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Judgment
PER MANISH AGARWAL, A.M.:
The present appeal is filed by assessee against the order dated 16.10.2025 passed by Ld. Commissioner of Income Tax (Exemption), Chandigarh [“Ld. CIT(E)”] u/s 12AB(1)(b) of the Income Tax Act, 1961 [“the Act”] pertaining to Assessment Year 2026-27.
Brief facts of the case are that the assessee society had filed an application for registration u/s 80G of the Act in terms of application dated 29.09.2025 in Form 10AB and all the necessary documents explaining the charitable activities carried out were submitted. The assessee society was granted registration u/s 12AB in terms of the registration certificate dated 16.10.2025 wherein registration was granted as “Religious Entity”. Ld. CIT(E) observed that the assessee society is engaged in the activities of running Hindu spiritual centre / temple and such activities include Spiritual discourse (satsang), religious practices and devotional gathering and pilgrimage activities. Ld. CIT(E) has further reproduced the screenshot of the website of “Shri Sidhdata Ashram” in support of the allegation made and further observed that since the registration u/s 12AB was granted for as “religious entity”, the registration cannot be granted u/s 80G of the Act. For this, reliance is placed on the judgement of Hon’ble Supreme Court in the case of Upper Ganges Sugar Mills Ltd./ vs CIT reported in [1997] 93 taxmann.com 645 (SC).
Aggrieved by the said order, the assessee is in appeal before the Tribunal by taking various Grounds of appeal mentioned in the appeal memo which are in respect to the rejection of registration u/s 80G of the Act on the allegation of religious activities, therefore, all Grounds of appeal of the assessee are taken together for consideration.
Before us, ld. AR for the assessee submits that assessee society is engaged in the activities of imparting education through Ved Vidyaalay which includes Vedic teaching and Sanskrit learning which does not fall in the category of religious activity and squarely covered in the charitable activities defined in section 2(15) of the Act. Ld. AR further submits that ld. CIT(E) has misunderstood the activities carried out by other society Shri Sidhdata Ashram which is a separate legal entity operating and running spiritual center/temple whereas assessee society is having separate PAN and its main object is to run Vedic Schools and conduct social programmes. Thus, as per ld. AR, the ld. CIT(E) has wrongly considered the activities of the other society to reject the registration applied u/s 80G of the Act. It is therefore, requested to the registration u/s 80G of the Act.
On the other hand, ld. Sr. DR for the Revenue vehemently supported the order of ld. CIT(E) and submits that the assessee has not filed its objects therefore, it is not evident whether the claim of the society was in conformity with the objects of the society. He further submits that form the screenshots referred by the ld. CIT(E), it is not clarified whether the said Ashram was running by the appellant society or by some other society. It is therefore, requested that the matter may be sent back to the file of ld. CIT(E) for re-consideration of the facts of the case as stated by the assessee.
Heard the contentions of both the parties at length and perused the material available on record. At the outset, it is observed that the appellant society i.e. Shri Sidhdata Ashram having its address i.e. Shri Sidhdata Ashram, Badkal Suraj Kund Road, Sector-44, Sector-21D, Faridabad has been grated registration u/s 12A as ‘Religious Entities’ and such registration has not been challenged by the assessee society. It is further observed that ld. CIT(E) has referred certain screenshots of Shri Sidhdata Ashram situated at Surajkund Road, Faridabad, and nowhere in the Paper Book, the assessee has filed a separate charter of Shri Sidhdata Ashram. In the written submissions filed before us, it is submitted that the said temple is run and managed by other society however, has not provided PAN of such other society. Under these circumstance, we are not able to verify and comment upon the contention raised by the assessee that there are two separate societies, one of which is running the Spiritual Centre / temple and other i.e. the appellant society doing charitable activities of general public utilities as defined in section 2(15) of the Act such as imparting education of Sanskrit language and giving knowledge of Vedic literature. The coordinate bench of Tribunal in the case of Baba Banda Singh Bahadur Vs. CIT(E) in ITA No. 1835/Del/2026 vide its order dt. 19.08.2026 has held that before rejecting the registration u/s 80G of the Act, the ld. CEIT(E) should examine whether the assessee is in religious activity or not as per the Essential Religious Practices (ERP) test, doctrine settled by the Hon’ble Supreme Court of India in 1954 during the Shirur Mutt case AIR 1954 SC 282, to decide which religious rituals and activities receive protection under Articles 25 and 26 of the Constitution, should broadly be the parameters to examine if the said activity is religious, so as to deny the approval of benefit of section 80G of the Act. The relevant observations of the bench are reproduced as under:
“7.We are of the considered view that ld. Tax authorities while examining the scope of religious activities in context to grant of benefit of approval u/s 80G(5)(ii) of the Act should be circumspect to the pre-dominant and actual intention of the applicant institution, as religions have in their foundation a philosophy of larger benefit to all forms of life and character building of individuals. Thus every religious activity cannot be looked with culpability to deny approval. Religion is a way of life intrinsically linked to the societal integration and peace and also dignity of an individual. It is only when there is an indication that intention of a religious activity is to segregate and benefit people on the basis of caste, creed, or their way of life or religious sentiment, or to propagate particular religious belief to exclusion of other or proselytisation then certainly the objective of establishing or maintaining any religious institution or place of worship and pilgimages, will make said religious activity, a prohibited activity, to deny approval. The activity, though emanating out of religious order cannot be alleged to be religious activity, while the colour actually is secular. A distinction must always be made between a practice which is religious and a practice in regard to a matter which is purely secular and has no element of religiosity associated with it.
8.In fact, to our mind, since the Act does not define ‘religious activity’, thus while examining the application of approval u/s 80G, to satisfy if the assessee is engaged or not, in religious activity, the Essential Religious Practices (ERP) test, doctrine settled by the Hon’ble Supreme Court of India in 1954 during the Shirur Mutt case AIR 1954 SC 282, to decide which religious rituals and activities receive protection under Articles 25 and 26 of the Constitution, should broadly be the parameters to examine if the said activity is religious, so as to deny the approval of benefit of section 80G of the Act. It is only in case of expenses on ERP are made, then that should be examined to establish that the predominant objective is religious activity. Activities like establishing and running hospital, educational institutions, places of rehabilitation of bovine or other animals, Dharamshala, maintaining amenities at religious places of worship or pilgrimages, and such like public utility activities, if are taken up by any institution, trust or society, which also serves any place of worship, by performing essential practices of a religion, then what is material is to examine what is the predominant object and proportionality of expenditures.”
Considering the overall discussions made herein above and facts and circumstances of the case, we remand the matter back to the file of ld. CIT(E) to examine these aspects more particularly the ERP test as observed by the coordinate bench in the case of Baba Banda Bahadur (supra) and decide the issue in accordance with law. Accordingly, all the Grounds of appeal raised by the assessee are allowed for statistical purposes.
In the result, appeal of the assessee is allowed for statistical purposes.