The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) has ruled that a charitable institution cannot be denied approval under Section 80G of the Income Tax Act merely because it incurs a negligible amount on worship expenses, so long as its primary activities remain charitable. 

The bench of Vikas Awasthy (Judicial Member) and S Rifaur Rahman (Accountant Member) directed the Commissioner of Income Tax (Exemption) [CIT(E)] to grant Section 80G approval after finding that the trust’s religious expenditure constituted less than one percent of its total charitable expenditure. 

The appeal arose from an order dated February 9, 2026, passed by the Commissioner of Income Tax (Exemption), Chandigarh, rejecting an application for approval under Section 80G filed by a charitable trust registered under Section 12A of the Income Tax Act. The matter was heard by the Delhi Bench “B” of the ITAT comprising Judicial Member Vikas Awasthy and Accountant Member S. Rifaur Rahman. The order was pronounced on July 28, 2026. 

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The trust is engaged in extensive charitable activities, including providing food, clothing, shelter, medical assistance, education, ambulance services, and welfare measures for mentally challenged and abandoned children. According to the trust, the denial of Section 80G approval had significantly affected its ability to receive donations, thereby impacting its charitable work. 

The CIT(E) rejected the application solely on the ground that the trust had claimed worship expenses amounting to ₹57,917, treating this as evidence that it was engaged in religious activities rather than exclusively charitable purposes.

The trust argued before the Tribunal that the worship expenditure represented only a very small fraction of its total expenditure and that the overwhelming majority of its funds were devoted to charitable activities benefiting vulnerable children without discrimination. It contended that the authorities had ignored the true nature and scale of its charitable operations while focusing only on a minor item of expenditure. 

After examining the records, the ITAT found that the CIT(E)’s decision was based exclusively on the existence of worship expenses and failed to consider the broader picture of the trust’s activities.

The Tribunal observed that there was no dispute regarding the charitable nature of the institution’s work. It noted that the trust was operating a home for mentally challenged children and incurring substantial expenditure on welfare activities such as boarding, clothing, education, ambulance services, and other humanitarian initiatives.

Importantly, the Tribunal held that the worship expenditure constituted less than one percent of the total expenditure on charitable activities. Such a negligible amount could not justify denial of Section 80G approval when the institution’s predominant purpose remained charitable and its benefits were extended irrespective of caste, creed, colour, race, nationality, or culture. 

The ITAT emphasized that where charitable activities are undisputed and form the principal object of the institution, the mere existence of nominal worship expenditure cannot be treated as a ground to deny approval under Section 80G.

The Bench observed that, at the highest, if any expenditure was considered inadmissible, only that particular expenditure could be examined or disallowed. However, such isolated expenditure could not result in rejection of the entire application for Section 80G recognition. 

Setting aside the order of the CIT(E), the Delhi ITAT directed the Commissioner of Income Tax (Exemption) to grant approval under Section 80G of the Income Tax Act to the charitable trust. Consequently, the appeal filed by the assessee was allowed. 

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