Nature of Trust cannot be treated as 'Religious' when There is No distinction between Caste, Creed, Race, or Religion: ITAT [Read Order]

The Bangalore bench of the Income Tax Appellate Tribunal (ITAT) has held that the object of the Trust cannot be characterized as religious object especially when it does not make a distinction between caste, creed, race, religion, etc.

The Commissioner of Income Tax (Exemption) considered the Trust as Religious in nature based on the assumption that by performing Pooja namely `Rudrabhisheka' the trust generates major income.

The assessee contended that the above observation was without appreciating the fact that the Trust is carrying out the activities of providing free food and Hostel Facilities to Students and also to General Public. According to the assessee, the facilities provided are for people without distinction relating to caste, creed or community.

The bench of Shri N. V. Vasudevan, Vice President and Ms. Padmavathy S, Accountant Member observed that the people from different walks of life are free to enter the Holy place, meditate, pray and worship. The monies collected in the form of voluntary contributions are utilised for providing food and hostel facilities, Conducting Training for creating employment, helping the needy people by giving them Sewing machines and other necessary equipment and support for sustaining livelihood for mainly people below poverty line.

Sec. 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 deduction while computing the total income in the hands of donor. It provides deduction in respect of donations to certain funds, charitable institutions, etc.

“The recipient of money or the donee gives a receipt of donation, based on which the donor is entitled to claim a deduction, provided the donee institution is approved under section 80G of the Income Tax Act, 1961. One of the Conditions to be satisfied to get approval under Section 80G (5) is that the Institution should be established in India for Charitable purpose and the institution should not be for the benefit of any particular religious community or caste,” the bench observed.

Granting relief to the assessee, the Tribunal concluded that “the objects and purposes of the Assessee are both charitable and religious, the Assessee does not exist exclusively for the benefit of a particular religious community. The objects do not channel the benefits to any community and thus, would not fall as an institution existing solely for religious purposes. In that view of the matter, we are of the view that the Assessee is a charitable and religious trust which does not benefit any specific religious community and therefore, it cannot be held that it exists solely for religious purposes. It cannot be characterized as religious object especially when it does not make a distinction between caste, creed, race, religion, etc.”

To Read the full text of the Order CLICK HERE

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