2011 (1) TMI 433 - HC - Income Tax

Deduction - Under section 80G - Held that Sufism is a part of Islam - Probably, it is a wing propagating Islam religion - Merely, because the document contains the aspects of culture, social and non-political organization, it will not come under the category of Charitable Institution - The contents of the document make it very clear that the whole object is to spread and preach Islam, a religion - Therefore, the authorities were justified in declining to grant recognition - There is a specific bar for granting such exemption to such a religious trust - Decided against of assessee.

Summary

Issues:
Challenge to denial of recognition under section 80G of the Income-tax Act based on the religious nature of the trust's activities.

Analysis:
The primary issue in this case is the denial of recognition under section 80G of the Income-tax Act due to the religious nature of the trust's activities. The assessee, a trust established for propagating Sufism, sought approval under section 80G, claiming exemption for charitable purposes. However, the assessing authority found that the trust's activities were substantially religious in nature, disqualifying it from claiming exemption under section 80G. The Tribunal upheld this decision, noting that Sufism is a branch of Islamic spiritualism practiced by Sunni Muslims, and the trust's activities did not align with charitable purposes as required by the Act.

The appellant contended that Sufism is not specific to any religion but promotes humanism, love, and unity through 'Tauheed.' The Trust Deed outlined Sufism as a way of life focused on self-realization, surrender to Allah, and non-violence. However, the court observed that Sufism, as detailed in the Trust Deed, is inherently linked to Islam and aims to spread and preach the Islamic religion. Despite including aspects of culture and social organization, the trust's core objective remained the propagation of Islam, leading to the denial of recognition under section 80G.

The court emphasized that the trust's activities, as outlined in the Trust Deed, did not align with the definition of a 'Charitable Institution' under the Act. While the trust claimed to be non-political and open to all citizens, its primary focus on propagating Islam rendered it ineligible for exemption under section 80G. The court concluded that the authorities were justified in denying recognition to the trust and upheld the original decision. No substantial legal question warranted interference, leading to the dismissal of the appeal.

In summary, the court's judgment focused on the religious nature of the trust's activities, specifically Sufism's association with Islam and the trust's primary objective of spreading the Islamic religion. The denial of recognition under section 80G was upheld based on the trust's failure to meet the criteria for charitable purposes as mandated by the Income-tax Act.