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Judgment
Per Raj Kumar Chauhan, Judicial Member:
The appeal of the asse ssee is d irected against the order dated 20.03.2026 of ld. CIT( Exemption) , Delhi wherein the Form 10AB for approval u/s 80G of the Inco me Tax Act 1961 (hereinafter refe rred to as “the Act”), was rejected on the ground that the appellant has spent more than 5% of the total income during the last three year s on daily puja e xpenses and durga puja expenses, which cannot be held to be a char itable activity as the same being necessarily a religious activ ity.
Aggrieved by the said order, the assessee is in appeal before the Tribunal and has raised the follow ing grounds of appeal:
“1 . That on the facts and circumstances and i n la w, t he Order o f the Learned COMMISSIO NER O F INC OME TAX (EX EMPTION),NEW DELHI in rej ecting the application of the Appellant for registration u/s 80G (5) (i ) of the Income Tax Act 1961 is bad i n law.
2.That the Orde r of the Lear ned CO MMISS IONER O F INCOME TAX (EX EMPTI ON), NEW DELHI is agai nst the pri nciples of nat ural justic e as no query was raised duri ng the pr oceedings u/s 80G (5) (i ) for t he reasons given i n rej ecti on order dat ed 20/03 /2026.
3.That the Orde r of the Lear ned CO MMISS IONER O F INCOME TAX (EXEMP TION), NEW DELHI is not sustainable in law i nas muc h as the Learned COMMISSIO NER OF INCOME TAX (EXEMPTION), NEW DELH I i n C ol . 2A in Form 10AD has admi tted t he nature of activities as Charitabl e.
4.That the Orde r of the Lear ned CO MMISS IONER O F INCOME TAX (EX EMP TION), NEW D ELHI is not sus tainable in law i nas muc h as the Learned COMMISSIO NER OF INCOME TAX (EX EMPTION),NEW DEL HI vide Or der dated 20/03/2026 has gra nted the A ppel lant r egistration u/s 12AB (1)(b) fo r the ass essment yea r 2027 28 to assessment year 2023-37 by holding the activities of t he Appellant on ident ical facts.
5.That the Orde r of the Lear ned CO MMISS IONER O F INCOME TAX (EX EMP TION). NEW D ELHI is not sus tainable in law o n facts and law in hol di ng that the activity of mandir and wors hip of Kali mata, D urgamata a nd ot her gods and goddesses is religi ous in nature without appr eciati ng t hat the Society do es not put any r est riction of any ki nd on the religi on , caste on the devotes for these activities. The mandir or t he place of worship i s in the nature of me diation cente r a nd do es not disti ngui sh peo ple of different r eligi on, c aste or creed.
6.That the Hon’ble Calc utta Hi gh Cour t has categorically held that Durga Puja is not a r eligi ous function confined mer ely to worshi p or reli gi ous off ering but a melti ng p oint of diffe rent cul tures havi ng el eme nt of cer emony, cult ural progra mmes and cannot be narr owed d own to a mere religious offeri ng of a particular com munity. It is a c ere mony of joyo us nat ure and gai et y.
7.That the Lea rned COMMISS IONER OF IN COME TAX (EX EMPTION), NEW DELHI failed t o call for and c onsi der Form 10BD for a ny of t he fi nancial years which c ontains donations received by the Appellant from a large s ection of S oci ety.
8.That t he Appellant is engaged in charit abl e activities o nl y without any profit m otive whic h rul es out busi ness a ctivity a s held by ITAT Delhi in ITO Exempti on vs Wrestling Fed erati o n of India. The emphasis was on subst antive activity i n determi ne ins tit uti ons na ture.
9.That Hon’bl e Ma dras High C ourt i n C IT Vs. A ngel Educ ati on Trust (2022) 440 ITR 449 has held tha t predomi nant pur pose is to be seen i n determine instituti ons nat ure.”
