MOTI DAMAN HINDU SAMASHAN BHOOMI TRUST,DAMAN AND DIU V. CIT(EXEMPTION), AHMEDABAD, AHEMDABAD

ITA 319/AHD/2025

AI Insights

The case involves the Moti Daman Hindu Samashan Bhoomi Trust appealing against the decision of the Commissioner of Income Tax (Exemption), Ahmedabad, which had rejected the Trust's application for approval under Section 80G(5) of the Income Tax Act, 1961. The rejection was based on the grounds that the Trust had exceeded the permissible limit of 5% of its total income on religious expenditure, specifically on a 'Bhagwat Katha' event. The Trust argued that the event was not religious but philosophical and cultural, aiming to benefit all sections of society. The tribunal found merit in restoring the matter for a fresh evaluation, allowing the Trust to present further evidence.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 396293 (ITAT-AHMEDABAD)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-05-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: misc
• Other Referred Cases: Shiv Ratan Rathi Foundation vs. CIT, Kota (Raj.) 20 taxmann.com 221 (JP)
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ASHESH R REWAR
• Assessee Lawyers: RASESH SHAH
• Keywords: Set aside
• Section: 80G

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “D” BENCH, AHMEDABAD BEFORE DR. BRR KUMAR, VICE PRESIDENT & SHRI SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER I.T.A. No.319/Ahd/2025 (Assessment Year: N.A.) Moti Daman Hindu Samashan Bhoomi Trust, Sonapur, Bhitwadi Moti Daman, Moti Daman, Daman & Diu (UT), Daman & Diu-396220 Vs. Commissioner of Income Tax (Exemption), Ahmedabad [PAN No.AAHTM3440K] (Appellant) .. (Respondent) Appellant by : Shri Rasesh Shah, A.R. Respondent by: Shri Ashesh R Rewar, CIT DR Date of Hearing 15.05.2025 Date of Pronouncement 26.05.2025 O R D E R PER SIDDHARTHA NAUTIYAL - JUDICIAL MEMBER: This appeal has been filed by the Assessee against the order passed by the Ld. Commissioner of Income Tax (Exemption), (in short “Ld. CIT(E)”), Ahmedabad vide order dated 27.12.2024. 2. The Assessee has taken the following grounds of appeal:- “1. On the facts and in circumstances of the case as well as law on the subject, the learned CIT(Exemption) has erred in rejecting assessee’s application for approval u/s. 80G(5) of the Income Tax Act, 1961. 2. It is therefore prayed that order of CIT(Exemption) passed u/s. 80G(5) of the Income Tax Act, 1961 may be set aside and he may be directed to pass fresh order granting approval u/s. 80G(5). 3. Appellant craves leave to add, alter or delete any ground(s) either before or in the course of hearing of the appeal.” ITA No. 319/Ahd/2025 Moti Daman Hindu Samashan Bhoomi Trust vs. CIT(E) Asst.Year –N.A. - 2– 3. The brief facts of the case are that in the order passed by the Commissioner of Income Tax (Exemptions), the application filed by the assessee for grant of registration under Section 80G(5) of the Income Tax Act, 1961 (Act), was rejected on the grounds of violation of the provisions contained in sub-section (5B) of Section 80G of the Act. The CIT(Exemptions) noted that this provision allows an institution or fund to incur religious expenditure only up to a limit of five percent of it’s total income while carrying out charitable activities. A show cause notice was issued to the applicant after the audit report for the Financial Year 2023-24 showed that the assessee had claimed expenses of ₹5,56,745 on a “Bhagwat Katha” event, which constituted 36.87% of total receipts amounting to ₹15,09,785. Accordingly, CIT(Exemptions) was of the view that this expenditure clearly exceeded the permissible limit and appeared to be of a religious nature, thereby violating Section 80G(5B) of the Act. In response to the notice, the assessee filed a reply on 27.12.2024 explaining that the Bhagwat Katha was not a religious event but rather a series