The Pune bench of the Income Tax Appellate Tribunal (ITAT) upheld the rejection of the claim of exemption under section 80G of the Income Tax Act,1961 due to utilization of income for religious expenses more than the prescribed limit.
Kalaram Sansthan, the appellant assessee was an individual and claimed the exemption under section 80G of the Income Tax Act. The assessing officer rejected the claim due to excessive utilization of income for religious purposes.
Thus the assessee appealed against the order passed by the Commissioner of Income Tax (Appeals) for confirming the rejection of the claim of exemption by the assessing officer.
Pramod S. Shingte, the counsel for the assessee contended that the expenses on electricity, which were substantial, if subtracted, then they would fall within the permissible limit of percentage as per section 80G(5B) of the Income Tax Act.
It was further submitted that as per the objects of the trust the assessee was doing not only religious activities but also other charitable activities, which were conducted by the applicant-trust for the benefit of the society at large.
Keyur Patel, the counsel for the revenue relied on the decisions of lower authorities and contended that the assessee-trust has violated the provisions of sec. 80G(5B) of the Income Tax Act, whereby the expenditure during any previous year for religious purposes should not exceed 5% of its total income whereas, as per the self-declaration by the assessee regarding the total income.
It was also submitted that the assessee had made religious expenses much more than the prescribed limit of 5% of the total income. Therefore, the application of the assessee for a grant of exemption under section 80G of the Income Tax Act was rejected.
The two-member bench comprising R.S. Syal (Vice-President ) and Partha Sarathi Chaudhury (Judicial) upheld the order of the Commissioner on the ground of the assessee had spent more than 5% for religious purposes from its total income and there was a clear violation of section 80G(5B) of the Income Tax Act while dismissing the appeal filed by the assessee.
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