We have heard the ld. AR w ho has argued that the approval u/s 12 A of the Act w as granted on the same grounds, vide order dated 20.03.2026 wherein the nature of the activities of the assessee has been held to be char itable, as mentioned in column 2A of the said order. It is therefore argued that the denial of registration u/s 80G is contrary to the approval granted u/s 12AB(1)(b) of the Act placed at page 13 of the paper book. With regard to the observation of the ld. CIT(E) that the expenditure incurred on religio us activities are more than 5% of the total income during the last 3 years having been spent on daily puja expense s and durga puja expenses, it is submitted that the ld. CIT(E) cannot assume the char acter of Assessing Officer and in case there was any expenses beyond 5% of the total income, which is permissible limit, it is the job of the Assessing Officer to take necessary action d uring the assessment proceedings and the registration u/s 80G of the Act canno t be rejected on that ground. It is further argued that the activity of the assessee/appellant is necessarily charitable as stands recognized while granting approval u/s 12AB of the Act. It is fur ther arg ued that one of the ob ject of the trust is held to be religious in nature by ld. CIT(E), as it has the object to construct a mandir and seco ndly to arrange special and seasonal worship of Kali Mata, Durga Mata and o ther gods and goddesses. It is argued that the objects of the trust cannot take away its dominant purpose of char itable nature, which is charitable activity and one of object of trust, co nstructing a mandir cannot be assigned to any particular religio n because the said activity is open to every caste, creed & community and not confined to only any particular religious community . The ld. AR has taken us to page 36 of the paper book, where one of the aim and objects as per Memorandum of Association is “(m) to organize religious operat ions amongst people without distinction of caste, creed or religion in times of natural calamities, etc.” In that regard, the ld. AR has relied the case of Hon’ble Supreme Cour t in Assistant Commissio ner of Income Tax (Exemption) Vs. Ahmedabad Urban Development Authority in Civil Appeal No. 21762/2017, wherein the Hon’ble Apex Court applied the dominant p urpose test “meaning of the primary objective is char itable, incidental commercial activity does not destroy the char itable nature”. It is further held by the Hon’ble Apex Court that only when the ge neral public utility “GPU” is converted into “ trade, commerce or business”, then the limits set out in section 2(15) of the Act are to be applied, adding that the provision is not clearly worded and does not provide precise definition of what is “in the course of carrying out such advancement” . It is argued before us that the dominant purpose of the trust is char itable and for that reason the approval u/s 12AB of the Act has been granted by the ld. CIT(E) and there is nothing on record that the app ellant trust is not involved in any commercial activity.
The ld. DR on the other hand submitted that the Hon’ble Supreme Co urt in Upper Ganges Sugar Mills Ltd. vs. CIT (1997) 93 Taxman 645 (SC) has observed that even if one of the object of the socie ty is wholly or substantially of religio us nature, the society cannot be said to be established for char itable purposes. It is therefore argued by ld. DR that since one of the obje ctives of the trust is to estab lish te mples and to make arrangeme nts for daily worship of Kali Mata, Shivalinga and Radha Kr ishna in traditional manner in accordance with Shastric injunctions and to arrange special and seasonal worship of Kali Mata, Durga Mata and other Gods and Goddesses in accordance with Shastric ritual, therefore, one of the object of the socie ty is wholly and substantially relig ious in nature and therefore, the approval u/ s 80G of the Act has been largely rejected. However, the ld. DR is silent on the question of approval u/s 12AB of the Act where the nature of the tr ust has been held to be “charitable” in nature and approval has been granted by the same ld. CIT (E) without any o bjection.
We have considered the rival submissions and e xamined the material on record. In a case, where approval u/s 80G of the Act was rejected while re lying the order of Hon’ ble Supreme Cour t in Upper Ganges Sugar Mills Ltd. (supra), ld. co-ordinate bench of Delhi Tribunal in the case of Baba Banda Singh Vs. CIT(E) in IT A No. 1835/Del./2026 order dated 19.08.2026 had the occasion to deal the identical issue in detail and after detailed discussion on all aspects of a case of similar nature has decided in favour of assessee trust by directing the ld. CIT(E) to grant approval in four weeks u/s 80G of the Act. The relevant observations contained in Para 3 to 9 are extracted below as under:
