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2021 (12) TMI 93 - AT - Income TaxRejecting the application for approval u/s 80G - assessee trust is registered u/s 12AA and is stated to be engaged in carrying out charitable activities including spiritual activities, samuhik prayers, yoga camp, old age home and also owns a temple namely Balaji Mandir - HELD THAT - The assessee trust is providing food to poor, organizing medical camp and so it was not justified on the part of the Ld. CIT(E) to observe that the assessee trust is only running for religious activities. Even in the Income Tax expenditure account apart from the expenses for Pooja Samagri and Poshak trust has incurred other expenses. This facts goes un-rebutted by Ld. DR, therefore, so for as the first observation of the Ld. CIT(E) that the assessee is carrying out only religious activities does not seems to have merit as the evidence placed on record shows that the assessee trust is carrying out other activities also as enumerated in the trust deed. As regards the second observation of the ld. CIT(E) that the assessee trust has violated the provision of section 80G(5B) of the Act, we find that as per the provisions of section 80G(5B) for institutions or fund to qualify for getting approval u/s 80G(5B) of the Act the expenditure of religious nature incurred during any previous year should not exceed 5% of its total income. In the impugned order Ld. CIT(E) has alleged that the expenditure of religious nature incurred by the assessee has exceeded 5% of the total income. We, however on going through the submissions of the Ld. counsel for the assessee as well as facts placed on record, find that during the year total receipts appearing in the income and expenditure account are at ₹ 14,11,089/- and carpus fund received during the year (as shown in the balance sheet end 31st March 2017) is ₹ 7,43,111/-. Thus total receipt of the trust for the year at ₹ 21,54,200/- and against the total receipts the alleged expenditure of religious nature amounts to ₹ 88,262/- which in percentage term comes to only 4.10% of the total receipt. Therefore, in our considered view assessee has not violated the provision of section 80G(5B). CIT(E) erred in denying the approval u/s 80G applied by the assessee in Form 10G since the assessee is carrying out activities both religious and charitable in nature and expenditure of religious nature during the year have not exceeded 5% of the total receipts, assessee should be granted necessary approval u/s 80G. Thus, grounds raised by the assessee are allowed.
Issues Involved:
1. Whether the capital expenditure incurred by the assessee trust during the financial year 2016-17 should be considered as expenses covered under Section 80G(5B) of the Income Tax Act. 2. Whether the application of income for non-charitable purposes led to the rejection of the application for approval under Section 80G(5)(ii). Detailed Analysis: Issue 1: Capital Expenditure Consideration under Section 80G(5B) - The Ld. CIT(E) rejected the application for approval under Section 80G, citing that the capital expenditure incurred by the trust during the financial year 2016-17 amounted to ?11,82,924/-, which was considered under Section 80G(5B). - The Tribunal noted that the assessee trust is registered under Section 12AA of the Income Tax Act and is engaged in various charitable activities, including constructing an old age home. - The Tribunal observed that the trust's activities include providing food to the poor, organizing medical camps, and other charitable activities, which contradicts the Ld. CIT(E)'s observation that the trust is only running religious activities. - The Tribunal concluded that the expenses, apart from those for Pooja Samagri and Poshak, were for charitable purposes, and thus, the capital expenditure should not be solely considered as religious expenses under Section 80G(5B). Issue 2: Application of Income for Non-Charitable Purposes - The Ld. CIT(E) also rejected the application based on the violation of Section 80G(5B), stating that the expenditure for religious activities exceeded 5% of the total income. - The Tribunal found that the total receipts of the trust for the year were ?21,54,200/-, and the alleged expenditure of religious nature was ?88,262/-, which amounts to only 4.10% of the total receipts. - The Tribunal emphasized that the trust's expenditure on religious activities did not exceed the 5% limit stipulated under Section 80G(5B). - The Tribunal referenced judicial precedents, including Shiv Mandir Devsttan Panch Committee Sanstan vs. CIT and Umaid Charitable Trust vs. Union of India & Ors., which supported the view that the trust's activities were not solely religious and that the expenditures did not violate Section 80G(5B). Conclusion: - The Tribunal concluded that the Ld. CIT(E) erred in denying the approval under Section 80G, as the trust was carrying out both religious and charitable activities, and the expenditure on religious activities did not exceed the 5% limit. - The Tribunal allowed the appeal, granting the necessary approval under Section 80G of the Income Tax Act to the assessee trust. Judgment: - The appeal filed by the assessee was allowed, and the order pronounced on 09.08.2021.
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