In this case, the assessee trust had applied for approval under section 80G(5) of the Income Tax Act, 1961, which allows donors to claim deduction for donations to certain approved charitable institutions. The Commissioner (Exemptions) rejected the application on the ground that the trust’s objects included running or maintaining a temple, and hence the trust was wholly or substantially wholly religious in nature.
However, the ITAT Ahmedabad overturned the rejection, holding that mere inclusion of an object relating to temple maintenance does not make a trust religious, unless the dominant purpose is religious. Hence, the assessee was entitled to approval under Section 80G(5).
Key Observations by ITAT:
- Mixed Objects – Permissible:
- The trust had multiple charitable objects, such as education, medical relief, and social welfare, along with a mention of temple maintenance.
- ITAT held that unless the predominant or exclusive purpose is religious, the presence of religious activity as one among many objects does not disqualify the trust.
- Section 80G(5)(vi) Interpretation:
- For rejection under section 80G(5)(vi), the trust must be “wholly or substantially wholly religious.”
- A broad or incidental religious object does not attract disqualification.
- Temple Not Sole Activity:
- No evidence was found that the trust’s activities were dominantly or substantially religious in nature.
- The temple mentioned was a minor or peripheral activity in the overall scheme of charitable operations.
- Supreme Court & High Court Precedents Cited:
- Relied on various rulings including CIT v. Dawoodi Bohra Jamat (2014) and CIT v. Barkate Saifiyah Society, emphasizing that religious activity alone doesn’t render the trust ineligible unless predominant.
Outcome / Ruling:
The ITAT directed the Commissioner (Exemptions) to grant approval under section 80G(5) to the assessee trust.
🏛️ Case Name & Citation
Discover Joy Foundation, Ahmedabad v. The CIT (Exemptions), ITA No. 202/Ahd/2025 (Ahmedabad bench of ITAT)
📅 Order Date
10 July 2025 in open court at Ahmedabad.
⚖️ Core Holding
- The Tribunal clarified that a mere mention of temple upkeep in the trust deed—as one among 36 objectives—does not render the trust “wholly or substantially wholly religious.”
- Since no religious expenditures were evidenced, the trust was not disqualified under Section 80G(5) despite having a temple-related object.
- Per Explanation 3 to Section 80G(5), a trust is ineligible only if all or substantially all objects are religious. Here, that was not the case.
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Matter was remanded to CIT (Exemptions) to verify whether any religious expenditure exceeded the permissible limit under Section 80G(5B). Approval to be granted if it hadn’t.