1997 (8) TMI 4 - SC - Income Tax

Donation to the trust - claim for deduction under section 80G - deduction disallowed on reopening of assessment u/s 147(b) - held that trust and the donation by the assessee to it fall outside the scope of section 80G.

Summary

Issues:
Interpretation of Section 80G for deductions on donations to charitable institutions - Whether a trust qualifies for deduction under section 80G for donations made to it.

Analysis:
The case involved an appeal regarding the eligibility of a donation made to a trust for a deduction under section 80G of the Income-tax Act. The trust in question, Vishwa Mangal Trust, had various objects listed in its trust deed, including the establishment of prayer halls and places of worship. The primary contention was whether these activities constituted a religious purpose, thereby disqualifying the trust from receiving deductions under section 80G.

The High Court, in its judgment, held that the establishment and maintenance of prayer halls, even for all religions, were considered religious in nature. It emphasized that if any purpose within the trust's charitable objectives was wholly or substantially religious, the trust would not qualify for deductions under section 80G. The court rejected the argument that the trust was not predominantly religious, highlighting the specific purpose related to prayer halls as a religious activity.

The court referred to Explanation 3 of section 80G, which clarifies that a charitable purpose should not be wholly or substantially religious to qualify for deductions. It distinguished the case from precedents related to the definition of charitable purposes, emphasizing that the focus under section 80G is on identifying any religious purpose within the overall objectives of the institution or fund.

Ultimately, the court concluded that the trust's inclusion of activities related to prayer halls and places of worship constituted a purpose substantially of a religious nature. As a result, the trust did not meet the criteria under section 80G for deductions on donations. The appeals were dismissed, and no costs were awarded in the case.