Vedanta Sasthra Prachara Trust challenged the rejection of its application for approval under section 80G

5-Second Takeaway

The Bombay High Court held that a trust is not automatically ineligible for section 80G approval merely because it describes its activities as religious-cum-charitable. Eligibility must be tested on the trust deed, its predominant objects, actual application of funds, and section 80G(5B), which permits limited religious expenditure.

Vedanta Sasthra Prachara Trust challenged the rejection of its application for approval under section 80G. The Commissioner (Exemption) had refused approval on the view that a trust established for religious or religious-cum-charitable purposes could not qualify.

The court held that this approach was too broad. It noted that the description used in Form No. 10AB could not by itself decide eligibility, and that the real question was how the trust was constituted and how its activities and funds were actually deployed.

The court also observed that there is no legal bar on a trust being both religious and charitable. Section 80G(5B) contemplates that an institution may incur some expenditure of a religious nature and still remain eligible, subject to the statutory limit.

Because the Commissioner had not examined the trust deed, the actual activities, the predominant objects, the application of funds, or the relevance of section 80G(5B), the rejection could not stand. The appeal was allowed.