ITAT Denies 80G Exemption as Educational Trust Fails to Justify Donations to Other Trusts [Read Order]

The Ahmedabad Bench of the Income Tax Appellate Tribunal (ITAT) upheld the decision of the Commissioner of Income Tax (Exemptions) to deny Section 80G registration after finding that the trust failed to justify large donations made to other charitable trusts that were not directly linked to its core educational activities.

The trust, Shree Saurashtra Patel Seva Mandal Education Trust which runs schools and is registered under Section 10(23C)(vi) as an educational institution, had sought approval under Section 80G to enable donors to claim tax deductions for their contributions.

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During the assessment, the CIT(E) noted that the trust had incurred expenditures totalling over ₹58 lakh that appeared to be of religious nature, breaching the condition that an institution seeking 80G approval should not use funds for religious purposes beyond the statutory limit.

On examination, the trust clarified that the sum in question was not for religious spending but rather donations made to two other trusts Shri Saurashtra Patel Samaj Charitable Trust and Uma Arogya Seva Foundation as well as a contribution to the Chief Minister’s Relief Fund.

However, the CIT(E) observed that the trust’s primary objective should be solely educational, and any significant diversion of funds to other unrelated trusts raised questions about the genuineness of its activities under Section 10(23C)(vi).

The trust failed to produce sufficient evidence or explanations to establish how the donations advanced its educational purposes. In appeal, the trust’s counsel could not file any additional documents or clarifications before the Tribunal to address these concerns.

The ITAT bench of Vice President Dr. BRR Kumar and Judicial Member T.R. SenthilKumar concluded that the trust’s failure to substantiate how the donated funds supported its educational mission justified the rejection of the Section 80G application.

The Tribunal stated that for an institution to be eligible for 80G approval, it must show that its resources are used exclusively for its declared charitable objects and not diverted to other entities without clear accountability.

As a result, the ITAT dismissed the trust’s appeal and upheld the denial of 80G benefits.

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