Gurukrupa Foundation Vs CIT (Exemption) (ITAT Ahmedabad)
The Income Tax Appellate Tribunal (ITAT), Ahmedabad Bench, has set aside an order by the Commissioner of Income Tax (Exemption) [CIT(E)], which had rejected the application for final registration under Section 80G(5) of the Income Tax Act, 1961, for the Gurukrupa Foundation. The ITAT’s decision, delivered on March 6, 2025, allows the trust to be reconsidered for the tax exemption, which is crucial for organizations to receive donations with tax benefits for donors.
The core of the dispute revolved around whether the Gurukrupa Foundation, a public trust registered under the Bombay Public Trust Act, 1950, was a purely charitable entity or if its objects were “wholly or substantially the whole of which is of a religious nature,” as defined under Explanation 3 to Section 80G. The CIT(E) had reviewed the trust’s 26 objects and identified six specific objects that were deemed to be religious. These included the establishment of halls and dharamshalas for social and religious programs, providing education on the Jain religion, and organizing religious camps. Based on this, the CIT(E) had concluded that the trust was not purely charitable and, therefore, did not qualify for the 80G registration.
The assessee, represented by its authorized representative, countered this argument by explaining that the objects flagged as religious were, in fact, part of its broader charitable activities. For example, the trust’s objective of establishing halls, wadis, and dharamshalas was not exclusively for religious purposes but also for social programs, and these facilities were available to the general public upon paying rent. The assessee argued that merely because these facilities could be used for religious functions, the trust’s activity did not become religious in nature. Similarly, the trust’s efforts to educate people about the basic principles of Jainism were presented as an educational activity, not a religious one, drawing a parallel to how various universities include religious studies in their curricula without being classified as religious institutions.
