The Bangalore Bench of Income Tax Appellate Tribunal has allowed approval under Section 80G of the Income Tax Act 1961, holding that the activities of donation to Veda Pathashalas, Veda Pundits, Medical Assistance etc. would be treated as “charitable” in nature.
The assessee, Shruthi Parampara Gurukulam applied for the regular registration under section 12A and 80G for recognition as a Charitable trust. The ITO, analysed the documents. Similarly, explanation as to how the objects and activities of the Trust are covered within the meaning of definition of ‘Charitable purpose’ under section 2(15) of the Income tax Act, 1961 (‘the Act’) was also filed. Note explaining as to how the objects of the assessee are charitable, not religious, with supporting case laws and therefore the assessee was eligible for regular registration under section 12AB and regular approval under section 80G as a Charitable trust was filed.
The Commissioner of Income Tax (CIT-Exemptions) heard the matter and passed the order of registration under section 12A (1) (ac)(iii) on 29.9.2022 registering the assessee as RELIGIOUS and not as Charitable, rejecting the application for approval under section 80G.
Section 80G of the Income Tax Act deals with the deduction which allows the amount paid by a taxpayer as donation to charitable trust or any other fund. donations may be deducted 100% to 50%. deduction of the Income Tax Act.
Sudheendra, on behalf of the assessee, submitted that, section 80G applies only to charitable trusts or institutions. It does not apply to religious trusts or institutions whereas scheme of exemption u/s 12A applies to both charitable as well as religious trusts. Section 80G of the Income Tax Act ‘1961 provides that any donation to a charitable institution or funds approved under the said section shall be entitled to deduction of the sum so donated, while computing the total income in the hands of an assessee who is the donor of such donation.
Sreenivas T Bidari on behalf of the revenue submitted that the assessee was engaged in a religious activity of teaching Vedas, a Hindu religious scripture, to Hindu students and hence the whole purpose of the trust is of religious nature as per Explanation 3 to section 80G. It is therefore concluded that the appellant Trust was not eligible for approval under section 80G.
N. V. Vasudevan (Vice President) and Chandra Poojari (Accountant Member) quashed the impugned order allowing registration under section 12A of the Act as charitable trust, observing that the activities carried on by the assessee-Trust were Charitable in the nature of education, relief of poor and not Religious.
The Bench further observed that,
” The assessee-trust has carried on other charitable activities in the nature of relief of the poor. The Vedic Scholars were identified and felicitated irrespective of their caste, creed or religion. The Trust has given financial assistance to various people, irrespective of caste, creed or religion, involved in Indian Heritage Education. The Income and expenditure ledger account for expenses incurred in achieving the objects like donation to veda pathashalas, veda pundits, medical assistance etc demonstrates the charitable activities carried on by the assessee Trust.
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