Shri Jain Swetamber Terapanthi Sabha Trust Vs CIT (Exemption) (ITAT Ahmedabad)
The Ahmedabad Bench of the ITAT set aside the order of the CIT (Exemption) rejecting the assessee-trust’s application for approval under section 80G(5) on the ground that its objects were religious in nature. The Tribunal held that registration under section 80G cannot be denied merely because a trust has religious objects, unless it is shown that the whole or substantially the whole of its activities are religious, or that religious expenditure exceeds the statutory threshold of 5% of total income as prescribed under section 80G(5B).
The Tribunal noted that the assessee-trust was already granted registration under section 12AB for religious-cum-charitable purposes and that the CIT(E) had selectively relied on the word “Jain” in the trust’s name without examining the actual nature of activities or expenditure. Audit reports and financial statements indicated that no religious expenditure had been incurred in the relevant years.
Emphasising the scheme of Explanation 3 to section 80G(5) read with section 80G(5B), the ITAT held that limited religious activity is permissible and what is material is the quantum of religious expenditure, not the presence of incidental religious objects. Accordingly, the matter was remanded to the CIT(E) with directions to grant a fresh opportunity of hearing, examine whether religious expenditure exceeded 5%, and pass a reasoned order in accordance with law. The appeal was allowed for statistical purposes
FULL TEXT OF THE ORDER OF ITAT AHMEDABAD
