Shree Shyam Aaradhan Sewa Trust Vs CIT (Exemption) (ITAT Ahmedabad)
Mere Presence of Religious Objects Not Enough to Deny 80G; Matter Remanded to Examine Actual Religious Expenditure Within 5% Limit u/s 80G(5B)
In this appeal filed by Shree Shyam Aaradhan Sewa Trust against rejection of its Form 10AB application, the Tribunal examined whether the CIT(E) was justified in denying approval u/s 80G(5)(iii) & cancelling the provisional approval on the ground that the trust was a religious-cum-charitable institution.
CIT(E) had held that several objects in clause 5 of the Trust Deed—such as constructing temples, prayer houses, gaushala, celebrating deity birthdays, conducting kirtans/pravachans & religious ceremonies—were wholly or substantially religious. Relying on Upper Ganges Sugar Mills Ltd., Yug Chetna Parmarth Trust & OM Tapovan Charitable Trust, the CIT(E) concluded that a trust with religious objects fails the mandate of section 80G(5)(ii). He also held that section 80G(5B) does not permit a trust to have religious objects, but only permits limited religious expenditure for a trust whose objects are otherwise entirely charitable. CIT(E) further noted that the Assessee, by its letter to the Senior Town Planner dated 22.10.2024 enclosing drawings titled “Khatu Shyam Mandir”, was in fact proceeding with construction of a temple, thus demonstrating ongoing religious activity.
The Assessee submitted that amendments were already initiated to remove religious clauses & provided minutes and proposed revised objects, but the CIT(E) held that no evidence of actual approval by the Charity Commissioner or ROC had been filed. On this basis, he rejected the 80G application & cancelled provisional approval.
The Tribunal, however, observed that the legal position after insertion of section 80G(5B) is materially different. Relying on the Rajasthan High Court in Mishrilal Gordhanlal Batra Charitable Trust, and Ahmedabad ITAT decisions in Discover Joy Foundation & Vaishnav Sangh, as well as the Cochin Bench decision in Kizhakke Kovilakom Trust, Tribunal held that mere existence of a religious object does not automatically disentitle a trust from 80G approval. What must be examined is whether the trust actually incurred religious expenditure exceeding the 5% cap prescribed u/s 80G(5B). It emphasized that temples open to the general public & activities that are not confined to a particular caste or community are not hit by Explanation 3 to section 80G.
Tribunal found that neither the CIT(E) nor the Assessee had produced specific evidence regarding actual expenditure on religious activities for the relevant period. Since expenditure—not merely the wording of objects—is the determinative factor under section 80G(5B), Tribunal held that the matter required fresh examination. The Assessee also stated before Tribunal that it was in the process of amending its deed to remove objectionable clauses.
Accordingly, Tribunal set aside the CIT(E)’s order & restored the matter for de novo adjudication. CIT(E) was directed to re-examine the Assessee’s application, verify if the actual religious expenditure exceeded 5% of income, consider the amended Deed if filed, & decide afresh after granting adequate opportunity. Appeal allowed for statistical purposes.
FULL TEXT OF THE ORDER OF ITAT AHMEDABAD
This appeal has been filed by the Assessee against the order passed by the Ld. Commissioner of Income Tax (Exemption), (in short “Ld. CIT(E)”), Ahmedabad vide order dated 30.012.2024.