of philosophical and spiritual lectures open to the general public and beneficial to all sections of society regardless of religion. The applicant emphasized that the Katha covered topics such as family values, mental wellness, and cultural promotion, and included expenses for logistical arrangements like food, sound systems, and stage setup etc. It was submitted by the assessee that these were not religious in nature and therefore should not disqualify the society from obtaining 80G registration. However, upon examining the reply and the financial records, the CIT(Exemptions) found the explanation to be unsatisfactory. CIT(Exemptions) held that the Bhagwat Katha, centered around the Shreemad Bhagwat scripture, is inherently religious in nature. ITA No. 319/Ahd/2025 Moti Daman Hindu Samashan Bhoomi Trust vs. CIT(E) Asst.Year –N.A. - 3– Further, it was found that the assessee had incurred such religious expenditure exceeding the prescribed 5% limit not only in the Financial Year under consideration but also consistently in prior years. Given this pattern of non- compliance, the CIT(Exemptions) held that the assessee had violated the conditions laid down under Section 80G(5B) of the Act. As a result, the application filed in Form No. 10AB was rejected and the provisional approval granted earlier was also cancelled. 4. The assessee is in appeal before us against the aforesaid order passed by Ld. CIT(Exemptions). Before us, the Counsel for the assessee submitted that Ld. CIT(E) while rejecting the application filed by the assessee / applicant trust has given an incorrect finding of fact that the assessee has incurred expenditure of religious nature in excess of more than 5% of it’s income for the relevant assessment year. The Counsel for the assessee submitted that though, admittedly, in the earlier assessment years, the assessee had incurred expenditure of religious nature in excess of 5% of it’s total income, but for the impugned assessment year, Ld. CIT(E) has given an incorrect finding of fact that the assessee incurred expenditure of religious nature in excess of 5% of it’s total income. 5. In response, Ld. D.R. placed reliance on the decision of ITAT Jaipur Bench in the case of Shiv Ratan Rathi Foundation vs. CIT, Kota (Raj.) 20 taxmann.com 221 (JP.), in which it was held that organizing ‘Bhagwat Katha’ is a religious activity and where expenditure incurred thereon by a trust exceeds 5% of it’s income of year, trust would not be granted approval under Section 80G for that year. ITA No. 319/Ahd/2025 Moti Daman Hindu Samashan Bhoomi Trust vs. CIT(E) Asst.Year –N.A. - 4– 6. We have heard the rival contentions and perused the material on record. 7. Before us, the Counsel for the assessee placed reliance on various judicial precedents on the proposition that expenditure incurred on supporting prayer halls at places of worship, which are open to the public at large are not expenses of a “religious nature”. Accordingly, in the interest of justice, the matter is restored to the file of Ld. CIT(E) for de-novo consideration and the assessee / applicant trust would be at liberty to place judicial precedents on the subject in support of it’s case. 8. In the result, the appeal of the assessee / applicant trust is allowed for statistical purposes. This Order pronounced in Open Court on 26/05/2025 Sd/- Sd/- (DR. BRR KUMAR) (SIDDHARTHA NAUTIYAL) VICE PRESIDENT JUDICIAL MEMBER Ahmedabad; Dated 26/05/2025 TANMAY, Sr. PS TRUE COPY आदेश की Ůितिलिप अŤेिषत/Copy of the Order forwarded to : 1. अपीलाथŎ / The Appellant 2. ŮȑथŎ / The Respondent. 3. संबंिधत आयकर आयुƅ / Concerned CIT 4. आयकर आयुƅ(अपील) / The CIT(A)- 5. िवभागीय Ůितिनिध, आयकर अपीलीय अिधकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाडŊ फाईल / Guard file. आदेशानुसार/ BY ORDER, उप/सहायक पंजीकार (Dy./Asstt.Registrar) आयकर अपीलीय अिधकरण, अहमदाबाद / ITAT, Ahmedabad "