Law:

Section:

section 80g of the income-tax act, 1961-deductions-donations for charitable purposes-whether assessee was entitled to relief under section 80g on donations paid to a trust one of whose objects was of religious nature-held, no Facts The assessee paid a certain amount as donation to a trust and the ITO allowed deduction thereof under section 80G. Subsequently, the proceedings were reopened and the trust deed of the said trust was examined. One of the objects of the trust was found to be 'to establish, maintain and/or to grant aid to public places of worship and prayer halls'. The ITO held that this clause was wholly of a religious nature and, accordingly, was not a charitable purpose and, hence, the deduction under section 80G was not allowable. The Tribunal, however, allowed the assessee's appeal. On reference: Held According to Explanation 3 to section 80G 'charitable purpose' does not include any purpose the whole or substantially the whole of which is of a religious nature. In the instant case, one of the purposes of the trust was to establish, maintain and/or to grant aid to public places of worship. This clearly was a religious purpose. It would be open to the trustees to spend the entire income or the funds belonging to the trust for this purpose alone. This purpose came squarely within the mischief of Explanation 3 to section 80G. The language used in a trust deed should be interpreted in accordance with reason and common-sense. Prayer and worship in common parlance denote religious activities. Everyday thousands of people of every religion all over India pray or worship either in their homes or in the public places of worship and prayer. The impugned clause of the trust deed set out two purposes; one related to places of worship, the other related to prayer halls. Prayer halls and places of worship are places where people congregate to worship and pray. So the assessee was not entitled to relief on the donations as one of the trust's purposes was of religious nature. Case review Walls v. Peak [1960] 2 All ER 81 (CA) and Hiralal Mallick v. State of Bihar AIR 1977 SC 2236 distinguished. Case referred to : Baxter v. Langley 38 LJMC 1, Leader v. Duffey…

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