Shree Hanumant Pakshighar Charitable Trust – Ujalvav Vs CIT (Exemption) (ITAT Ahmedabad)
The Income Tax Appellate Tribunal (ITAT), Ahmedabad Bench, in the matter of Hanumant Pakshighar Charitable Vs Commissioner of Income Tax (Exemption) (CIT(E)), has set aside an order denying approval under Section 80G(5)(iii) of the Income Tax Act, 1961. The dispute arose when the CIT(E) rejected the charitable trust’s application, arguing that one of its stated objectives was religious in nature, thereby violating the conditions for public donation tax benefits.
The Tribunal’s holding is a significant clarification on the intersection of charitable and religious activities, particularly regarding the permissible allowance for religious expenditure stipulated under the Act. The ITAT ruled that the mere existence of an object with religious tenets does not automatically disqualify a trust from 80G approval. Instead, the focus must shift to whether the trust has violated the 5% expenditure limit permitted for religious purposes as per Section 80G(5B).
Background of the Dispute
The assessee, Hanumant Pakshighar Charitable, is a public charitable trust that had already secured registration under Section 12AB of the Act. The trust subsequently applied for Section 80G approval, which permits donors to claim a tax deduction on contributions made to the institution.
