Law: Income Tax Act, 1961

Section: 80G

Income-tax-----Charitable trust---Grant of approval by Commissioner---Approval not to be granted merely by looking at the instrument creating trust---Real purpose of trust as distinguished from ostensible purpose to be found---Renewal of recognition---Trust receiving donations for charitable purposes---Donations instead of being spent on charity utilised for investment to earn returns thereon---Returns utilised for religious purposes---Donations received utilised for construction of temple and religious purposes---Commissioner denying renewal of recognition---Justified---Indian Income Tax Act, 1961, S.80G. The objects of the petitioner-trust as set out in its trust deed were charitable. Construction of a religious temple was not ore of the objects set out in the deed of trust, The Director of Income-tax (Exemption) allowed recognition to the petitioner-trust for the period from April 1, 1993 to March 31, 1996, entitling deduction under section 80G of the Income Tax Act, 1961, in respect of the donations made to the trust. On September 4, 1996, the petitioner applied for renewal of recognition of the trust and by order, dated December 12, 1996, the petitioner was asked to furnish the details of the activities undertaken by the petitioner-trust for the last three years. The petitioner was also asked to show cause why the recognition granted to it be not cancelled on account of the religious activities carried out by it. The petitioner admitted that it was engaged in the construction of a temple completed during the assessment year 1996-97, but, however, contended that the trust was carrying on mixed activities, i.e., running a hospital and temple, that the income of the trust from investment in securities was much more than the amount spent on construction, that the donations received under section 80G were invested in Government securities, post office savings bank and time deposits as also with financial corporations and that the income received from such investments was utilised for the purpose of constructing a temple. On the question whether the petitioner-trust, having enjoyed recognition under section 80G of the Act and utilised the amount of donations…

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