“3 . Ld. Counsel for t he assess ee has s ubmit ted that without exami ni ng t he fi nancials of the assesse e ld. Presc ribed aut hority has co ncl uded about r eli gious activities being c onducted by the assess ee while that is not the case. It was submitted that after decision of Upper Ganges Sugar Mills Ltd. Vs. CIT (s upra) t here has bee n amendment in t he Act, and our attenti on was drawn to sub-secti o n (5 B) of S ec tion 80G ins erted by Fi nanc e Act, 1994 w.e.f 01.04.1994 whic h provides that whe rei n instituti ons make expe nditure i n the rel evant year, which is of religi ous nat ure for an amount not exc eedi ng 5 % of its total i ncome in that previous year then, for t he previ ous year, the insti tuti on shall be deeme d exempted u/s 80G. L d. Counsel rel ied decisions in CIT (Exemptions) Vs. Tuls hishyam Mandir Society, Junagadh (2026) (6 ) TMI 832 – Gujarat High Court; and Co ordi nat e B enc h decisi on i n S hri 108 Gupti SagarD ham Jai n Soci ety Vs. CIT (Exem pti on), Cha ndi gar h vide ITA No.7551/Del/2 025 dat ed 26.05.2026; a nd Coordi nat e B ench decision i n Shri Baba Balakpuri Ji Charitable Soci ety Vs. ITO Exemption vide ITA No. 5833/Del /2025 order 1 8.02.2026; Anj uman-E-Himayat h-EIslam Vs. CIT, Exemp ti on, Che nnai vide ITA No . 3951/Chny/2 025 dated 10.04.2026; and Shree Modes hwari Dvs than S ociety A hmedaba d Vs. CIT (Exempti on) vide ITA No . 145/Ahd/2025; and B hatidha mSeva S ociety Vs. CIT (Exempti o n) vide ITA No. 33/AHD/2025 dated 08.01.2026; and S ri Guru Nanak Devji Religious And Charitabl e Soci et y Vs. CIT (Exempti ons ) vide ITA No. 3 84/CTK/2018 dated 24.05.2021 to co ntend that H on’bl e Del hi Hi gh C ourts and Coordi nate B enches have consi ste ntly taken a view tha t if t he religious expenditure a re withi n the st atuto ry limit, approval u/s 80G of the Ac t c annot be deni ed.
3.1Ld. D R v ehemently s upporte d the impugned order of ld. CIT(E).
4.Appr eciati ng the c ont ention and after perus al of mat erial on recor d we ar e of the c onsider ed vi ew t hat ld. Presc ribed authori ty has nowhere analysed fi nancials of the assess ee to draw i nfer ence with regard to the activities of the assess ee bei ng rel igi ous i n nature and only on the basis of obj ec tives i n t he memor andum of association such a c oncl usi on has been drawn. In this regard, we are o f t he considered vie w that memorandum of ass ociati on contai ni ng articles wi th regard t o o bjects and sc ope of acti vities are generally framed keeping in mind the l ong term perspec ti ve of the S oci ety and such instituti ons try to incl ude and extend t hei r activities to all spheres of chari table ac tivi ties and also for the reason to avoid s eeki ng a mendments i n the objectives .
4.1Thus, wi thout actually indicati ng as to w hat activities of rel igious natur e have been taken up by instituti on, mer ely o n the basis of r efere nce to some o bjectives, menti oned in the obj ective doc uments , which may be reli gio us too, t he deni al of appr oval i s not j ustified. More so, when it is the c ase of re newal of appr oval and wherei n it is merely necessary to exami ne t he fi nanci als of imme diately previ ous years to allege expendit ure w ere made on religious activities.
5.In the case of assessee our atte ntion has been dr awn to t he total computati on of income and fi na ncials and reports for year endi ng 31.03.2 021 to 31.03.2025 availabl e at pa ge No. 40-101 of the paper book a nd t he same show that actually no expenditure on alle ged reli gio us activities has been i ncurred . R ather, i t is establ is hed that the S ociety m aintai ned two s et of financials, one for Baba Banda Singh Bahadur Public School and anot her for remai ni ng activities of the Soci ety and the fi na ncials of the appli cant Soci ety do not s how any e xpenditure was made for r el igious pur poses. The decisi ons relied by the ld. C ouns el with regard to benefit of sub-secti on (5 B) of S ec tion 80G of the Ac t c ertai nly deserves to be relied by us.
6.Further, havi ng per used the B ye Laws o f ass essee made avail able at pa ge 14-39 of the PB and whic h are also repr oduce d i n the impugned order , we ar e of the considered view that assessee sufficiently establ ishes tha t ther e is actually no case o f alle ged r eligi ous activities. The same reflect that the pri mary obj ect is to enhance cohesion be tween differ ent communi ti es, to work for establishing reli gio us sentiment i n Indian children and to p r omote their allegi anc e towards Indi an culture. Further they have objective of runni ng hosp ital whil e k eepi ng itse lf a way from all political activities in ev ery ma nner. Thus , witho ut doubt pri ma ry obj ec tives of the s ociety ar e c haritable i n nature and only because it ref ers to c onstruction or mai nt enance of Mandir & Gurud wara or other plac es of pi l gri mage does not make its activity reli gious i n nature as ther e is no thi ng that whil e constr ucti ng these plac es of worship or ma naging these places of wors hip or places of pilgrimage ther e is any i ndicati on of discrimination of t he beneficiaries on the basis of their pers onal rel i gion. More s o when places of wors hip of differe nt faiths are to be run along w ith educational institutio ns an medical faciliti es, there cannot be jus tifi cation to allege t hat assessee before us is engaged i n reli gious activit y.
