SHREE SHYAM AARADHAN SEWA TRUST,AHMEDABAD V. THE CIT(EXEMPTION), AHMEDABAD

ITA 143/AHD/2025

AI Insights

The case involves Shree Shyam Aaradhan Sewa Trust, which appealed against the decision of the Commissioner of Income Tax (Exemption) rejecting their application for approval under section 80G(5) of the Income Tax Act, 1961. The Commissioner had found that the trust's objects included religious activities, which disqualified it from receiving approval under section 80G(5). The Tribunal noted that the mere presence of religious objects in the trust deed does not automatically disqualify the trust from approval under section 80G, provided that the expenditure on such activities does not exceed 5% of the total income, as stipulated by section 80G(5B). The Tribunal decided to set aside the Commissioner's order and remand the matter for a fresh examination, allowing the trust to amend its deed and submit evidence regarding the actual expenditure on religious activities.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 790400 (ITAT-AHMEDABAD)
• Duration Of Justice: 10 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-11-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: misc
• Appeal Filed On: 21-01-2025
• Other Referred Cases: Mishrilal Gordhanlal Batra Charitable Trust vs. Union of India, Discover Joy Foundation vs. Commissioner of Income-tax (Exemption), Vaishnav Sangh vs. Commissioner of Income-tax(Exemption), Kizhakke Kovilakom Trust vs. Commissioner of Income-tax (Exemption)
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Matter Remanded
• Court: TRIBUNAL
• Department Lawyers: SHER SINGH
• Assessee Lawyers: SAMIR VORA
• Keywords: Set aside; Principle of natural justice; Competent authority; Charitable institution
• 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.143/Ahd/2025 (Assessment Year: NA) Shree Shyam Aaradhan Sewa Trust, 904, Sakar-9, Lobby No. 2, Nr. City Gold Cinema, Ashram Road, Ahmedabad-380009 Vs. Commissioner of Income Tax (Exemption), Ahmedabad [PAN No.ABHTS7342B] (Appellant) .. (Respondent) Appellant by : Shri Samir Vora, AR Respondent by: Shri Sher Singh, CIT-DR Date of Hearing 04.11.2025 Date of Pronouncement 25.11.2025 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 30.012.2024. 2. The assessee has raised the following grounds of appeal: “1.1 The order passed by U/s.80G(5) on 30.12.2024 by CIT(Exem), Ahmedabad rejecting the application for approval of the appellant trust u/s 80G(5)(ii) of the Act and cancelling the provisional approval by holding that the appellant trust was a religious cum charitable trust which is excluded from the benefits of sec.80G(5) is wholly illegal, unlawful and against the principles of natural justice. 1.2 The ld. CIT(Exem) has erred in not considering fully and properly the explanations furnished and evidence produced by the appellant trust. 2.1 The ld. CIT(Exem), has grievously erred in law and or on facts in not appreciating that the appellant trust was not a religious trust and even the composite Printed from counselvise.com ITA No. 143/Ahd/2025 Shree Shyam Aaradhan Sewa Trust vs. CIT(E) Asst.Year –NA - 2– trust being charitable cum religious in nature which was eligible for approval u/s 80G(5). 2.2 That the in the facts and circumstances of the ld. CIT(Exem), ought not to have held that the appellant trust was a predominantly charitable trust eligible for approval u/s 80G(5). 3.1 The ld. CIT(Exem), has grievously erred in law and or on facts in rejecting the approval of the appellant trust u/s 80G(5) (iii) of the Act and cancelling the provisional approval. 3.2 That the in the facts and circumstances of the ld. CIT(Exem), ought not to have rejected the application for registration by ignoring the evidence on record with the application for registration.” 3. The brief facts of the case are that the assessee, Shree Shyam Aaradhan Sewa Trustfiled an application in Form No. 10AB before the Learned CIT(Exemptions) for approval under clause (iii) of the first proviso to section 80G(5) of the Income Tax Act, 1961 (“the Act”). Along-with the application the assessee also filed the trust deed and other basic documents. The CIT(Exemptions) called for various details and documents and the assessee filed replies on different dates in response to such notices. 