Section 80G Approval Cannot Be Denied Merely for Puja Expenditure: ITAT Delhi

Dwarka Kalibari Vs Assessing Officer (ITAT Delhi)

Summary: The Delhi Bench of the Income Tax Appellate Tribunal allowed Dwarka Kalibari’s appeal against rejection of its Form 10AB application for approval under section 80G for assessment year 2026–27. The Commissioner of Income Tax (Exemption), Delhi, had rejected the application on 20 March 2026 after treating daily puja and Durga puja expenses exceeding 5% of total income over the preceding three years as religious activity. On the same date, the Commissioner had granted the society registration under section 12AB while describing its activities as charitable.

The society argued that its dominant purpose was charitable, that its activities were open to people irrespective of caste, creed or religion, and that it also undertook relief operations during natural calamities. It contended that the extent of any expenditure requiring disallowance was for the Assessing Officer to examine during assessment, rather than a reason for refusing approval. The Revenue relied on the Supreme Court decision in Upper Ganges Sugar Mills Ltd. to argue that the society’s objects concerning temples and worship were substantially religious.

The Tribunal followed its coordinate Bench decisions in Baba Banda Singh Vs. CIT(E) and Om Welfare Society Vs. CIT(E). It held that an object concerning a temple or puja was not, by itself, the society’s sole dominant purpose; the Commissioner had overlooked its relief objective. The Tribunal also adopted the view that evaluation of expenditure exceeding the applicable threshold belongs in assessment proceedings. It considered the refusal inconsistent with the section 12AB approval granted on similar objects by the same authority. Allowing the appeal, it directed the Commissioner to grant section 80G approval within four weeks of receiving the order. The Tribunal did not remand the application for another examination.