7.We are of the considered view that ld. Tax authorities whil e e xami ning the sco pe of r eligi ous activities in context to gra nt of benefit of appro val u/s 80G(5 )(ii) of the Act should be circums pect to the pr edominant and actual intenti on of the appl icant i nstit uti on, as r eli gions hav e i n their f oundation a philosophy of larger benefit to all forms of life and character building of i ndividuals. Thus ev ery religi ous ac tivity c annot be looked with culpability t o de ny approval. R eligi on is a way of l ife intr insically li nked to the s ocietal i ntegrati on and peace and also di gnity of an individual. It is only when t here is an indicati on that int ention of a religio us activity is to segr ega te and benefit p eopl e on the basis of caste, creed, or their way of l ife or religious sentiment, or to prop agate parti cul ar religi ous belie f to excl usion of ot her or proselytisati on t hen certai nl y t he objec tiv e of establ is hi ng or maintai ni ng a ny r el igious i nstit ution or place of worship and pil gimages, will make said reli gi ous activity, a prohi bited activity, to deny appr oval. The activity, t hough emanati ng out of religi ous ord er cannot be alleged to be religi ous activity, while the c ol our actually is s ecular. A distinction must al ways be m ade bet ween a prac tice whic h is religious and a prac tice in regard to a matter which i s purel y secular a nd has no element of religiosity associated wi th it.
8.In fact , t o our mi nd, si nce the Act does not defi ne ‘reli gio us activit y’, thus while examini ng t he application of approval u/s 80G, to s atisfy if the assessee is engaged or not, in religio us acti vity, the Essential Reli gious Pra ctices (ERP) test, doctri ne settled by the Ho n’ble Supreme Court of India in 1954 dur ing the S hi rur Mutt case AIR 1954 SC 282, to deci de which religious rituals and activiti es recei ve pr otection under A rticles 25 and 26 of the Constituti on, shoul d broadly be the par ameters to exami ne if the said activit y is religious , so as t o d eny t he appr oval of benefi t of section 80G of t he Act. It is onl y in case of expenses on ER P are mad e, then t hat should be exami ned to establish that the pr edomi nant objective is reli gio us activity. Activities like establishi ng and runni ng hos pital, educati onal institutions, pl aces of rehabilitation of bovi ne or other ani mals, Dharams hala, maintai ni ng ameniti es at religious places of wors hip or pilgrima ges, and such l ike pub lic utility activiti es, if are taken up by any i nstitutio n, trust or s ociety , which also s erv es any place of wors hip, by performing essential practices of a reli gio n, then what is material is to examine wha t i s t he predomi nant obj ec t and p roportionality of expendit ur es.
9.In the light of afor esaid, discussion made by us , we find that ld. CIT(E) has given a very narrow inte rpretation to scope of Secti on 80G, and has thus err oneously dismissed the applicati on o f the as sess ee. We thus, allow the appeal of the assessee. The ld. C IT(E) is directed t o grant the a ppr oval, in a pe riod of 4 weeks from receipt of this order.”
Regarding the exceeding of expenditure more than 5% on the religio us activity, we have noticed that the similar issue was before the co-ordinate bench in the case of Om Welfare Society Vs. CIT(E) in ITA Nos. 8278 & 8279/Del./2025 order dated 06.08 .2026 where one of us i.e . Hon’ble A.M. has delivered the order and has discussed that the ld. CIT(E) cannot assume the char acter of Assessing Officer for evaluating the relevant expenditure exceeding, if any, because it is essentially an exercise which can be looked into and carried out during the asse ssment pro ceedings by the Assessing Officer. Para 10 & 11 of the said order are relevant and extracted below as under:
“10.Furt her, the Hon’ble Punjab & Haryana Hi gh C our t i n the case of Ya dvi ndra Public Schoo l Associati on (s upra) had relied on the decision of Hon’ble S upr em e Court in the case of A nanda S ocial & Educati onal Trust case . We observed t hat t he similar view was expr essed by the vari ous courts that at the time of granting r egistration, ld. CIT(E) has to satisfy hims elf on the obj ects of t he tr ust and 19 ITA Nos. 8278 & 8279/D el /2025 Om Wel fare Soci ety genui neness of the activities, he cannot extend hims elf t o t he shoes of t he As sessing Officer . A t this stage if any ac tivities carried on by an i nstituti o n which is chari tabl e i n nature and its activities are genui ne, unl ess ther e is any devia tion which are not considered to be c haritable , the rel evant exp enditure to the extent of non-charitable activiti es, t he same can be disallowed at assessment st age. In the pres ent case, lo oki ng at t he subst antial activi ties carried on by the assessee to impar t t he educati on merely on certain deviati on of funds to other i ns tituti on which are interest bearing funds, that itself cannot be the r eas on to rej ect the registration. The compet ent authori ty has to v erify only c haritable o bjects and its activities in ter ms of c ase objects to gra nt registr ati on and shoul d not i ndul ge in findi ng reas ons to rej ect the appli cations for grant of registrati on. Ther efore, in o ur co nsidered vi ew the ass essee has been granted regist ratio n over the years and it deserves to be granted registrati on t heref ore, we direct the l d. C IT(E) to grant r egi stration and if t here is any deviati on, the Assessi ng Officer may be direc ted to do the needful at the assessment stage. Ther efor e, we ar e i ncline d to direct accordi ngly.
