IN THE INCOME TAX APPELLATE TRIBUNAL ‘B’ BENCH, PUNE

BEFORE SHRI R.S. SYAL, VICE PRESIDENT

AND
SHRI PARTHA SARATHI CHAUDHURY, JUDICIAL MEMBER

ITA No. 2004PUN/2019

Santshreshtha Gajajan Maharaj

Sevabhavi Sanstha
Borisavargao Kasij, Dist. Beed – 431 518
PAN:
AAMAS 7563 B Appellant

Vs.

The Commissioner of Income-tax

(Exemption) Pune. Respondent

Appellant by : Shri Hari Krishan

Respondent by : Shri Sardar Singh Meena

Date of Hearing : 01-12-2022

Date of Pronouncement : 06-12-2022

ORDER

PER SHRI PARTHA SARATHI CHAUDHURY, J.M.

This appeal preferred by the assessee emanates from order of ld. CIT

(Exemption) dated 30-09-2019 as per the grounds of appeal on record.

2. That on perusal of grounds of appeal, it is seen that the grievance of the

assessee is that the department has rejected the claim of assessee for grant of

recognition u/s 80G of the Income-tax Act, 1961 (hereinafter referred to as “the

Act‟). In this regard an application was made by the assessee-trust in Form No.

10G on 13-11-2017. The assessee is also registered u/s 12AA of the Act vide

order No. PN/CIT(Exemp)/Tech/12AA/PuneReg/721/251/2016-17/1375 dated

20-06-2016. The office of ld. CIT (Exemption) had directed the assessee-trust

to furnish various information/clarification for the purpose of verification

regarding genuineness of the charitable activities carried out for utilizing the

receipts of the trust towards charitable objects of the trust. In response to the

notices, the ld. A.R of the assessee attended on various dates and had

furnished documents/evidences in compliance with the notices. These facts are

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Santhshrestha Gajanan Maharaj

not disputed. The assessee had applied for approval u/s 80G(5)(vi) of the Act

and has given submissions dated 11-02-2019 wherein the assessee has given

details of charitable and social welfare work that it undertakes such as school

for poor children, gaushala, old-age home, upliftment of weaker section of the

society etc. The assessee has further stated that since its inception the

activities of the assessee were carried out by receiving donations for the

fulfilment of the objects prescribed in the Memorandum & Articles of

Association. Broadly, the reason for rejection for grant of exemption u/s

80G(5)(vi) of the Act by the ld. CIT (Exemption) was that the assessee received

donations of Rs. 13,50,00,000/- from Shri Ganapati Devasthan Trust to be used

inter-alia for construction and maintenance of temple of Gajanan Maharaj, but

the construction and maintenance of temple is not included in the objects of the

assessee trust and therefore, the assessee-trust has not carried out its

activities as per its objects. The ld. CIT (Exemption) had observed at page 3

para 4.3 of his order that the administration and maintenance of temple of

Gajanan Maharaj is a pure religious activity. That further, the assessee has not

given complete head-wise details of the capital expenditure of Rs. 83,65,500/-,

Rs. 33,20,214/- and Rs. 57,04,189/- incurred during the financial years 2015-

16, 2016-17 and 2017-18. The ld. CIT (Exemption) held that the assessee

failed to substantiate genuineness of charitable activities and therefore, did not

fulfil the conditions as required u/s 80G(5) of the Act.

3. At the time of hearing, ld. Counsel for the assessee opening his

arguments submitted that as per the decision of Hon‟ble Supreme Court in the

case of Surat City Gymkhana (2008) 170 Taxman 612 (SC) and Gemological

Institute of India (2019) 105 taxmann.com 180 (SC), once the registration u/s

12A has been granted to a trust the approval u/s 80G cannot be rejected. The

ld. Counsel further submitted that the amount of Rs. 13,50,00,000/- received

from Ganapati Devasthan Trust of Baramati, Dist. Pune, were to be used as per
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the order of Joint Charity Commissioner, Pune, dated 18-06-2015 as annexed

in the paper book at page 102. Referring to the relevant page at para 3 of the

order of the Jt. Charity Commissioner, Pune, the ld. Counsel brought to our

notice that there is a categorical direction given by the said Jt. Charity

Commissioner that out of total amount of Rs. 13,50,00,000/- an amount of Rs.