4. In the order, the CIT(Exemptions) referred to section 80G(5) of the Act and Rule 11AA of the Income Tax Rules which prescribe the forms (Form 10A and Form 10AB) and the documents to be filed for obtaining approval under section 80G of the Act. The CIT(Exemptions) observed that for an institution or fund to qualify under section 80G(5) of the Act, it must be established in India for charitable purposes only and that trusts which are purely religious or composite religious-cum-charitable are excluded, particularly where any of the objects are wholly or substantially religious in nature. The CIT(Exemptions) relied on the decision of the Hon’ble Supreme Court in Upper Ganges Sugar Mills Ltd. wherein it was held that even if one Printed from counselvise.com ITA No. 143/Ahd/2025 Shree Shyam Aaradhan Sewa Trust vs. CIT(E) Asst.Year –NA - 3– of the objects is wholly or substantially of a religious character, donations to such an institution fall outside the scope of section 80G of the Act. The CIT(Exemptions) further discussed section 80G(5B) of the Act which allows an institution or fund, otherwise charitable, to incur expenditure of a religious nature not exceeding 5% of its total income in a previous year. The CIT(Exemptions) clarified that this provision is only in the nature of an exception regarding expenditure and does not permit a trust seeking 80G approval to have religious objects in its deed. According to CIT(Exemptions), section 80G(5B) of the Act only clarifies and qualifies the extent of religious expenditure permissible for a trust already having purely charitable objects and does not override the basic requirement that its objects must not be religious in nature. For this proposition CIT(Exemptions) also referred to various judicial precedents including the decision of the Hon’ble Supreme Court in Director of Secondary Education v. Pushpendra Kumar, and the ITAT decisions in Yug Chetna Parmarth Trust and OM Tapovan Charitable Trust, which held that trusts having religious objects or composite religious- cum-charitable objects are not eligible for approval under section 80G of the Act. 4.1 On the particular facts of the assessee’s case, the CIT(Exemptions) examined the trust deed of the assessee and noted that the main object clause in paragraph 5, particularly clause 5(A)(a) to (h), contained objects which were religious in nature. These objects included constructing prayer houses, temples, yatri niwas, religious buildings and gaushala, keeping the temple premises for worship and related religious programmes, celebrating the birthday of the deity and holding religious functions such as kirtans and Printed from counselvise.com ITA No. 143/Ahd/2025 Shree Shyam Aaradhan Sewa Trust vs. CIT(E) Asst.Year –NA - 4– pravachans, performing poojas and religious ceremonies, and maintaining and insuring the temple property. He therefore treated the assessee as a composite religious-cum-charitable trust and issued a show cause notice asking the assessee to explain how there was no violation of the conditions laid down in section 80G(5) of the Act and to furnish details of religious expenditure incurred in the last three years. In the same notice he also gave the assessee an option that, if it wanted to amend or delete the impugned religious objects so as to comply with section 80G(5) and had not yet incurred expenditure on those objects since the provisional approval, it could file an affidavit to that effect along with a resolution and a copy of the application made to the Charity Commissioner or ROC for amendment. 4.2 In response to the show cause notice, the assessee filed replies dated 18.12.2024 and 28.12.2024. In its replies, the assessee contended that its activities were for the benefit of the general public and not for any particular caste or community, and sought to justify that the trust was engaged in charitable purposes. The assessee also stated that steps had been taken to amend or remove the objects which were considered to be religious. In support of this, the assessee submitted the minutes of a meeting held on 30.10.2023 and a Schedule III showing the proposed amendments to the objects clause. The assessee tried to convey that it was in the process of amending the trust deed and that the objectionable religious objects were being removed in order to comply with the provisions of section 80G(5) of the Act. The assessee’s stand essentially was that after such amendment its Printed from counselvise.com ITA No. 143/Ahd/2025 Shree Shyam Aaradhan Sewa Trust vs. CIT(E) Asst.Year –NA - 5– objects would be charitable and that its application for 80G of the Act approval should therefore be allowed. 4.3 The CIT(Exemptions), after considering these contentions held that the explanation given by the assessee did not satisfactorily answer the queries raised in the show cause notice and was devoid of merit. With respect to the later reply dated 28.12.2024, he acknowledged that the assessee had produced minutes of meeting and Schedule III indicating its intention to amend the objects, but noted that the assessee had not produced any evidence to show that these amendments had actually been submitted before or approved by the competent authority such as the Charity Commissioner. There was no material to show that any hearing had taken place or any order had been passed on such proposed amendments. The CIT(Exemptions) further observed that, even assuming the assessee was in the process of amending its objects, correspondence showed that the trust was in fact proceeding to implement religious activities. 