2011 (7) TMI 1261 - AT - Income Tax

Summary

Issues involved: Appeal against rejection of application for exemption u/s 80G(5) and determination of charitable activities status.

Appeal against rejection of application for exemption u/s 80G(5): The assessee appealed against the rejection of the application for grant of exemption u/s 80G(5) of the Income Tax Act, 1961 by the ld. CIT, Kota. The assessee was granted registration u/s 12A(a) and approval u/s 80G for a specific period. The application for further extension of approval u/s 80G was filed, but the ld. CIT did not allow it based on the opinion that the assessee, a religious trust, was not engaged in charitable activities. The ld. CIT highlighted a specific donation and expenditure related to a 'Bhagwat Katha' program as evidence. However, the assessee presented financial records showing donations received for conducting the program for individuals of different religions, with no claims for tax deductions by the donors. The CBDT circular No.7/2010 was referenced, indicating that the approval granted earlier should be considered in perpetuity post the removal of a specific proviso. Consequently, the Tribunal ruled in favor of the assessee, stating that the approval was not required to be requested again, and the earlier approval should be deemed perpetual unless withdrawn specifically.

Determination of charitable activities status: The Tribunal considered the financial records provided by the assessee for multiple years, showing varying donation amounts. The Tribunal noted that the donations were not claimed as deductions by the donors from their taxable income. Additionally, the assessee clarified that the 'Bhagwat Katha' program was inclusive of individuals from different religions. The Tribunal also highlighted the CBDT circular No.7/2010, emphasizing the perpetual nature of approvals post the removal of a specific proviso. Based on these factors, the Tribunal concluded that the order of the ld. CIT rejecting the application for exemption u/s 80G(5) was invalid and allowed the appeal of the assessee.

Separate Judgment: No separate judgment was delivered by the judges.