3,50,00,000/- shall be spent for the “purchase of land for the project,

construction of the temple of Santshreshtha Shi Gajanan Maharaj, Goshala and

Old Age Homes, and school for the poor students…..” Therefore, he submitted

that it is only a part of the amount that is to be used for construction of temple

and therefore, it cannot be said that the assessee-trust is only doing religious

activities and is not doing any charitable activities. The ld. Counsel also

emphasized the fact that there is no direct donation by one trust to another. It

has been done with the authority of Govt. approval i.e. Charity Commissioner,

Pune and he has directed and satisfied himself that the assessee to whom the

amount is being donated is a charitable trust and along with the charitable

activities, the said Commissioner had directed that a part of the amount can be

spent for construction of the temple. In this regard, the ld. Counsel made a

statement at Bar that till date the temple has not been constructed and if at all

the temple is constructed, they would approach the Charity Commissioner for

necessary amendment in the objects of the trust. Furthermore, it was

contended that as per section 80G(5B) of the Act which is a non-obstante

clause and it says that “notwithstanding anything contained in clause (ii) of

sub-section (5) of and Explanation 3, an institution or fund which incurs

expenditure, during any previous year which is of a religious nature for an

amount not exceeding five per cent of its total income, shall be deemed to be

an institution or fund to which the provisions of this section apply”. He submitted

that as on date, there is no construction of the temple and if at all whenever it is

done and the necessary expenses for its maintenance, etc. the assessee shall
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comply with this provision and accordingly as on date the assessee is doing

charitable activities as per the objects of the assessee-trust and the very fact

that registration u/s 12AA has been granted to the assessee and before

granting such registration, the ld. CIT (Exemption) has satisfied himself

regarding the genuineness of the objects and charitable nature of the activities

performed by the assessee-trust. So therefore, there is no reason for denial of

grant of exemption u/s 80G(5)(vi) of the Act. Another argument put forward by

the ld. Counsel regarding observations of the ld. CIT (Exemption) that the

assessee has not given complete head-wise details of the capital expenditure

of Rs. 83,65,000/-, Rs. 33,20,214/- and Rs. 57,04,189/- in the F.Ys. 2015-16,

2016-17 and 2017-18, this statement by the ld. CIT (Exemption) is not correct

since the assessee trust has duly filed audited balance-sheets for the said

financial years vide letter dated 11-02-2019 which is also annexed in the paper

book at page 89. Head-wise details of the expenditure given in the schedules

of the respective balance-sheets was very much there before the ld. CIT

(Exemption).

4. Per contra, the ld. D.R supported the decision of the ld. CIT (Exemption)

and contended regarding requirement of provisions of section 80G clause (5)

sub-clause (ii) where it is stated “instrument under which the institution or fund

is constituted does not, or the rules governing the institution or fund do not,

contain any provision for the transfer of application at any time of the whole or

any part of the income or assets of the institution or fund for any purpose other

than a charitable purpose.” So therefore, the trust deed under which the trust is

constituted it should not have any provision for application or transfer of the

income or asset of the trust for any purpose other than charitable purposes.

The ld. D.R also read out Explanation 3 which states as follows:

“In this section, “charitable purpose” does not include any purpose the whole or
substantially the whole of which is of a religious nature.”
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Then, he also submitted that as Rule 11AA of Income-tax Rules, 1962 the ld.

CIT (Exemption) may call for any document/evidences for verification of the

activities of the trust before granting approval u/s 80G of the Act. The ld. D.R

supported his stand by placing reliance on the decision of Hon‟ble Delhi High

Court in the case of Kirti Chand Tarawati Charitable Trust (1999) 105 taxman

686 (Del) wherein it has been held that once it is found that the trust created for

charitable purposes is engaged mainly in construction of the religious temple

wherein no charitable activities are being carried out the department was right

in denying renewal of recognition u/s 80G(5) of the Act.

