2011 (12) TMI 634 - AT - Income Tax

Deduction under section 80G(5)(vi) - rejected the renewal application filed in Form No. 10G for claiming deduction - Held that - Since the assessee was having valid exemption upto 31.03.2010, because of ignorance of the A/R of assessee, a mistaken application for renewal of exemption was filed, the same should not have been rejected for violation of the provisions of section 11(1)(a). In case, there is a violation of the provisions of section 11(1)(a), the relevant additions could have been made by the Assessing Officer in the hands of the Trust disallowing the exemption to the assessee accordingly. But in any case, renewal of exemption under section 80G(5)(vi) cannot be denied. Accordingly, we direct the DIT(Exemption), Kolkata to allow the exemption and this issue of appeal of the assessee is allowed.

Summary

Issues involved:
Renewal application rejection under section 80G(5)(vi) of the Income Tax Act, 1961.

Detailed Analysis:

Issue 1: Renewal Application Rejection
The appeal arose from the rejection of the renewal application filed in Form No. 10G for claiming deduction under section 80G(5)(vi) of the Income Tax Act, 1961 by the ld. Director of Income-Tax (Exemption), Kolkata. The assessee, a charitable institution, had been carrying out various charitable activities and had received approval for exemption under section 80G(5)(vi) until 31.03.2010. Despite the legislative amendment omitting the provision for renewal and allowing approvals to be valid in perpetuity from 01.10.2009, the renewal application was rejected without a speaking order. The ITAT Kolkata referred to a similar case decided by the Lucknow Bench 'A' of ITAT, where it was held that approvals once granted under section 80G(5)(vi) shall continue in perpetuity. The circular issued by CBDT further supported this interpretation, emphasizing that existing approvals expiring on or after 1st October 2009 would be deemed to have been extended in perpetuity unless specifically withdrawn. The ITAT Kolkata concluded that the renewal of exemption under section 80G(5)(vi) could not be denied, directing the DIT(Exemption), Kolkata to allow the exemption. Thus, the appeal was allowed, and the rejection of the renewal application was deemed unjustified.

In conclusion, the judgment focused on the rejection of a renewal application for claiming deduction under section 80G(5)(vi) of the Income Tax Act, 1961. It highlighted the legislative amendment allowing approvals to be valid in perpetuity from 01.10.2009 and the corresponding circular issued by CBDT. By referring to a similar case decided by the Lucknow Bench 'A' of ITAT, the judgment emphasized that approvals once granted under section 80G(5)(vi) shall continue in perpetuity. The ITAT Kolkata concluded that the rejection of the renewal application was unjustified, directing the concerned authority to allow the exemption.