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Judgment
PER SHRI ANUBHAV SHARMA, JUDICIAL MEMBER:
These appeals filed by the assessee are against the orders dated 14.01.2026 & 16.01.2026 passed by the Commissioner of Income Tax (Exemption), Chandigarh (in short ‘Prescribed Authority’) in DIN & Notice No. ITBA/EXM/F/EXM44/2025-26/1084761583(1) & ITBA/EXM/F/EXM45/2025-26/1084874901(1) against the registration granted under the head Religious Entity u/s 12A/12AA/12AB and cancellation of approval u/s 80G of the Act for AY: 2026-27.
The appeals arise out of common facts thus are taken up for decision together. On hearing both the sides we find that ld. Prescribed authority while rejecting the claim of assesse for approval u/s 80G has concluded that assesse engaged in religious entity. The registration is also granted as religious entity. In this regard, as we go through the impugned findings forming part of Form 10AD dated 16.01.2026 we find that in para 2 the assessee’s aims and objectives have been described running from point 4.1 to 4.20 and of all these aims and objectives ld. Prescribed authority has picked up for point No. 4.3 by which the applicant trust has mentioned of object to propagate for the vedas and vedic principles and by way of clause 4.10 indicated its objective to run research centre of vedas of vedic philosophy. In para 2.2 list of expenditure have been mentioned for which ld. Prescribed authority mentions that applicant has also booked some religious expenses under the head “Temple Expenses”. We find that ld. Prescribed authority has relied the decision of Hon’ble Supreme Court in Upper Ganges Sugar Mills Ltd. v. Commissioner of Income-tax (1997) 93 taxmann.com 645 (SC), to rely the proposition that it is not necessary that the trust be established only for religious purpose but even if, one object of the trust is wholly or substantially of religious nature than the trust cannot be said to be established for charitable purposes.
Though, ld. DR has heavily defended impugned orders our attention has been drawn to the fact that by order dated 19.09.2016 of ld. Prescribed Authority on the same set of objectives assesse was granted approval u/s 80G(5)(iv) of the Act and also provisional approval under clause (i) of proviso to sub-section (5) of Section 80G for the period AY: 2022-23 to AY: 2026-27 vide order dated 31.05.2021 and the copies of same are available at page No 1-2 & 3-4 respectively. The assessee’s profit and loss account for FY: 2022-23, 23-24 & 24-25 are made available at page No. 14-16 of the paper book and we primarily see expenses in the nature of general expenditure and we don’t see any expenditure which can be categorically be said to be substantially or exclusively for religious purpose. If we see the objectives for which the trust has been established by its settler we find that the trust has been started to run yoga centers, meditation center and spiritual institutions to fight against social evils like dowry, child marriages, female feticides and to fight against orthodoxy and fundamentalism. The objectives include publication of magazines and newspapers for circulation of ideas. The objective includes to open Adivasi, vanvasi and down trodden service center and to help handicap and disabled persons. These are some of broad objectives and which predominantly show that the nature of activities taken are charitable in nature as the trust was established to manage and administer orphanage, old age home, hospital, library, reading room, school, club and other institutions. We are of the considered view that merely pointing out at one or two of the numerous clauses for which an applicant trust or society has been established, to allege it is engaged in religious activity is not a prudent approach to examine the issue and unless there is something from financials to show that the applicant suffer the limitations expressed in explanation 3 to Section 80G(5). Thus, the grant of registration u/s 12AB(1) (b) as religious entity alone and not as religious cum charitable entity and denying the approval u/s 80G cannot be sustained. To complete our findings and to further bolster our conclusion we rely following findings by a Coordinate Bench, where one of us, the judicial member was also in the Bench in the case of ITA No.1835/Del/2026, Baba Banda Singh Bahadur versus Commissioner of Income Tax (Exemption) Chandigarh order dated 19.08.26, observed as follows;
“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 pilgrimages, 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.”
In the light of aforesaid discussion we sustain the grounds in appeals before us and allow the appeals. The ld. Prescribed Authority shall grant the registration and approval in four weeks from communication of this order.