4.4 In this regard Ld. CIT(E) referred to letter dated 22.10.2024 written by the assessee to the Senior Town Planner, Ahmedabad, in which the assessee confirmed that it had occupied land at Sanathal, Taluka Sanand, and expressed its intention to use that land for constructing, among other things, a Khatu Shyam Mandir, temple complex, gaushala, yatri bhavan, vidya sankul, hospital, dialysis centre and other social activities. Along with this letter the assessee had submitted a main drawing titled “Khatu Shyam Mandir” showing, inter alia, a first floor for the Shyam Mandir and a room for the priest. The CIT(Exemptions) treated this as decisive evidence that the trust was actively engaged in creating a religious asset and in carrying out Printed from counselvise.com ITA No. 143/Ahd/2025 Shree Shyam Aaradhan Sewa Trust vs. CIT(E) Asst.Year –NA - 6– religious activity, despite its assertion of amending objects. He held that such conduct clearly brought the trust within the category of a religious or composite religious-cum-charitable institution which is hit by the main conditions of section 80G(5). The CIT(Exemptions) therefore held that there was a clear violation of clause (ii) of section 80G(5) of the Act, which prohibits approval where the instrument permits application of income or assets for purposes other than charitable purposes, as well as a violation of Explanation 3 to section 80G which excludes purposes substantially of a religious nature from the definition of “charitable purpose”. He also held that section 80G(5B) could not be invoked by the assessee because that provision only allows a purely charitable trust to incur limited religious expenditure of up to 5% of its income, and does not legitimize religious objects in the trust deed or convert a composite religious-cum-charitable trust into a purely charitable one. Relying on the above statutory provisions and the judicial precedents, CIT(Exemptions) held that if even one of the objects is religious in nature, approval under section 80G(5) cannot be granted, as there is no mechanism to ensure that expenditure under that religious object will remain within the 5% limit during the entire period of approval. 4.5 Accordingly, the CIT(Exemptions) held that the assessee trust did not satisfy the basic conditions laid down in section 80G(5) and Explanation 3 to section 80G, and that its objects and activities were partly religious and therefore outside the scope of section 80G. The CIT(Exemptions) therefore rejected the application filed in Form 10AB for approval under clause (iii) of the first proviso to section 80G(5) and further ordered that the assessee’s provisional approval under section 80G also stood cancelled. Printed from counselvise.com ITA No. 143/Ahd/2025 Shree Shyam Aaradhan Sewa Trust vs. CIT(E) Asst.Year –NA - 7– 5. The assessee is in appeal before us against the order passed by Ld. CIT(Exemptions). 6. We have heard the rival contentions and perused the material available on record. At the outset, we note the well-settled legal position that temples and places of worship per se are not automatically disentitled from approval under section 80G of the Act, provided that the institution is not established for the benefit of any particular religious community and the conditions prescribed under section 80G(5) are duly satisfied. In the case of Mishrilal Gordhanlal Batra Charitable Trust vs. Union of India [2009] 178 Taxman 114 (Rajasthan)/[2008] 307 ITR 221 (Rajasthan) the brief facts of the case are that the assessee-trust had applied for renewal of approval under section 80G of the Income-tax Act. The Commissioner rejected the application on 25-9-1998 on the ground that one of the objects of the trust deed included construction of temples and religious activities, and therefore the trust was partly religious, even though no temple had actually been constructed nor any expenditure incurred on religious activities. The trust filed a writ petition before the Rajasthan High Court contending that after the insertion of section 80G(5B) by the Finance Act, 1999 with effect from 1-4- 2000, the Commissioner was required to examine whether expenditure incurred on religious activities exceeded 5 per cent of the income, and if not, approval under section 80G could not be refused. The High Court held that in view of the newly inserted section 80G(5B), the Commissioner was required to consider the trust’s application for renewal for the period beginning 1-4-2000 independently of the earlier rejection order, and to examine whether religious expenditure exceeded the statutory limit. The Printed from counselvise.com ITA No. 143/Ahd/2025 Shree Shyam Aaradhan Sewa Trust vs. CIT(E) Asst.Year –NA - 8– Court therefore directed the Commissioner to reconsider the assessee’s application for renewal from 1-4-2000 without being influenced by the earlier order dated 25-9-1998, keeping in view the provisions of section 80G(5B). The writ petition was disposed of accordingly. In the case of Discover Joy Foundation vs. Commissioner of Income-tax (Exemption) [2025] 176 taxmann.com 447 (Ahmedabad - Trib.)