Approval under section 80G(5) cannot be rejected if registration is granted under section 12AA

Short Over view: Since Commissioner (Exemptions) was satisfied with the objects and activities of the assessee that it was meant for charitable purposes, therefore, assessee was also entitled for approval under section 80G(5) with the grant of registration under section 12AA.

Assessee was a charitable trust and carried out various charitable activities. Commissioner (Exemptions) granted registration under section 12AA but declined to grant approval under section 80G.

it is held that since Commissioner (Exemptions) was satisfied with the objects and activities of the assessee that it was meant for charitable purposes, therefore, different view could not be taken while refusing the grant of approval under section 80G(5). Commissioner (Exemptions) did not doubt the objects of the assessee and did not mention anything if assessee has violated any of the conditions of section 80G(5). Thus, assessee was entitled for approval under section 80G(5) from the date of application.

Decision: In assessee’s favour.

Referred: CIT (Exemption) v. Sant Girdhar Anand Parmhans Sant Ashram (2018) 408 ITR 79 (P&H) : 2018 TaxPub(DT) 3337 (P&H-HC); Sonepat Hindu Educational and Charitable Society v. CIT (2005) 278 ITR 262 (P&H) : 2005 TaxPub(DT) 1640 (P&H-HC); DIT v. Foundation of Ophthalmic & Optometry Research Education Centre 2013 TaxPub(EX) 1543.

IN THE ITAT, DELHI BENCH

BHAVNESH SAINI, J.M. & L.P. SAHU, A.M.

Bharat Vikas Parishad Maharana Pratap Nyas v. CIT

ITA No. 6487/Del/2018

6 February, 2019

Citations:

CIT v. M/s Sant Girdhar Anand Parmhans Sant Ashram (2018) 408 ITR 79 (P&H) : 2018 TaxPub(DT) 3337 (P&H-HC)

DIT v. Foundation of Ophthalmic & Optometry Research Education Centre 2013 TaxPub(EX) 1543

Sonepat Hindu Educational & Charitable Society v. CIT & Anr. (2005) 278 ITR 262 (P&H) : 2005 TaxPub(DT) 1640 (P&H-HC)

Assessee by : Ved Jain, Advocate, Rishabh Jain, C.A. & Umang Luthra, Advocate

Revenue by : Sanjay Goyal, CIT-D.R.

Bhavnesh Saini, J.M.

This appeal by Assessee has been directed against the Order of the learned Commissioner (Exemption), Chandigarh, Dated 29-8-2018, under section 80G(5)(vi) of the Income Tax Act, 1961.

2. We have heard the learned representatives of both the parties and perused the material available on record.

3. Briefly the facts of the case are that an application in the prescribed form was filed for approval under section 80G(5)(vi) of the Income Tax Act, 1961. The learned Commissioner (Exemption) noted that in this case the applicant also filed an application under section 12A of the Income Tax Act did not meet the requirement for approval as mandated by rule 11AA of the Income Tax Rules. Even though, the applicant has been granted registration under section 12A recently, the real purpose as per the stated object cannot be corroborated at present given that the entity is still to redeem itself after the grant of 12A registration. The application was found premature and the same was rejected.

4. Learned counsel for the assessee submitted that assessee is a charitable trust and carried out various activities since inception like providing free mortuary vans free of cost to Civil Hospitals, providing free foods to the patients of civil hospitals, free water ATMs etc. The learned Commissioner (Exemption) granted registration under section 12AA vide Order dated 29-8-2018 (PB-55) but declined to grant approval under section 80G of the Income Tax Act, 1961. He has relied upon decision of Hon’ble jurisdictional Punjab and Haryana High Court in the case of CIT (Exemption) v. Sant Girdhar Anand Parmhans Sant Ashram (2018) 408 ITR 79 (P&H) : 2018 TaxPub(DT) 3337 (P&H-HC) in which it was held as under :

“It was recorded by the tribunal that since assessee had been granted exemption under section 12AA which was in existence and in case of any violation, the same was subject to variation/withdrawal by the Commissioner (Exemption), there was no logic in denying approval under section 80G(5)(vi) of the act. There seems no reason to differ with the view taken by the tribunal. In case, in subsequent years, the revenue is satisfied that the activities of assessee are not qualified for charitable purposes, it shall be open for the department to initiate action for cancellation of registration under section 12AA and also for passing appropriate orders regarding approval granted under section 80G(5)(vi) in accordance with law.”

4.1. He has also relied upon similar decision of Hon’ble jurisdictional Punjab and Haryana High Court in the case of Sonepat Hindu Educational and Charitable Society v. CIT (2005) 278 ITR 262 (P&H) : 2005 TaxPub(DT) 1640 (P&H-HC) in which it was held that registration of an institution under section 12A of the act is sufficient to of its being established for charitable purposes. Thus, registration under section 80G cannot be denied. He has also relied upon decision of the Hon’ble Delhi High Court in the case of DIT v. Foundation of Ophthalmic & Optometry Research Education Centre 2013 TaxPub(EX) 1543 in which it was held as under :

“Denial of registration as charitable trust under section 12AA(1)(B) no charitable activity had in fact taken place since the society was a newly established one – Held that:–Considering the procedure for registration as lead in Section 12AA the statute does not prohibit or enjoin the Commissioner from registering Trust solely based on its objects, without any activity, in the case of a newly registered Trust. The statute does not prescribe a waiting period, for a trust to qualify itself for registration.

When the society/trust of assessee itself was formed on 30-5-2008 with the money available with the trust, one cannot expect them to do activity of charity immediately and because of that situation the authority cannot come to a conclusion that trust was not intending to do any activity of charity. In such a situation the objects of the trust have to be taken into consideration by the authority and the objects of the trust could be read from the trust deed itself in favour of the assessee.”

4.2. He has submitted that while granting approval under section 80G, the commissioner is required to satisfy the prescribed conditions which he has not doubted in the present case. He has, therefore, submitted that approval under section 80G may be granted to the assessee.

5. On the other hand, learned D.R. relied upon the impugned Order.

6. After considering the rival submissions, we are of the view that order under section 80G(5) denying approval to the assessee cannot be sustained in Law. It is not in dispute that assessee has been granted registration under section 12AA of the Income Tax Act, 1961, by DIT (E) vide Order dated 29-9-2018. The learned Commissioner (Exemption) was satisfied with the objects and activities of the assessee that it is meant for charitable purposes, therefore, different view cannot be taken while refusing the grant of approval under section 80G(5) of the Income Tax Act. The learned Commissioner (Exemption) did not doubt the objects of the assessee and did not mention anything if assessee has violated any of the conditions of section 80G(5) of the Income Tax Act. Considering the totality of the facts and circumstances of the case in the light of above decisions relied upon by the learned counsel for the assessee, we are of the view that assessee is entitled for approval under section 80G(5) of the Income Tax Act, 1961, from the date of application. We, accordingly, set aside the impugned Order and direct the learned Commissioner (Exemption), Chandigarh, to grant approval to the assessee under section 80G(5)(vi) of the Income Tax Act, 1961, from the date of application.

7. In the result, appeal of assessee is allowed.