needy persons, public welfare-were charitable in nature & open to all. Audit reports in Form 10B for FY 2022-23 & 2023-24 categorically certified that no expenditure was incurred for private religious purposes or for benefit of a particular community/caste. It argued that any incidental religious activity was within permissible 5% limit u/s 80G(5B). It was further argued that rejection order was passed in undue haste without adequate opportunity, violating natural justice, & contrary to precedents such as N.N. Desai Charitable Trust (Guj HC), Jay Mataji Charitable Trust (ITAT Ahmedabad) & others, where incidental religious activity did not disqualify a Trust.
