2023 (1) TMI 412 - AT - Income Tax

Approval u/s 80G - recognition as a Charitable Institution or Religious Institution - CIT(E) has held that the asessee is engaged in a religious activity of teaching Vedas, a Hindu religious scripture, to Hindu students and hence the whole purpose of the trust is of religious nature as per Explanation 3 to section 80G, therefore is not eligible for approval under section 80G - HELD THAT - There is no merit in the impugned finding of the CIT(E) that teaching Vedas is a religious activity and therefore not eligible for approval under section 80G. In the present case, objects of the assessee-Trust are reproduced in the earlier part of this order. The assessee Trust does not have any object to establish, maintain and to grant and / or aid to public places of worship and prayer halls and hence the judgment of Upper Ganges Sugar Mills Ltd. 1997 (8) TMI 4 - SUPREME COURT is inapplicable to the facts of the present case. The impugned conclusion of the CIT(E) that teaching of Vedas involve offering worship and prayer to God is not correct and bereft of any reason. The assessee only teaches the students how to recite the Vedas. There is a particular method of pronunciation of Vedas with Swaras attached to it. The recitation and pronunciation of Vedas is what is taught by the assessee-Trust. It is like teaching any other Sanskrit literature. The teaching of Vedas does not involve offering worship and prayer to God as held by the CIT(E). There is no object or activity of worship or prayer to God as contended by the CIT(E). CIT(E) is also not an authority to conclude what teaching of Vedas involve. Assessee-trust has carried on other charitable activities in the nature of relief of poor. The Vedic Scholars were identified and felicitated irrespective of their caste, creed or religion. The Trust has given financial assistance to various people, irrespective of caste, creed or religion, involved in Indian Heritage Education. During Covid, many were in financial difficulty and the Trust provided financial assistance and distributed food kit, clothes, medicines for the needy Vedic scholars irrespective of their caste, religion or gender. All the expenses were met out of voluntary contributions or donations. Thus, the activities carried on by the assessee-Trust are CHARITABLE in the nature of education, relief of poor and not RELIGIOUS as concluded by the CIT(E). In view of the above, the impugned findings of the CIT(E) that the assessee-trust is registered as RELIGIOUS is quashed and the assessee is allowed registration under section 12A of the Act as charitable trust. Consequently, the approval under section 80G of the Act is to be granted. Appeals filed by the assessee-trust are allowed.

Summary

Issues Involved:
1. Classification of the Trust as "Religious" or "Charitable."
2. Eligibility for approval under Section 80G of the Income Tax Act, 1961.

Detailed Analysis:

Issue 1: Classification of the Trust as "Religious" or "Charitable"

The main contention revolves around whether the Trust, which aims to teach and spread Vedic knowledge, should be classified as a "Religious" or "Charitable" institution. The CIT(E) classified the Trust as "Religious" based on the premise that teaching Vedas, a Hindu scripture, constitutes a religious activity. This classification was challenged by the Trust, arguing that Hinduism is a way of life and not a religion, citing various judicial precedents.

The Trust's objectives include disseminating Vedic knowledge, supporting students and scholars, and promoting Indian heritage and culture without any religious bias. The beneficiaries are members of the general public irrespective of race, religion, caste, community, creed, or gender. The Trust argued that the activities are educational and cultural rather than religious, emphasizing that Vedas are a universal source of knowledge and not confined to a particular religion.

The Tribunal referenced several judicial decisions, including those from the Hon'ble Supreme Court and various High Courts, which have held that Hinduism is a way of life and not a religion. The Tribunal also noted that the Trust's activities did not involve worship or prayer, but rather the teaching and recitation of Vedas, which is akin to teaching any other literature.

Issue 2: Eligibility for Approval under Section 80G

Section 80G of the Income Tax Act, 1961, provides deductions for donations to charitable institutions. However, it excludes institutions with purposes that are wholly or substantially religious. The CIT(E) denied the Trust's approval under Section 80G, asserting that the Trust's activities were religious in nature.

The Tribunal examined whether the Trust's activities could be considered charitable under Section 2(15) of the Act. It was found that the Trust engaged in various charitable activities, such as providing financial assistance to Vedic scholars and distributing food and medical aid during the COVID-19 pandemic, irrespective of the beneficiaries' caste, creed, or religion.

The Tribunal distinguished the present case from other cases cited by the CIT(E), such as Upper Ganges Sugar Mills Ltd v. CIT, where the trust's activities were explicitly religious. In contrast, the Trust in question did not have any objectives related to establishing or maintaining places of worship or conducting religious ceremonies.

Conclusion:

The Tribunal concluded that the Trust's activities are charitable in nature, focusing on education and relief of the poor, and not religious. Consequently, the Trust is entitled to registration under Section 12A as a charitable institution and approval under Section 80G. The appeals filed by the Trust were allowed, and the impugned orders of the CIT(E) were quashed.