s. 80G approval cannot be denied for incidental religious elements; ITAT remands trusts’ applications for fresh decision

5-Second Takeaway

Approval under s. 80G(5) cannot be refused merely because a trust has incidental religious elements; the competent authority must examine the institution’s dominant objects, actual activities, beneficiaries, and application of income to see whether it is in substance established for a particular religious community or for predominant religious purposes. The Tribunal also held that activities inspired by religion remain charitable if their essential character is social, educational, medical, or philanthropic, and it remanded the assessees’ applications for de novo adjudication.

The Tribunal considered several trust applications rejected under s. 80G on the footing that the assessees were engaged in religious activities. It held that the statutory inquiry is not whether an institution has any religious affiliation or performs any activity with a religious inspiration, but whether religion is its dominant object or whether it is established for the benefit of a particular religious community or caste.

Drawing on the language and structure of s. 80G(5), the Tribunal said Parliament drew a distinction between institutions that are predominantly religious and those that remain charitable despite some religious elements. It emphasized that only activities which are essential and integral manifestations of religious faith can be treated as religious in the strict legal sense.

On that approach, welfare activities such as feeding the poor, education, medical relief, environmental protection, and similar public-benefit work do not lose their charitable character merely because they are inspired by religious philosophy. The authority must look at the trust deed, actual functioning, beneficiaries, and income application as a whole, rather than isolating individual expressions or activities.

Because the denial orders rested on a common assumption that the trusts were engaged in religious activities, the Tribunal set them aside. It restored the matters to the Commissioner (Exemptions) for de novo adjudication and directed the assessees to prove their respective claims.