5. We have perused case records, heard the rival contentions, analysed

the facts and circumstances in this case. The relevant provision of the Act for

which the assessee-trust has applied for exemption is sec. 80G(5)(vi) of the

Act. Now, for approval as per provision of section 80G(5)(vi) the first and

foremost requirement which the institution or fund has to satisfy is “if it is

established in India for a charitable purpose”. The conditions contemplated by

clauses (i) to (iv) to section 80G(5) are the conditions which the institution was

formed must additionally fulfil so as to be entitled to the approval by the

Commissioner. In this case the assessee-trust is established in India and is for

a charitable purpose, greatest evidence is that it has got registration u/s 12AA

of the Act. It is settled legal position that once registration has been granted to

a charitable trust u/s 12AA of the Act, the question whether the assessee-trust

is for charitable purpose or not itself does not arise. This is so since the ld. CIT

Exemption gets satisfied regarding the charitable objects of the trust and

genuineness of the activities conducted for the charitable purposes and only

then registration u/s 12A is accorded to a particular institution or trust. Once

this is there, the question should not arise again for ascertaining the charitable

purpose of the trust. The objection that has been raised by the ld. CIT

(Exemption) as per para 4.2 of his order that one of the main objects of the
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donations received by the assessee-trust from Shri Ganapati Devasthan Trust

during F.Y. 2015-16 is to construct Gajanan Maharaj Temple. In this regard,

the assessee has also submitted to the ld. CIT (Exemption) the details of

proposed accumulation or setting apart of amounts regarding construction of

temple, gaushala, old age home, school for poor children and upkeep and

maintenance of temple, etc. Thereafter at para 4.3 of his order, the ld. CIT

(Exemption) holds that as per the funds received as donation during F.Y. 2015-

16 from the said Ganapati Devasthan Trust a substantial amount of fund the

assessee intends to use for the purpose of construction of temple of Gajanan

Maharaj and also intends to administrate and maintain the said temple which is

the work of a pure religious activity. The ld. CIT (Exemption) opined that the

object of the assessee-trust does not have any object regarding the

construction and maintenance of the temple. In this regard, we would refer to

the submissions made by the ld. Counsel for the assessee that as on date, the

assessee has not constructed any temple. The assessee only intends to

construct the temple and in such situation they would even approach the

Charity Commissioner, Pune, for necessary amendments in the object clauses

of the trust deed. Therefore, as on date, the assessee-trust has only

performed activities of a charitable nature and the department is satisfied about

the charitable nature of the assessee-trust because of which the ld. CIT

(Exemption) has already granted registration u/s 12AA of the Act to the

assessee. Even before us, ld. D.R did not raise any objection regarding non-

charitable activities of the assessee-trust nor he could bring any evidence on

record to demonstrate that the assessee trust is not doing any charitable

activity. Regarding the objection raised by the ld. CIT (Exemption) that the

assessee intends to utilise a substantial amount of funds received as donations

during F.Y. 2015-16, for construction of temple of Gajanan Maharaj and for its

maintenance, we have perused the entire order of the Jt. Charity

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Commissioner, Pune and therein at para 3 he has assigned an amount of Rs.

3,50,00,000/- out of total donations received by the assessee and this has to be

spent for purchase of land, construction of temple, goshala, old age home and

school for the poor students. Therefore, it cannot be said that a substantial

amount the assessee proposes to spend on construction of the temple since all

the aforestated expenses is to be incurred within the said amount.

Furthermore, as on date, there has been no construction of the said temple.

Therefore, the objection of the department that the assessee-trust intends to

spend substantial amount of the said donation received for religious purpose is

unsubstantiated and unfounded. The decision of Hon‟ble Delhi High Court

(supra) relied on by the ld. D.R is substantially different on facts as compared to

the present case since therein the trust had mainly used the funds for

construction of religious temple and no charitable activity was carried out.

However, in the instant case of the assessee, the department has not disputed

the charitable activities conducted by the assessee and as per the directions of

the Jt. Charity Commissioner, Pune, the construction of the temple, if at all it

would be constructed, would involve only part of the total expenditure within the

designated amount which has been directed by the Jt. Charity Commissioner

Pune being the appropriate authority. The ld. D.R had also referred to the

provision of section 80G(5)(ii) along with Explanation 3 and in this regard it is

worthwhile to refer to the provisions of section 80G (5B) which is as follows:

“Notwithstanding anything contained in clause (ii) of sub-section (5) and

Explanation 3, an institution or fund which incurs expenditure, during any previous
year, which is of a religious nature for an amount not exceeding five per cent of its
total income in that previous year shall be deemed to be an institution or fund to
which the provisions of this section apply.”

