2021 (5) TMI 865 - AT - Income Tax

Applicant seeking approval u/s 80G(5)(vi) - denying approval and registration u/s 80G of the Act is that the Trust s activities includes religious activities and violating the provisions of section 80G(5)(vi) - CIT (E) rejected the application of the assessee on the ground that the main object of the assessee trust is to establish, construct, maintain and run a Gurudwara at Puri and Nayagarh providing for regular daily seva puja according to the Sikh religious custom, tradition, therefore, the activities of the trust is religious and violating the provisions of section 80G(5)((iii) - HELD THAT - We are not in agreement with the contention of the ld CIT DR as from the relevant part of the impugned order, it is clear that the CIT (E) has denied registration only on one ground violation of clause (iii) of sub-section (5) of Section 80G. The revenue cannot be allowed to make a new case. Even if we see that the ld counsel of the appellant has not contended that the Trust s activities are centralised to only a few objects cannot be a ground for denying registration u/s.80G of the Act as this is not required to conduct activities on all the objects to get approval registration u/s.80G and it is also not a requirement of section 80G of the Act to conduct activities on all the objects stated in the Trust Deed. Therefore, we are of the considered view that the contention of ld CIT DR are not found to be acceptable in the present case. The order of ITAT Jaipur in the case of Shri Bair Singh Ji Narayan Singh Ji Memorial Sansthan 2018 (12) TMI 1887 - ITAT JAIPUR relied on by the assessee also provides support to the grounds of the assessee. In this order, the Co-ordinate bench has relied to the judgment of Umaid Charitable Trust vs The Union of India 2008 (5) TMI 232 - RAJASTHAN HIGH COURT wherein, it was held that unless objection of the assessee trust is for spending its income for a particular religion and it is so found in the Trust Deed, the Revenue cannot reject application seeking registration u/s. 80G of the Act merely because the Trust has incurred some expenditures for certain activities within its charitable objects. The decisions relied by the assessee support the case of the assessee. Accordingly, in the absence of any other adverse finding of the CIT(E), as required by law for granting approval u/s 80G of the Act, regarding the charitable character and genuineness of the activities carried out by the assessee/applicant, the impugned order is not only unsustainable based on unreasonable ground but also perverse being not in accordance with the provisions of the Act. Therefore, we direct the ld CIT (E) to grant approval u/s. 80G(5)(vi). - Decided in favour of assessee.

Issues Involved:
1. Rejection of approval under section 80G(5)(vi) of the Income Tax Act, 1961.
2. Assessment of the charitable nature of the trust's activities.
3. Examination of compliance with section 80G(5)(iii) regarding religious activities.
4. Consideration of the trust's registration under section 12A.
5. Evaluation of the trust's financial records and activities.

Issue-Wise Detailed Analysis:

1. Rejection of approval under section 80G(5)(vi) of the Income Tax Act, 1961:
The assessee appealed against the CIT(E) Hyderabad's order dated 29.6.2018, which rejected their application for approval under section 80G(5)(vi). The CIT(E) based the rejection on the grounds that the trust's main objective was religious, specifically to establish and maintain a Gurudwara, which violated section 80G(5)(iii).

2. Assessment of the charitable nature of the trust's activities:
The trust argued that its activities were charitable, including free distribution of food and water during the Sri Jagannath Rath Yatra, providing free meals to pilgrims, maintaining a children's park, and other public welfare activities. The trust provided agreements, financial records, and auditor's reports to support its claim. The trust emphasized that its activities were not solely religious but also included significant charitable work.

3. Examination of compliance with section 80G(5)(iii) regarding religious activities:
Section 80G(5)(iii) stipulates that an institution should not benefit any particular religious community or caste. The CIT(E) rejected the application on the grounds that the trust's activities were religious. However, the tribunal noted that the trust's activities, such as providing food and maintaining parks, were for the general public without discrimination. The tribunal referenced previous cases, such as Shiv Mandir Devsttan Panch Committee Sanstan, where it was held that activities like maintaining temples did not necessarily advance a particular religion.

4. Consideration of the trust's registration under section 12A:
The tribunal observed that the trust had been granted registration under section 12A since 22.8.2017, which indicated that the trust was recognized for its charitable activities. The tribunal cited several cases, including Hiralal Bhagwati vs CIT, where it was held that once registration under section 12A is granted, the application under section 80G(5) should not be rejected without substantial grounds.

5. Evaluation of the trust's financial records and activities:
The tribunal reviewed the trust's financial records and activities, noting that the trust had provided food to pilgrims, maintained parks, and engaged in relief work during natural calamities. The tribunal found that these activities were charitable and not limited to any particular religious community. The tribunal also noted that the CIT(E) did not find any defects in the trust's financial records or activities, other than the alleged religious nature of the trust.

Conclusion:
The tribunal concluded that the CIT(E) had erred in rejecting the trust's application for approval under section 80G(5)(vi). The tribunal found that the trust's activities were charitable and not solely for the benefit of a particular religious community. The tribunal directed the CIT(E) to grant approval under section 80G(5)(vi) of the Act.

Order:
The appeal of the assessee was allowed, and the CIT(E) was directed to grant approval under section 80G(5)(vi) of the Income Tax Act, 1961.

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