2007 (12) TMI 200 - HC - Income Tax

Application of the petitioner-trust for renewal of exemption u/s 80G was refused on the ground that in one of the object of the Trust Deed the construction of temples etc. was included though notwithstanding such inclusion in object clause, no temples in fact have been constructed sub-section 5B was inserted in section 80G w.e.f. April 1, 2000 - Commissioner is directed to consider the application of petitioner independently in view of the provision of sub-section 5B of section 80G

Summary

Issues: Challenge to refusal of renewal of exemption under Section 80G based on inclusion of construction of temples in trust deed and lack of actual construction. Interpretation of Section 80G and consideration of expenditure for religious purposes.

In this case, the petitioner challenged the order refusing renewal of exemption under Section 80G due to the inclusion of construction of temples in the trust deed, despite no actual construction or expenditure on religious activities. The petitioner argued that the principal activity of the trust should be considered, and the mere inclusion of temple construction should not be the sole criteria for rejection. Reference was made to the amendment in Section 80G, specifically sub-section (5B) inserted by the Finance Act, 1999, which allowed exemption if expenditure on religious activities did not exceed 5% of total income. The petitioner contended that the Commissioner should consider the ratio between total income and expenditure on religious purposes each year, and registration should only be refused if more than 5% of total income was spent on religious activities.

The petitioner requested the court to direct the Commissioner to reconsider the trust's registration for renewal from 1.4.2000 onwards, unaffected by the previous refusal for the assessment year 1995-2000, in line with sub-section (5B) of Section 80G. The court found merit in the petitioner's arguments and disposed of the writ petition by directing the Commissioner to review the renewal application from 1.4.2000 independently of the earlier order, considering the provisions of sub-section (5B) of Section 80G. The court did not award any costs in this matter.