2015 (12) TMI 137 - AT - Income Tax

Grant of recognition u/s 80G rejected - one of the clauses of the object of the assessee trust as religious in nature - Held that - None of the expenditure so far incurred by the assessee can be said to be of a religious nature and, therefore, the assessee fulfilled the conditions as provided u/s 80G of the Income-tax Act. The Hon ble Supreme Court in the case of Dawoodi Bohra Jamt (2014 (3) TMI 652 - SUPREME COURT ) has also confirmed and recognized the duality of the purpose of religious as well as charitable nature. The provision of sec. 80G also recognizes the duality of purpose with a rider that for the purpose it should not be wholly or substantially the whole of which is religious in nature. In the case in hand the reference of the promotion of study of Jain Agama and Jain Siddhnta by itself would not render the whole of the object of the trust as religious in nature. In view of the above facts and circumstances of the case, we find that the assessee s objects cannot be described as wholly or substantially the whole an religious in nature, accordingly, we set aside the impugned order of Commissioner and direct the Commissioner to grant the recognition u/s 80G of the Act by considering the fact that the assessee has already been granted the registration u/s 12A and picking up a particular reference in one of the clauses of the object would not constitute the entire and whole of the objects of the assessee trust as religious in nature. - Decided in favour of assessee.

Summary

Issues:
- Rejection of application for grant of recognition u/s 80G
- Interpretation of objects of the trust as religious in nature
- Discrepancy in treatment of objects under u/s 12AA and u/s 80G
- Compliance with provisions of sec. 80G regarding expenditure for religious purposes

Issue 1: Rejection of application for grant of recognition u/s 80G
The appeal was against the rejection of the application for recognition u/s 80G by the Commissioner of Income-tax. The Commissioner based the rejection on the belief that the trust's objects, particularly clause 13, were religious in nature, citing the Upper Ganges Sugar Mills Ltd. case as precedent.

Issue 2: Interpretation of objects of the trust as religious in nature
The assessee argued that the trust was primarily an educational trust promoting Sanskrit, Jain Agama, Siddhant, and Indian philosophy, which did not solely constitute religious activities. The assessee contended that the trust was accepted as a public charitable trust under u/s 12A, and the emphasis on clause 13 alone did not reflect the overall charitable nature of the trust's objectives.

Issue 3: Discrepancy in treatment of objects under u/s 12AA and u/s 80G
The assessee highlighted the discrepancy in treatment between u/s 12AA and u/s 80G regarding the trust's objects. While u/s 12AA recognized the charitable nature of the trust, u/s 80G was denied based on the interpretation of clause 13 as religious. The assessee argued that the trust's objects should be viewed holistically to determine its charitable nature.

Issue 4: Compliance with provisions of sec. 80G regarding expenditure for religious purposes
The learned AR argued that the trust had not incurred any expenditure for religious purposes, meeting the requirements of sec. 80G. Referring to relevant financial details, it was asserted that none of the trust's expenditures were of a religious nature. The argument was supported by the provision allowing up to 5% of total income for religious expenditure under sec. 80G.

In conclusion, the Appellate Tribunal found that the trust's objects were not wholly or substantially religious in nature, as clause 13 did not represent the entirety of the trust's objectives. The Tribunal set aside the Commissioner's order and directed the grant of recognition u/s 80G, emphasizing the need to consider the trust's overall charitable nature and compliance with expenditure provisions. The appeal by the assessee was allowed, highlighting the importance of a holistic interpretation of trust objects in determining eligibility for tax benefits under the Income-tax Act.