6. So therefore, it is a non-obstante clause taking care of section 80G(5)(ii)

and the Explanation 3 and stating that the expenditure for a religious nature if it

does not exceed five per cent of the total income then the said trust or

institution shall be deemed to be an institution to which the provision of section

80G would apply. In this context, the assessee has given an undertaking that
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whenever the construction of temple would take place and the maintenance

fund for the said temple it shall be in accordance with section 80G (5B) of the

Act. That, the assessee would even take necessary approval from the Charity

Commissioner, Pune, before undertaking such activity. However, in the

present context given the facts when the assessee is registered u/s 12AA of

the Act and when the provision of section 80G(5)(vi) of the Act has been

complied with, we do not see any reason for refusing the assessee the grant of

exemption u/s 80G of the Act. The Department has also not brought out a case

where they can prove through evidences that the assessee-trust has violated

the stipulations contained in sec. 80G(5B) of the Act. In fact, the revenue

authorities have not demonstrated anything showing substantial expenditures

of the fund received in donation by the assessee for religious purposes and

whether it is exceeding the permissible limit of 5%. It has also been mentioned

by the ld. CIT (Exemption) that the assessee has not provided head-wise

details of various expenditure as per para 4.3 of his order but all these details

have been submitted before him and as annexed before us in the paper book.

The ld. D.R did not refute these facts. In this scenario it will be also worth

mentioning that while exercising the power to reject or accord approval u/s

80G(5) the Commissioner acts as a quasi-judicial authority. Therefore, the

conclusion arrived at by him is expected to be supported by valid and cogent

reasons. It is also expected that he should apply his mind to the facts of each

case and give reasons either to grant or refuse recognition/approval. This

requirement is very much imperative on the part of the Commissioner

particularly having regard to the statutory provision under which he functions.

This proposition has been observed and upheld by the Hon‟ble Andhra

Pradesh High Court in the case of Tirumala Tirupati Devasthanam Vs. Chief

C.I.T. (2001) 251 ITR 849 (AP). In the case of CIT Vs. Christian Medical

College (2015) 274 ITR 17, it was observed and held by the Hon‟ble Punjab &
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Haryana High Court that in a case where the assessee has been running and

maintaining the Christian Medical college, Christian College of Nursing, where

medical care and training the professionals were provided by the assessee-

society to everyone irrespective of their caste, creed, race, religion etc. the

assessee was held to be entitled for grant of exemption/approval u/s 80G(5) of

the Act. So therefore, if Trust/Institution incurs expenses for religious purposes

which is inclusive and is only a small part of the income, and if the substantial

work done by the trust is charitable in nature benefitting the public at large then

the institution or trust has to be granted exemption u/s 80G of the Act. In the

present case of the assessee, the department has not been able to make out a

case through facts that the assessee is substantially a religious trust. That on

examination of the facts and circumstances we set aside the order of the ld.

CIT (Exemption) and direct him to grant exemption/approval u/s 80G of the Act

to the assessee-trust. Grounds of appeal are allowed.

7. In the result, appeal of the assessee is allowed.

Order pronounced in the open Court on this 06th day of December 2022

Sd/- sd/-
(R.S. SYAL) (PARTHA SARATHI CHAUDHURY)
VICE PRESIDENT JUDICIAL MEMBER

Pune; Dated, the 06th day of December 2022

Ankam
Copy of the Order forwarded to :

1. The Appellant.
2. The Respondent.
3. The C.I.T. (Exemption)
4. D.R. ITAT „B‟ Bench
5. Guard File
BY ORDER,

Sr. Private Secretary

ITAT, Pune.

/// TRUE COPY ///

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1 Draft dictated on 01-12-2022 Sr.PS/PS

2 Draft placed before author -12-2022 Sr.PS/PS
3 Draft proposed and placed JM/AM
before the second Member
4 Draft discussed/approved by AM/JM
second Member
5 Approved draft comes to the Sr. Sr.PS/PS
PS/PS
6 Kept for pronouncement on 06-12-2022 Sr.PS/PS
7 Date of uploading of order 06-12-2022 Sr.PS/PS
8 File sent to Bench Clerk 06-12-2022 Sr.PS/PS
9 Date on which the file goes to
the Head Clerk
10 Date on which file goes to the
A.R
11 Date of dispatch of order