Exemption allowable u/s 80G to the Charitable Trust: ITAT [Read Order]

Exemption - Charitable Trust - ITAT - taxscan

The Pune bench of Income Tax Appellate Tribunal (ITAT) presided over by R.S. Syal, Vice President and Accountant Member with Partha Sarathi Chaudhury, Judicial Member held that the assessee-trust is allowed to get exemption under the Section 80G of the Income Tax Act, 1961.

Aggrieved by the order of the Commissioner of Income Tax (Exemption)[(CIT(E)], the appeal was preferred by the assessee before the appellate tribunal.

The assessee-trust, which engaged in philanthropic activities, sought the grant under Section 80G of the Income Tax Act, which permits a deduction for donations made to specific funds, charitable institutions, etc.; nevertheless, the CIT(E) denied the claim.

The CIT(E) asked the assessee to submit the furnished information regarding the actions taken to use the trust’s receipts for its charitable purposes, and the assessee’s counsel did so.

Additionally, the assessee submitted an application for approval under Section 80(5)(vi) of the Income Tax Act, outlining its involvement in charity and social welfare initiatives.

The assessee received donations worth Rs.13,50,00,000 from Shri Ganapati Devasthan Trust, which were intended to be utilised, among other things, for the building and administration of the Gajanan Maharaj temple, according to the CIT(E).

However, the development and upkeep of the temple are really not addressed by the assessee trust’s objects, and as a consequence, the assessee has not carried out its activities in accordance with its objects.

Additionally noted that the assessee failed to provide evidence of the sincerity of their charity activity and did not meet the criteria established by Section 80G(5) of the Income Tax Act.

Hari Krishnan, the assessee’s counsel referenced the rulings of the Supreme Court cases Surat City Gymkhana (2008) and Gemological Institute of India (2019) to establish that once a trust has been registered under section 12AA of the Income Tax Act, its authorisation under section 80G of the Income Tax Act cannot be denied.

The representative added that the contributions from the Shri Ganapati Devasthan Trust were used in compliance with the Joint Charity Commissioner’s orders. He added that just a small portion of the funds was used for the purchase of land and the residue was donated.

The counsel of the Department Sardar Singh Meena supported the decision of CIT(E).

The bench concluded its analysis of both sides by observing that it is settled law that the question of whether the assessee-trust is for charity purposes or not itself does not arise once registration has been given to a charitable trust under Section 12AA of the Income Tax Act.

Additionally, it was determined that the assessee only intended to build the temple and that, until this point, they had solely engaged in charity activities, to which the Department had not objected.

The bench ruled that the department had not provided sufficient evidence to support the trust’s religious nature. If the trust engaged in religious activities, it is not subject to the provisions of section 80G of the Income Tax Act. As a response, the tribunal directed the CIT(E)’s to grant the exemption under Section 80G of the Income Tax Act.

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