Delhi ITAT: Advancement of Spiritual and Moral Values Does Not Render a Trust 'Religious' — Section 12AB Registration and Section 80G Approval Directed for Jain Swetamber Terapanthi Charitable Trust

Overview of the Dispute

The Delhi Bench of the Income Tax Appellate Tribunal recently adjudicated two connected appeals filed by Jain Swetamber Terapanthi Charitable Trust against the orders of the Commissioner of Income Tax (Exemptions), Chandigarh — CIT(E) — in the context of Assessment Year 2025-26. The appeals, bearing ITA Nos. 3550 & 3551/Del/2026, were disposed of by a common order pronounced on 25.08.2026.

The central controversy arose from the CIT(E)'s decision to classify the trust as a "religious and charitable" institution rather than a purely charitable one. While registration under Section 12AB was granted — albeit under the "religious-cum-charitable" label — the application for approval under Section 80G(5)(ii) was rejected on the ground that the trust was engaged in religious activities, which disqualified it from the benefit. Aggrieved by both the classification and the consequent denial of Section 80G approval, the trust approached the Tribunal.

Background and Procedural History

The assessee-trust had filed applications in Form 10AB seeking:

  1. Registration under Section 12AB(1)(b)(ii) of the Income-tax Act, 1961; and
  2. Approval under Section 80G(5) of the Income-tax Act, 1961.

The CIT(E), through two separate orders dated 03.02.2026 and 05.02.2026, granted Section 12AB registration but categorised the trust as a "religious and charitable" entity. Simultaneously, the application under Section 80G(5)(ii) was rejected on the basis that an institution engaged in religious activities is ineligible for such approval under the statutory provisions.

It is also noteworthy that the trust had previously enjoyed registration under Section 12A and Section 80G since 01.04.2007, and no change in its stated aims, objectives, or actual activities had been brought on record by the CIT(E).

Grounds of Appeal

ITA No. 3550/Del/2026 — Registration Appeal

The assessee raised the following grounds:

  1. That the CIT(E) erred in law and on facts in treating the nature of the assessee as "religious cum charitable" and that too only on the basis of surmises and conjectures.
  2. That the CIT(E) erred in law and on facts in ignoring that the activities actually carried out by the trust are charitable and for public welfare, and not religious in nature.
  3. That the CIT(E) erred in law and on facts in passing the order without following the principles of natural justice and without giving adequate opportunity of being heard.
  4. That the appellant craves the leave to add, withdraw, alter or modify any ground of appeal at any stage of hearing and that the grounds above are without prejudice to each other.

ITA No. 3551/Del/2026 — Section 80G Appeal

  1. That the CIT(E) erred in law and on facts in rejecting the application for approval under section 80G(5) of the Income Tax Act, 1961, without appreciating that the appellant trust is a bona fide charitable institution engaged in genuine charitable activities.
  2. That the CIT(E) erred in law and on facts in rejecting the approval under section 80G of the Act by treating the nature of the assessee as "religious cum charitable" and that too only on the basis of surmises and conjectures.
  3. That the CIT(E) erred in law and on facts in ignoring that the activities actually carried out by the trust are charitable and for public welfare, and not religious in nature.
  4. That the CIT(E) erred in law and on facts in passing the order without following the principles of natural justice and without giving adequate opportunity of being heard.
  5. That the appellant craves the leave to add, withdraw, alter or modify any ground of appeal at any stage of hearing and that the grounds above are without prejudice to each other.

Submissions by the Assessee