80G Approval Rejected over Religious Object: ITAT Directs CIT(E) to Verify 5% Spending Limit [Read Order]
The tribunal observed that having some religious elements did not make the trust substantially religious and referred to the Gurukrupa Foundation decision allowing up to 5% of income to be spent on religious purposes.
![80G Approval Rejected over Religious Object: ITAT Directs CIT(E) to Verify 5% Spending Limit [Read Order]](https://images.taxscan.in/h-upload/2025/09/26/2091292-itat-ahmedabad-80-taxscan.webp "80G Approval Rejected over Religious Object: ITAT Directs CIT(E) to Verify 5% Spending Limit [Read Order]")
The Ahmedabad Bench of Income Tax Appellate Tribunal ( ITAT ) directed Commissioner of Income Tax(Exemption)[CIT(E)] to verify whether the assessee had exceeded the 5% limit of income spent on religious activities before rejecting its application for approval under Section 80G(5) of Income Tax Act,1961.
Shree Hanumant Pakshighar CharitableTrust,appellant-assessee, through the counsel, submitted that it was a registered public charitable trust under Section 12AB of the Act. The trust had applied for approval under Section 80G(5) through Form No. 10AB, which was rejected by the CIT(E).
The counsel explained that the rejection was based on object no. 6 of the trust, which was considered religious in nature. He clarified that the object related to spiritual or culturally inspired activities and that its mere presence did not make the trust religious. He referred to the tribunal’s decision in Gurukrupa Foundation vs. CIT(E), (ITAT Ahmedabad) to support this view.
The counsel also stated that the trust had not incurred any religious expenditure since its inception and requested that the matter be sent back to the CIT(E) with a direction to issue a specific show-cause notice regarding classification of expenses and allow the trust to explain their nature.
The Revenue counsel, however, supported the CIT(E)’s decision and requested that the rejection be upheld.
The two member bench comprising Sanjay Garg (Judicial Member) and Narendra Prasad Sinha (Accountant Member) reviewed the contentions and the order of the CIT(E). Section 80G of the Act defines “charitable purpose” and excludes purposes that are wholly or substantially religious.
The CIT(E) had rejected the trust’s application under Section 80G(5) because object no. 6, which involved promoting Sanatan Dharma and serving monks, saints, and pilgrims, was considered religious.
The appellate tribunal observed that having some religious elements in an object did not make the overall objects of the trust substantially religious. It referred to the decision in Gurukrupa Foundation, which held that a trust could include religious objects since it was allowed to spend up to 5% of its income on religious purposes. Therefore, rejecting the application solely because of object no. 6 could not be justified.
The tribunal also noted that the CIT(E) had not checked whether the trust had spent more than 5% of its income on religious activities, which could affect approval. The matter was set aside and sent back to the CIT(E) to examine this. If the trust had not exceeded the limit and complied with other conditions, approval under Section 80G(5) was to be granted, giving the trust an opportunity to be heard.
Accordingly the appeal was allowed for statistical purposes.
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