2012 (4) TMI 307 - AT - Income Tax

Withdrawal of exemption u/s. 80G(5) – Charitable Trust - CIT(A) withdrew approval u/s 80G(5) on finding that Trust has spend about 78% of its total receipt for organizing 'Bhagwat Katha' i.e. activities of religious nature, which is in violation of Section 80G(5B) in FY 07-08 – AY 08-08, 09-10 - Held that:- Expenditure of religious nature exceeds the qualifying limit of 5%, in AY 2008-09. The withdrawal of the approval once for all on the basis of an activity restricted to a particular year would be unjust, amount as it would to castigating a person acting bona fide, particularly considering that its objects are purely charitable in nature. The charge of un-genuineness in our view would imply that the institution is not undertaking any charitable work or engaged in impermissible activity/s in the guise of charitable objects, which would be, a very un-charitable and unwarranted view to take.

Therefore, withdrawal of approval u/s. 80G would be sustainable in law only in respect of the first year, i.e., AY 2008-09, while the matter would require a review for the subsequent years. In other words, the section would continue to apply, and the approval valid, for the years for which the said limit is not exceeded – Decided partly in favor of assessee for statistical purposes.