11.The other app eal r ela tes to regis trati on u/s 80G whic h were denied for the reasons that the a ppl ication for registration u/s 12AB was denied. Since, we are directed to grant the regi str ati on u/s 12AB, we di rect t he ld. CIT(E) to evaluate the grant of regis trati on u/s 80G as per la w. In t he resul t, the appeal filed by the assess ee is allo wed as per above t er ms .”
Respectfully following the judgments of the co -ordinate Bench in IT A No . 1835/Del/2 026 and IT A No s. 8278 & 8279/Del/2025 (referred supra) , we have noticed that the facts and circumstances are identical before us in the appeal and therefore the denial of approval u/s 80G of the Act simply on the ground that one of the object of the trust is to construct a temple and to arrange for puja of some deity which cannot be said to be the only dominant purpose of establishing the trust or its activity. While deny ing the approval, the ld. CIT(E) has ignored the other important objective of the tr ust as contained in clause (3) sub-clause (3) of the Memorandum of Asso ciation placed at page 36 of the papal book stating “to organize re lief operations amongst people witho ut distinction of caste, creed or relig ious in times of natural calamities et c.” We respectfully agree with the observatio n of the ld. co-ordinate Bench in ITA No. 1835/Del/2026 (supra) in para No.7 observing that “thus every relig ious ac tivity cannot b e looked with culpability to deny the approval. Religion is a way of life intrinsically linked to the societal integration and peace and also dignity of an indiv idual. It is only when there is an indication that inte ntion of religious activities to segregate and benefit people on the b asis o f caste, creed or their way of life or religious se ntiment or to propagate particular religious be lief to the exclusion of others or proselytisatio n, then certainly the objective of establishing or maintaining any religious institution or place of worship and pilgrimages, w ill make said religious activity, a prohibited activity , to deny approval”. While respectfully following the observation of the ld. co-ordinate bench in the above order, we are of the considered opinion that the ld. CIT(E) has unjustifiably denied the approval u/s 80G of the Act, notwithstanding that the approval u/s 12AB o n the similar objective of the trust was granted by the same authority. In that regard, the ld. AR has relied on the fo llowing case laws:
CIT(E) vs. Rajkot Jilla Gayatri P arivar Tr ust [2020] 117 taxmann.co m 121 (Guj.) [SLP dismissed by SC in [2020] 117 taxmann.com 122 (SC)] wherein it w as held that “the issue is now squarely c overed by a decisi on of the Supreme Court in the case of CIT vs. Lok Sewa Sansthan Samiti Sonebhadra [2019] 105 taxmann.com 203/263 Taxman 495. It is not i n disput e t hat the respondent - assess ee stands register ed as a C haritable Institution under secti on 12-A of the Act. In s uch circumstances, as a nat ural co rollary, the applicatio n under section 80G(5) of the Act would also beliabl e to be allowed.”
Sonepat Hindu Educational and Char itable Society vs. CIT (2005) 278 IT R 262 (P&H)
Zindagi So ciety v. C IT(E) ( ITA No. 3716/Del/24) (ITAT Delhi)
For these reasons, we are of the considered opinion that the ld. C IT(E) has erroneously dismissed the application of the assessee. We accordingly allow the appeal of the assessee and direct the ld. C IT(E) to grant the approval within a period of four weeks from the receipt of this order.
In the result, the appeal of the assessee is allowed.