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2019 (5) TMI 1545 - AT - Income TaxApproval u/s 80G(5) denied - alleged that assessee society is not engaged in any charitable activity - registration u/s 12AA(1)(b)(i) - HELD THAT - The registration so granted to the assessee society u/s 12AA is still continuing shows that the activities being carried out by the assessee society are charitable in nature and once the assessee society is in possession of registration u/s 12AA, granting of approval u/s 80G(5)(vi) of the Act, in our opinion, is consequential. It is well settled position of law that at the time of granting approval u/s 80G, what is to be examined is the object of the trust and so far as the aspect of income is concerned, the same can be very well examined by the AO at the time of framing assessment. We note that at the time of granting approval u/s 80G, only the object of trust is required to be examined and, therefore, assessee's application seeking approval u/s. 80G(5) could not be rejected on ground that the assessee society is not engaged in charitable activities. We set aside the order of the CIT and restore the matter to his file for readjudication of the request of the assessee for approval u/s 80G(5), as per law. - Appeal of assessee allowed for statistical purposes.
Issues:
- Appeal against refusal to grant approval under section 80G(5) of the Income-tax Act, 1961. Analysis: 1. The appellant filed an application for approval under section 80G(5) of the Act, which was rejected by the ld. CIT (Exemptions). The ld. CIT (Exemptions) observed that the approval under section 80G(5) is not a mechanical process and the application must pass the test as mandated by law. The appellant contended that the order incorrectly mentioned a different section, showing a lack of application of mind by the ld. CIT (E) while deciding the application. 2. The appellant argued that they are engaged in charitable activities, providing free education and running educational institutions, falling under section 2(15) of the Act. They submitted all required documents and replied to queries raised by the ld. CIT (E). The appellant claimed that the reasons for rejection were unjustifiable and based on surmises. The appellant cited legal precedents to support their case. 3. The ld. CIT (E) rejected the application stating that the appellant was not engaged in any charitable activity. However, the ITAT found that since the appellant had registration under section 12AA of the Act, indicating charitable activities, approval under section 80G(5) should logically follow. The ITAT emphasized that at the approval stage, only the object of the trust needs to be examined, not the income aspect. 4. Citing legal precedents, the ITAT highlighted that once registration under section 12A(1) is granted, benefits cannot be refused on grounds of public benefit. The ITAT also noted that registration of a trust under section 12A is conclusive, and further probes into the trust's objects are not permissible. Consequently, the ITAT set aside the ld. CIT's order and remanded the matter for readjudication of the appellant's request for approval under section 80G(5) as per law. 5. The ITAT allowed the appeal of the appellant for statistical purposes, emphasizing the importance of examining the charitable nature of activities at the approval stage and the conclusive nature of registration under section 12AA for granting approval under section 80G(5).
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