ITAT Bangalore Rules Arabic & Islamic Studies Are Educational, Not Religious, For Section 12AB and Section 80G Benefits

Background of the Dispute

The Bangalore Bench of the Income Tax Appellate Tribunal (ITAT) in An-Nauman Educational Religious Social Charitable & Welfare Trust Vs CIT has delivered an important decision on the classification of trusts that conduct Arabic and Islamic studies and operate a Madarasa.

The core controversy was whether such activities necessarily make a trust “religious” for the purposes of denial of:

  • Registration under Section 12AB of the Income Tax Act 1961; and
  • Approval under Section 80G of the Income Tax Act 1961.

The Commissioner of Income Tax (Exemptions) [CIT(E)] had treated the assessee trust as a religious trust and, on that basis, refused both:

  • Registration under Section 12AB; and
  • Approval under Section 80G.

The Tribunal, however, held that the trust’s predominant objective was education, and that academic teaching of Arabic language and Islamic studies, as well as running a Madarasa as an educational institution, cannot by themselves convert a charitable trust into a religious trust.

Facts and Proceedings Before CIT(E)

Formation and Objects of the Trust

  • The assessee is a charitable trust created on 08/04/2013.
  • The primary stated object in the trust deed is to establish, run and manage educational institutions.
  • The trust also proposes to:
    • Impart education in the tenets of Islam in Arabic,
    • Set up an Arabic Madarasa,
    • Function under the SUNNI-HANAFI school of thought, and
    • Carry out other charitable and welfare activities such as scholarships, libraries, and professional and technical courses.

The trust filed:

  1. An application for registration under Section 12AB; and
  2. A separate application for approval under Section 80G.

Along with these applications, it furnished its trust deed, financials and other supporting documents. Representatives of the trust also appeared before the CIT(E) and explained their activities, particularly their focus on education and public welfare.

Adverse View of CIT(E)

Despite the submissions and documents, the CIT(E):

  • Concluded that the assessee is a religious trust, and
  • Consequently rejected the Section 80G application on the ground that the trust is religious in nature.

Key elements of the CIT(E)’s reasoning (later extracted in the 80G rejection order) included:

  • The trust was considered “religious cum charitable”;
  • The proposed educational building was to be constructed on land belonging to a masjid;
  • The trust was imparting religious education on tenets of Islam;
  • The trust was running or proposing to run a Madarasa; and
  • According to the CIT(E), there was no adequate proof that the dominant object was education and allied charitable purposes.

Crucially, the Tribunal noted that no proper show-cause notice was issued to the assessee before branding it a religious trust, especially at the Section 12AB stage.

Assessee’s Arguments Before the ITAT

The assessee trust challenged the orders before the ITAT and submitted detailed written arguments along with supporting case law and documentation.

Core Submissions

The assessee, represented by its Authorised Representative, essentially argued:

  1. Arabic is a language, not a religion

    • Imparting Arabic education is akin to teaching any foreign or Indian language.
    • It is an academic and linguistic activity, not a religious ritual.

  2. Islamic studies as academic instruction is “education”

    • Systematic study of Islamic texts or Quranic literature in a structured course is an educational activity.
    • It does not amount to worship, rituals, or religious propagation.

  3. Madarasa is an educational institution, not a place of worship

    • A Madarasa functions like a school:
      • Teaching languages, moral education, general subjects, and sometimes vocational skills.
    • A mosque is a place of worship; a Madarasa is not. Equating the two is incorrect.

  4. Dominant object test – trust is charitable, not religious

    • The trust deed, when read as a whole, shows:
      • Establishment of schools and colleges;
      • Scholarships;
      • Libraries;
      • Professional and technical courses;
      • Educational and welfare activities for the general public.
    • Presence of terms such as “Islamic”, “Arabic” or “Madarasa” does not, by itself, make the trust religious.