[10-07-2025], the Ahmedabad ITAT held that mere mention of running/maintaining a temple in objects of assessee-trust, would not make object of trust wholly or substantially wholly religious in nature and, thus, Commissioner (Exemption) was not justified in rejecting application of assessee for approval under section 80G(5) of the Act. In Vaishnav Sangh vs. Commissioner of Income-tax(Exemption) [2025] 176 taxmann.com 487 (Ahmedabad - Trib.)[10-07-2025], the Ahmedabad ITAT held that where assessee-trust's objects included both charitable and one religious object, approval under section 80G(5) couldn't be denied solely for mentioning of running/maintaining a temple in objects, and matter was remanded to verify if religious expenditure exceeded 5 per cent limit and if not, assessee was to be allowed approval under section 80G(5) of the Act. In Kizhakke Kovilakom Trust vs. Commissioner of Income-tax (Exemption) [2025] 170 taxmann.com 81 (Cochin - Trib.)[02-12-2024], the ITAT held that where assessee-trust was carrying on activities relating to temple and other charitable activities such as annadanam, since temples were open to general public irrespective of caste, creed, sex, colour etc., and there was no specific instance of violations to allege that assessee trust was a religious trust, assessee was entitled for approval under section 80G(5)(vi) of the Act. Printed from counselvise.com ITA No. 143/Ahd/2025 Shree Shyam Aaradhan Sewa Trust vs. CIT(E) Asst.Year –NA - 9– 7. In view of the above facts, and considering the legal position emerging from the judicial precedents discussed, particularly the decision of the Hon’ble Rajasthan High Court in Mishrilal Gordhanlal Batra Charitable Trust vs. Union of India [2009] 178 Taxman 114 (Rajasthan)/[2008] 307 ITR 221 (Rajasthan), wherein it was held that after insertion of section 80G(5B) of the Act the authority must examine whether expenditure on religious activities exceeds the statutory limit of 5 per cent before refusing approval under section 80G, as well as the decisions of the Ahmedabad ITAT in Discover Joy Foundation vs. CIT(Exemption) [2025] 176 taxmann.com 447 (Ahmedabad - Trib.) and Vaishnav Sangh vs. CIT(Exemption) [2025] 176 taxmann.com 487 (Ahmedabad - Trib.), which held that mere presence of a religious object in the trust deed cannot by itself be a ground for denial of approval and that verification of actual expenditure on religious activities is essential, we are of the considered view that the matter requires fresh examination. 8. The record shows that despite repeated opportunities, neither the CIT(Exemptions) nor the assessee has furnished or examined concrete evidence regarding the actual quantum of expenditure incurred on religious activities so as to determine whether the conditions prescribed under section 80G(5) read with section 80G(5B) have been satisfied. 9. Accordingly, in the interest of justice and fair adjudication, the impugned order of the CIT(Exemptions) rejecting the application for approval under section 80G is set aside and the matter is restored to his file for de-novo consideration. Before us, the Counsel for the assessee submitted that the assessee is also in the process of amending the Trust Deed with a Printed from counselvise.com ITA No. 143/Ahd/2025 Shree Shyam Aaradhan Sewa Trust vs. CIT(E) Asst.Year –NA - 10– view to remove any objectional religious objects which may have inadvertently crept in. The assessee is also given liberty to amend it’s Trust Deed in the meantime and submitted the amended Trust Deed before Ld. CIT(E) for his consideration before the next date of hearing. The CIT(Exemptions) shall examine afresh whether the assessee has incurred expenditure of a religious nature exceeding the permissible limit prescribed under section 80G(5B) of the Act and whether the conditions laid down under section 80G(5) stand fulfilled, after affording adequate opportunity of hearing to the assessee and after considering the evidences that may be placed on record. The assessee is directed to fully cooperate and furnish all relevant documents. 10. In the result, the appeal is allowed for statistical purposes. This Order pronounced in Open Court on 25/11/2025 Sd/- Sd/- (DR. BRR KUMAR) (SIDDHARTHA NAUTIYAL) VICE PRESIDENT JUDICIAL MEMBER Ahmedabad; Dated 25/11/2025 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 1. Date of dictation 24.11.2025 (Hon’ble Member dictated on his dragon software) 2. Date on which the typed draft is placed before the Dictating Member 24.11.2025 3. Other Member………………… 4. Date on which the approved draft comes to the Sr.P.S./P.S .11.2025 5. Date on which the fair order is placed before the Dictating Member for pronouncement 25.11.2025 6. Date on which the fair order comes back to the Sr.P.S./P.S 25.11.2025 7. Date on which the file goes to the Bench Clerk 25.11.2025 8. Date on which the file goes to the Head Clerk…………………………………... 9. The date on which the file goes to the Assistant Registrar for signature on the order…………… 10. Date of Dispatch of the Order…………………………………… Printed from counselvise.com "