a) The assessee was a charitable trust. It was granted registration under section 12A. It was also granted recognition under section 80G(5)(vi).

 

b) During relevant year, the assessee filed an application in Form 80G seeking renewal of the recognition. The Director (Exemptions) rejected said application on ground that income of assessee was not being used for charitable purpose.

 

c) The Tribunal confirmed order passed by the Director (Exemptions). Aggrieved-assessee filed the instant appeal before the High Court.

 

The High Court held in favour of assessee as under:

 

1) The only condition that requires to be fulfilled for the purposes of seeking renewal is as specified under section 80G(5)(ii) and the clauses narrated therein. None of the clauses in section 80G(5)(ii) would be said to be applicable herein.

 

2) It only postulates that any income derived from the charitable trust may be used for charitable purpose. Therefore, the rejection of the application was inappropriate.

 

3) However, this consideration could only be made during the assessment proceedings. The question whether renewal was justified or not, was not necessary to be considered at this stage.

 

4) The applicability of the income of the assessee whether it was for charitable purposes or not was a question of fact and necessarily could be gone into by the assessing authority at the time of assessing the income of the assessee.

 

5) Therefore, it was needless to state that the assessing authority shall look into all the material placed on record in order to ensure that the income was used for a charitable purpose in accordance with law.

 

6) Under these circumstances, the Tribunal was not right, in law, in holding that the assessee was not eligible for renewal for approval under section 80G. Consequently, the order of the Tribunal was set aside.   – [2019] 101 taxmann.com 124 (Karnataka)