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2014 (2) TMI 654 - AT - Income TaxDeduction u/s 80G(5) of the Act Held that - The assessee did not dispute that the assessee trust exists and was established having dominant objects, which are religious in nature and for the benefit of Hindu community - the assessee did not exist for the charitable purpose only - The conditions of section 80G(5) are not satisfied Relying upon Commissioner Of Income-Tax, Central I, Calcutta Versus Upper Ganges Sugar Mills Limited 1984 (12) TMI 61 - CALCUTTA High Court - Section 80G of the Income-tax Act, 1961, sets out the deductions to be made, in accordance with and subject to its provisions, in computing the total income of an assessee in respect of donations to certain funds, charitable institutions, etc - The CIT has given specific finding that dominant objects of the assessee trust are religious in nature and for the benefit of Hindu community thus, the assessee did not exist and established for charitable purposes - It is clear that the assessee has failed to satisfy the conditions of section 80G(5) of the IT Actand is not entitled for approval under the provisions Decided against Assessee.
Issues Involved:
1. Whether the assessee trusts qualify for approval under section 80G(5) of the Income Tax Act. Issue-wise Detailed Analysis: 1. Qualification for Approval under Section 80G(5) of the IT Act: ITA No. 370/Agra/2013 (Yug Chetna Parmarth Trust): The appeal was filed against the order of the CIT-I, Agra, dated 21.11.2013, which rejected the application for approval under section 80G(5) of the IT Act. The CIT observed that the dominant objects of the trust were for the benefit of the Hindu Community and were religious in nature, thus contravening the provisions of section 80G(5)(ii), (iii), and Explanation 3 to section 80G(5) of the IT Act. The CIT relied on the decision in CIT vs. Upper Ganges Sugar Mills Ltd., where it was held that the establishment or maintenance of public places of worship and prayer halls is a religious purpose. Consequently, the CIT concluded that the trust did not qualify for approval under section 80G(5) as it was not established for a "charitable purpose." The assessee's counsel did not dispute the CIT's finding that the dominant objects were religious and for the benefit of the Hindu Community. However, it was argued that since the expenditure on religious activities was less than 5% of the total income, as per section 80G(5B), the trust should still qualify for approval. The counsel cited the Karnataka High Court decision in DIT (Exemption) vs. International Society for Krishna Consciousness, which supported this contention. The Tribunal noted that section 80G(5) applies to institutions established for charitable purposes only and not for the benefit of any particular religious community or caste. The CIT's findings that the trust's dominant objects were religious and for the Hindu community were not challenged. The Tribunal held that the trust did not satisfy the conditions of section 80G(5) as it was not established for charitable purposes only. The Tribunal also found that the expenditure on religious activities exceeded 5% of the total income, thus not qualifying for the exception under section 80G(5B). The appeal was dismissed. ITA No. 380/Agra/2013 (Shri Dharm Prachar Anashrit Sewashram Trust): This appeal was similarly filed against the order of the CIT-I, Agra, dated 26.11.2013, rejecting the application for approval under section 80G(5). The counsel for the assessee stated that the facts and issues were identical to those in ITA No. 370/Agra/2013 (Yug Chetna Parmarth Trust). Following the decision in the Yug Chetna Parmarth Trust case, the Tribunal dismissed the appeal, concluding that the trust did not qualify for approval under section 80G(5). Conclusion: Both appeals were dismissed on the grounds that the trusts did not meet the conditions of section 80G(5) of the IT Act, as they were not established for charitable purposes only and had dominant objects that were religious in nature and for the benefit of the Hindu community. The exception under section 80G(5B) was also not applicable as the expenditure on religious activities exceeded 5% of the total income.
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