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2026 Supreme(Online)(ITAT) 9383
INCOME TAX APPELLATE TRIBUNAL (CHENNAI BENCH)
ABY T VARKEY, Judicial Member, S. R. RAGHUNATHA, Accountant Member
Anjuman-E-Himayath-E-Islam – Appellant
Versus
Commissioner of Income Tax, Exemption – Respondent
ITA No.: 3951/Chny/2025
For the Appellants/Petitioners:Mr. D. Anand, Advocate
For the Respondents: Ms. V. Supraja, Addl. CIT
Incidental religious expenditure below 5% under S.80G(5B) does not disqualify charitable institution from approval if dominant objects are charitable.
Headnote:The Income-tax Act, 1961, under S.80G(5), prohibits approval for institutions substantially for religious purposes or benefiting specific religious communities, but S.80G(5B) deems eligible institutions incurring religious expenditure not exceeding 5% of total income. The assessee society, established in 1894-95, engages in educational and welfare activities, holds registration u/s.12AB(1)(b) for A.Ys. 2027-28 to 2031-32, and prior 80G approval for A.Ys. 2022-23 to 2026-27 with no change in objects. The CIT(E) rejected approval citing religious objects based on unverified Google searches, finding the institution engaged in religious activities. The Tribunal held dominant objects charitable, religious expenditure below 5% threshold (2.375% to 2.133% for relevant years), and rejection breached natural justice. The core issue is eligibility for S.80G approval despite religious elements. The Tribunal reasoned that mere presence of religious objects or incidental expenditure below S.80G(5B) limit does not disqualify if dominant purpose is charitable, as per harmonious reading of S.80G(5)(iii), Explanation 3, and S.80G(5B). Prior u/s.12AB registration and history affirm genuineness; unverified material without confrontation violates natural justice. Precedents affirm incidental religious activities do not disentitle approval. Appeal allowed; CIT(E) directed to grant approval u/s.80G(5).
| Table of Content |
|---|
| 1. assessee society denied 80g approval due to religious objects. (Para 2 , 3 , 4) |
| 2. dominant charitable objects; religious spend below 5% threshold. (Para 5 , 6) |
| 3. issue: religious elements bar 80g approval? (Para 7 , 8) |
| 4. incidental religious expenditure permitted under s.80g(5b). (Para 9 , 10 , 11) |
| 5. appeal allowed; direct 80g approval. (Para 12 , 13) |
आदेश/ORDER
PER S.R.RAGHUNATHA, AM:
The present appeal is filed by the assessee against the order dated 26.11.2025 passed by the learned Commissioner of Income Tax (Exemptions), Chennai (hereinafter referred to as “ld.CIT(E)”), rejecting the approval sought u/s.80G(5) of the Income-tax Act, 1961 (hereinafter referred to as the “Act”).
2. The brief facts emanating from the records are that the assessee is a society/institution established in the year 1894-95 and has, for more than a century, been engaged in educational, social and welfare activities. It runs educational institutions and allied charitable initiatives. It is not in dispute that the assessee has been granted registration u/s.12AB(1)(b) of the Act as a religious-cum-charitable institution for the period relevant to Assessment Years (A.Y.) 2027-28 to 2031-32. It is also the claim of the assessee that approval u/s.80G of the Act had earlier been granted for A.Ys. 2022-23 to 2026-27 and that there is no change in its objects, activities or pattern of expenditure.
3. The case of the ld. CIT(E) is that the assessee contains religious objects and, therefore, is not eligible for approval u/s.80G of the Act. The ld.CIT(E) further referred to certain material gathered from Google search / public domain sources to conclude that the assessee is engaged in religious activities and hence falls outside the scope of section 80G of the Act.
4. Aggrieved by the order of the ld.CIT(E), the assessee is in appeal before us.
5. The ld.AR submitted that the dominant objects of the assessee are educational and charitable. Our attention was invited to clause 15(C) of the Memorandum of Association, which, inter alia, refers to establishing and maintaining educational institutions, promoting cultural, social and economic upliftment, and supporting orphans and destitute children. The ld.AR contended that the Act recognizes institutions which may be charitable-cum-religious and that the grant of registration u/s.12AB of the Act itself demonstrates that the assessee’s objects and activities are genuine. It was further submitted that the reliance placed on unverified Google search material, without confronting the same to the assessee, is contrary to the principles of natural justice.
6. The ld. AR further submitted that, even assuming certain expenditure may be of a religious nature, section 80G(5B) specifically protects an otherwise eligible institution if such expenditure does not exceed 5 percent of the total income. A chart was filed showing religious expenditure at 2.375% for A.Y. 2023- 24, 1.703% for A.Y. 2024-25 and 2.133% for A.Y. 2025-26, all of which are below the statutory threshold. The ld.AR placed a reliance on the decision in the case CIT vs. Shree Sai Baba Sansthan Trust (Hon’ble Bombay High Court), Chennai Tribunal decision in the case of St. George Trust in ITA No.1795/Chny/2024 and Ahmedabad Tribunal in the case of Shree Sthanakvasi Jain Sangh Jivrajpark in ITA No.372/Ahd/2025. Further, the ld.AR filed a detailed written submission along with the copies of the decisions.
7. Per contra, the ld. DR supported the order of the ld. CIT(E) and submitted that the presence of religious objects disentitles the assessee from approval under section 80G and that the rejection order does not call for interference.
8. We have heard the rival submissions and perused the materials available on record. The short issue for our consideration is whether the assessee is ineligible for approval u/s.80G of the Act merely because some of its objects or expenditure are stated to be of a religious nature.
9. On a harmonious reading of clause (iii
