Facts of the Case

The assessee, a trust engaged in activities connected with worship and related functions along with certain charitable activities, challenged the order of the Commissioner of Income Tax (Exemption) denying approval under Section 80G of the Income-tax Act, 1961. The Commissioner concluded that a substantial portion of the trust’s expenditure was of a religious nature, thereby rendering the institution ineligible for benefits available to charitable organizations. Aggrieved by the denial, the assessee filed an appeal before the Income Tax Appellate Tribunal.

Issues Involved

  1. Whether the activities of the assessee-trust qualified as charitable within the meaning of the Act.
  2. Whether expenditure incurred on religious activities disentitled the trust from approval under Section 80G.
  3. Whether the Commissioner was justified in rejecting the application on the ground that the trust pursued religious purposes.

Petitioner’s (Assessee’s) Arguments

  • The assessee contended that its dominant objectives were charitable in nature.
  • It was argued that the activities carried out benefited the public at large and were not confined to any particular religious community.
  • The assessee maintained that participation in worship or related activities was open to persons of all castes, creeds, and religions.
  • Therefore, the expenditure should not be treated as exclusively religious so as to deny statutory approval.

Respondent’s (Revenue’s) Arguments

  • The Revenue supported the findings of the Commissioner (Exemption).
  • It was submitted that a significant portion of the trust’s expenditure related to worship, rituals, and honorarium to priests, which are inherently religious activities.
  • The Department argued that such expenses fall within the scope of religious purposes and not charitable purposes under Section 80G.
  • Consequently, the denial of approval was justified under the provisions of the Act.

Court Order / Findings (ITAT)

  • Activities centered on performance of religious rituals are inherently religious in nature.
  • The fact that persons of all communities may participate does not change the religious character of the expenditure.
  • The statutory conditions for approval under Section 80G were not satisfied where substantial income was applied for religious purposes.

Important Clarification

The Tribunal clarified that merely because activities are open to the public or persons of all faiths does not convert religious activities into charitable ones. For approval under Section 80G, the dominant purpose must be charitable, and substantial religious expenditure may disentitle the institution from such benefit.

Link to download the order –

https://itat.gov.in/public/files/upload/1629273045-ita%20no.%20234%20of%202016%20kRISHNAPATI%20SEWSHRAM.pdf

Disclaimer

This content is shared strictly for general information and knowledge purposes only. Readers should independently verify the information from reliable sources. It is not intended to provide legal, professional, or advisory guidance. The author and the organisation disclaim all liability arising from the use of this content. The material has been prepared with the assistance of AI tools.