Law:

Section:

Section 5(1)(va) of the Gift-tax Act, 1958 - Exemptions - Gifts to temple, etc. - One of objects of petitioner-trust was to feed people on a particular auspicious day - GTO denied exemption to petitioner under section 5(1)(va)(ii) without considering the trust deed in which religious purpose for which trust was created was available, nor did he consider claim in light of provisions of section 80G(5) of the Income-tax Act, 1961, nor was opportunity of hearing given to petitioner - Whether GTO was justified - Held, on facts, no - [Matter remitted back to GTO] Facts While considering the petitioner-trust's claim for exemption of gift under section 5(1)(va )(ii) the GTO did not consider the contents of the trust deed in which the purpose for which it was created was available. One of the objects of the trust was that on the day of Ramzan poor people had to be fed. On appeal, the Commissioner upheld the GTO's order. On writ: Held Section 80G(5 ) is a guiding factor in which mandatory relief is provided and which has to be followed when a dispute arises as to whether a trust is a public charitable trust or private charitable trust or trust which can be exempted under section 5(1)(v) In the instant case, while dealing with the provisions of section 5(1)(va)(ii ) both the GTO, as well as the Commissioner had not taken into consideration the religious purpose for which the charity had been created. In the instant case, it was common ground that on the day of Ramzan, poor people had to be fed which was one of the objects. Unless the purpose is sectarian and communal, even though it may mention a particular auspicious day and though it is of a religious character, that does not take away the charitable purpose for which it was created. The mere fact that the existence of the festival named in the deed created a charitable endowment could not also be a ground for coming to the conclusion that the purpose was not a charitable purpose under section 80G(5) . Section 5(1)( va) specifically provides that gifts made for charitable purposes, which are wholly or substantially of a religious nature are not entitled to exemption from tax. This aspect had not been considered by both…

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