Monday, May 12, 2014

No sec. 80G approval to trust created for benefit of Hindu community even if religious exp. was less than 5%


Where assessee-trust was established with objects of religious nature for benefit of a particular community, it could not be granted approval under section 80G(5) merely because expenditure incurred by trust on religious activities was less than 5 per cent of its total income.
Facts:
a)The assessee-trust moved an application before the Commissioner for approval under section 80G(5).

b)The Commissioner noticed that the dominant objects of the assessee-trust were for the benefit of Hindu Community only and were purely religious in nature. It was, therefore, opined that these objects contravened the provisions of section 80G(5). c)Accordingly, the Commissioner rejected the application of assessee-trust on the ground that assessee-trust was not established for charitable purpose. The Aggrieved-assessee filed the instant appeal.

The Tribunal held in favour of revenue:
1)The provisions for grant of approval under section 80G(5) apply to donations to any institution or fund only if it fulfills certain conditions mentioned therein. One of the conditions prescribed by section 80G is that the assessee-trust should be established for charitable purpose only and the institution or fund is not for the benefit of any particular religious community or caste;

2)The assessee pleaded that since the expenditure incurred by it on religious activities was less than 5 per cent of the total income, it would be given benefit of section 80G(5B). However, the benefit of section 80G(5B) is provided to that trust which is established for charitable purpose only and it incurs expenditure on religious activities not exceeding 5 per cent of its total income;

3)In the instant case, the Commissioner on going through the dominant objects of the assessee-trust had specifically held that they were religious in nature and for the benefit of Hindu Community;

4)Thus, as the assessee had failed to satisfy the conditions of section 80G(5), it was not entitled to approval under the section 80G. – YUG CHETNA PARMARTH TRUST V. CIT [2014] 44 taxmann.com 446 (Agra - Trib.)
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