Sec 80G Approval: Mere Reference to Religious Events Does Not Make Trust as Substantially Religious in Nature

Shri Mohit Balani, the Ld. AR of the assessee submitted that the assessee is a registered public charitable trust and was granted registration under Section 12AB of the Act. The assessee had filed an application in Form No.10AB for approval under Section 80G(5) of the Act, which was rejected by the Ld. CIT(E) vide the impugned order. The Ld. AR explained that the Ld. CIT(E) had rejected the application of the assessee for the reason that two of the objects of the trust (object nos. 14 & 18) were held to be religious in nature. Further, the Ld. CIT(E) had given a finding that during the Financial Year 2022-23, the assessee had incurred expenditure of Rs. 2,20,617/-, out of total gross receipt of Rs. 6,58,083/-, towards religious activities. Thus, the percentage of religious expenditure out of the total receipts was 33.52%, which exceeded the limit of 5% as provided under Section 80G(5B) of the Act. The Ld. AR explained that object no.14 relates to spiritual teaching concerning Indian culture and that object no.18 pertains to teaching music and arts rooted in Indian tradition. According to the Ld. AR, neither of the objects referred to the propagation of any specific religion nor included any ritualistic or denominational practices. He further submitted that the mere presence of a spiritual or culturally inspired object does not render the trust religious in nature. In this regard, he placed reliance on the decision of the Co-ordinate Bench of this Tribunal in the case of Gurukrupa Foundation vs. CIT(E), 172 taxmann.com 737 (ITAT Ahmedabad).

The Ld. AR further submitted that the Ld. CIT(E) had suo motto concluded that Rs. 2,20,617/- pertaining to event expenses was spent for religious purpose, without issuing any specific show cause notice in this regard and without calling for event-wise bifurcation. He submitted that the assessee was denied the opportunity to explain or furnish the classification of expenses. He, therefore, requested that the matter be restored to the file of the Ld. CIT(E) with a direction to issue a specific show cause notice regarding classification of event expenses and allow an opportunity to the assessee to explain the nature of these expenses.

On the other hand, the Ld. CIT-DR relied upon the order of the Ld. CIT(E) rejected the application of the Trust and requested to uphold the same.

Tribunal Analysis

Culturally rooted activities cannot be construed as religious objects

In the trust deed, the assessee had altogether 21 objects, out of which the above two objects were held to be of religious nature by the Ld. CIT(E). As per the object no.14, the activities of the trust to establish, run and maintain prayer centres, meditation centres, spiritual buildings, ashrams, gurukulas and other similar institutions for the development of spiritual and cultural spirit among the people cannot be held as religious in nature. The objective of the trust is to carry out activities to promote and disseminate the basic tenets of Indian culture and spiritual teachings. Similarly, as per the object no.18, the activities of performance of musical art, drama, Garba, promoting folk art & craft, music, etc., also can’t be considered as religious in nature. Therefore, the Ld. CIT(E) was not correct in holding that these two objects were religious in nature.

Mere reference to events like Navratri or Shivratri does not make the trust religious in nature.

Even if certain tenets of religious activity are embedded in organising Navratri Mahotsav, Shivaratri Mahotsav, Ganesh Utsav, etc., this does not make the overall objects of the trust substantially religious in nature. It was held by the Co-ordinate Bench of this Tribunal in the case of Gurukrupa Foundation (supra) that since the assessee was given option as per statute to spend upto 5% of its total income for religious purpose, it was imperative that some of the objects would have tenets of religious nature, otherwise it might not be able to spend that 5% permissible expense for religious purpose.

Final Order:

The action of the Ld. CIT(E) in rejecting the application under Section 80G(5) of the Act on the ground that two of the objects of the assessee were religious in nature, cannot be sustained. ITAT did not find those two grounds to be substantially religious in nature so as to deny the approval.