Narayan Cultural Mission Vs CIT (Exemption) (ITAT Ahmedabad)
Misclassification of Expenses as Religious – Cultural & Administrative Costs Not Religious in Nature –Tribunal Orders Fresh Verification
Assessee, a charitable trust registered under the Mumbai Charitable Mission Act, 1950 at Vadodara, has been active since 1982 in educational, medical & cultural activities. It filed Form 10AB for renewal of approval u/s 80G after expiry of provisional registration (granted in Nov 2021). CIT(E) rejected application on 19.12.2024, noting that in FY 2020-21, assessee incurred Rs.28,119/- on religious activities out of receipts of Rs.3,85,237/- (7.3%), breaching the 5% cap under s.80G(5B). Further, relying on past applications (2019 rejection also for similar reasons), CIT(E) held that the trust consistently exceeded the threshold, with religious expenditure ranging from 25% to 63% of income in earlier years. Since assessee did not respond to final SCN, CIT(E) concluded violation was established & rejected application.
On appeal, Assessee contended that CIT(E) wrongly classified administrative & cultural expenses (electricity, printing, calendars, cleaning, postage, AGM expenses, funeral aid, medical & educational support, cultural events) as religious expenditure. It argued that social gatherings like Annadaanam, Navati, Vilakku, Pongala, etc. were community cultural events, not religious rituals. Correct classification showed religious expenses within 5% in all years except marginally in FY 2020-21. Thus, rejection was factually incorrect.
