2015 (8) TMI 1083 - AT - Income Tax

Grant of approval u/s.80G denied - objects as well as activities are predominantly religious and since the religious expenses in all the 3 years in respect of which statement of accounts have been submitted exceeded 5% of the total income/receipts which is violative of the provisions of sub-section (5B) of section 80G - Held that - In the instant case the objects of the trust are not entirely religious and since some of the objects are charitable in nature, a finding given by the Ld. CIT himself and since the temple is open to everybody irrespective of caste, creed, sect, colour etc. and since there is no restriction of entry of any particular community and since it has been held that if the Honorarium paid to the Brahmins of the assessee trust is excluded, then there is no violation of the provisions of sub-section 5B of section 80G, therefore, we are of the considered opinion that the assessee trust in the instant case should not be denied the benefit of grant of approval u/s.80G of the I. T. Act. We accordingly set aside the order of the CIT and direct him to grant approval u/s.80G of the I. T. Act. - Decided in favour of assessee.

Summary

Issues Involved:
1. Rejection of approval under Section 80G of the Income-Tax Act, 1961.
2. Determination of whether the assessee trust is predominantly religious.
3. Consideration of honorarium paid to Brahmins as religious expenses.
4. Applicability of judicial precedents cited by the assessee.

Detailed Analysis:

1. Rejection of Approval under Section 80G of the Income-Tax Act, 1961:
The primary issue revolves around the CIT-I, Pune's rejection of the assessee trust's application for approval under Section 80G of the Income-Tax Act, 1961. The assessee trust had applied for this approval using Form No.10G but was denied on the grounds that its activities and objects were predominantly religious, with religious expenses exceeding 5% of total income/receipts, thus violating Section 80G(5B).

2. Determination of Whether the Assessee Trust is Predominantly Religious:
The CIT noted that the trust's main activities included maintaining a temple and performing poojas and utsavas, with the net income used for temple maintenance. The CIT concluded that the trust's activities were predominantly religious, as the religious expenses for the years in question exceeded the 5% threshold. The assessee argued that the trust does not propagate any particular religion and is open to all, irrespective of religion, caste, creed, or sex. The Tribunal found merit in this argument, noting that the CIT did not provide evidence that the trust propagated a specific religion.

3. Consideration of Honorarium Paid to Brahmins as Religious Expenses:
The CIT rejected the assessee's argument that the honorarium paid to Brahmins should be excluded from religious expenses. The CIT held that the honorarium was paid for performing poojas and related activities, thus constituting religious expenses. The Tribunal, however, found that the honorarium should not be considered as part of pooja expenses since it is an administrative facility provided to visitors, and excluding it would bring the religious expenses below the 5% threshold.

4. Applicability of Judicial Precedents Cited by the Assessee:
The assessee cited various judicial precedents to support its case, including the decision of the Panaji Bench of the Tribunal in Shri Gurudev Ranade Samadhi Trust Vs. CIT, Belgaum, and the Hon'ble Rajasthan High Court in Umaid Charitable Trust Vs. Union of India. The CIT distinguished these cases, noting that the facts differed significantly from the present case. The Tribunal, however, found the Rajasthan High Court's decision relevant, emphasizing that Hinduism is not one particular religion and that the line between religious and charitable purposes is thin. The Tribunal concluded that the assessee trust's activities did not exclusively serve a particular religious community and that the honorarium paid to Brahmins should not be considered religious expenses.

Conclusion:
The Tribunal set aside the CIT's order, directing the CIT to grant approval under Section 80G of the Income-Tax Act, 1961. The Tribunal held that the assessee trust's objects were not entirely religious, as some were charitable, and the temple was open to everyone irrespective of caste, creed, or sect. The Tribunal emphasized that excluding the honorarium paid to Brahmins from pooja expenses meant there was no violation of Section 80G(5B). The appeal filed by the assessee was allowed, and the grounds raised by the assessee were upheld.