Judgment:
1. Heard learned Counsel for the parties.
2. The petitioner has challenged the order dated September 25, 1998, passed by the Commissioner of Income-tax, Udaipur (annexure-9)whereby the application of the petitioner-trust for renewal of exemption under Section 80G was refused, inter alia, on the ground that in one of the objects of the trust deed the construction of temples etc. was included though notwithstanding such inclusion in objects clause, no temples in fact have been constructed by it so far nor any expenditure of religious activities has been incurred by the petitioner-trust but because of the said object the trust was held to be having partly religious purposes.
3. Learned Counsel for the petitioner has invited our attention to a number of decisions to urge that it is the substance of the objects of the trust in totality and the principal activity of the trust only should be taken into consideration and merely because one of many activities have been stated to be construction of the trust which in fact is not the basic purpose of formation of the trust, that should not be the sole criteria of rejection of the application.
4. He also relied on the amendment brought in Section 80G by inserting Sub-section (5B) of Section 80G by the Finance Act, 1999, with effect from April 1, 2000, which was in consonance with the submissions made by learned Counsel for the petitioner which, inter alia, provided an overriding provision that where an institution or fund which incurs expenditure in the relevant year which is of religious nature for an amount not exceeding 5 per cent, of its total income in that previous year then for that previous year, the institution or fund shall be deemed exempted under Section 80G by deeming it to be so.
5. On this premise learned Counsel for the petitioner further urges that in view of this provision, every year the Commissioner has to consider the ratio between the total income of the trust and the expenditure actually incurred for religious purposes and only if the substantive part of the income, that is to say more than 5 per cent, of total income is incurred for religious purposes the registration of trust/fund under Section 80G can be refused on that ground.
6. With this premise, it is further submitted by the learned Counsel for the petitioner that the petitioner shall be satisfied if the writ petition is disposed of with the direction to the Commissioner to consider the case of the petitioner-trust for renewal of its registration with effect from the insertion of Sub-section (5B) uninfluenced by the impugned order of rejecting the renewal for the assessment years 1995-2000. In other words, the petitioner's application for renewal with effect from April 1, 2000, should be considered keeping in view of Sub-section (5B) of Section 80G.
7. These submissions appear to be justified in the light of the aforesaid provision.
8. Accordingly, the writ petition is disposed of with the direction that the petitioner's applications for renewal of registration with effect from April 1, 2000, under Section 80G may be considered by the Commissioner independent of the impugned order dated September 25, 1998, keeping in view the provision of Sub-Section (5B) of Section 80G.
9. No costs.