Religious Objects must be Assessed under 5% Expenditure Rule: ITAT restores 80G Application [Read Order]
The Tribunal restored the matter to the CIT(E) for de novo adjudication with specific directions to verify whether the assessee incurred religious expenses in excess of 5% of its total income
![Religious Objects must be Assessed under 5% Expenditure Rule: ITAT restores 80G Application [Read Order]](https://www.taxscan.in/wp-content/uploads/2025/04/ITAT-ITAT-Ahmedabad-ITAT-on-80G-application-TAXSCAN.jpg "Religious Objects must be Assessed under 5% Expenditure Rule: ITAT restores 80G Application [Read Order]")
The Ahmedabad Bench of the Income Tax Appellate Tribunal (ITAT) restored the matter for fresh adjudication which is to be assessed at 5% Expenditure rule in a case where the Commissioner of Income Tax (Exemption) [CIT(E)] had rejected the assessee trust’s application for approval under Section 80G of the Income Tax Act, citing the presence of religious objects in the trust...
The Ahmedabad Bench of the Income Tax Appellate Tribunal (ITAT) restored the matter for fresh adjudication which is to be assessed at 5% Expenditure rule in a case where the Commissioner of Income Tax (Exemption) [CIT(E)] had rejected the assessee trust’s application for approval under Section 80G of the Income Tax Act, citing the presence of religious objects in the trust deed.
Vismruti Social and Charitable Trust (assessee) had applied for registration under Section 80G(5)(iii). The CIT(E) rejected the application on the ground that two of the trust’s objects publishing literature and organizing events related to Sanatan Dharma were religious in nature.
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The CIT(E) held that inclusion of even a single religious object disqualified the trust under Explanation 3 to Section 80G(5), as approval can be granted only to institutions having exclusively charitable purposes.
Aggrieved by the CIT(E)’s order, the assessee filed an appeal before the ITAT. The counsel for the assessee contended that the religious objects were aimed at moral and cultural education, and that the trust's overall expenditure on religious activities was well within the 5% limit prescribed under Section 80G(5B) of the Income Tax Act.
The two-member comprising Siddhartha Nautiyal (Judicial Member) and Narendra Prasad Sinha (Accountant Member) held that the CIT(E) failed to appreciate the legislative intent behind Section 80G(5B), which permits charitable institutions to incur religious expenditure up to 5% of their total income.
The Tribunal also observed that only 2 out of 22 objects of the trust were considered religious and that the CIT(E) did not verify the quantum of religious expenditure before rejecting the application.
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The tribunal relied on precedents, including Shree Sahajanand Gaushala Trust v. CIT (Exemption) and Jay Mataji Charitable Trust v. CIT (Exemption), which held that denial of registration based solely on isolated religious objects without examining expenditure and restored the matter back to CIT(E) with direction to verify whether expenditure incurred less than 5%.
The Tribunal restored the matter to the CIT(E) for de novo adjudication with specific directions to verify whether the assessee incurred religious expenses in excess of 5% of its total income. The tribunal held that if expenditure incurred found within permissible limits, the trust shall be eligible for 80G approval as per law.
The appeal of the assessee was allowed for statistical purposes.
To Read the full text of the Order CLICK HERE
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