2011 (12) TMI 646 - AT - Income Tax

Summary

Issues involved: Appeal against rejection of renewal of exemption u/s 80G of the Income Tax Act, 1961 due to omission of proviso to Section 80G(5)(vi) by the Finance Act (No.2) 2009 and non-consideration of Board Circular dated 3.6.2010 and 27.10.2010 by the learned DIT(E).

Issue 1: Omission of proviso to Section 80G(5)(vi) by Finance Act (No.2) 2009

The assessee Trust appealed against the rejection of renewal of exemption u/s 80G by the learned DIT(E), citing the omission of the proviso to Section 80G(5)(vi) by the Finance Act (No.2) 2009. The Board Circular dated 3.6.2010 clarified that existing approvals expiring on or after 1st October, 2009 shall be deemed extended in perpetuity, unless specifically withdrawn. The impact of this omission was explained, emphasizing that approvals granted after 1.10.2009 shall continue indefinitely unless withdrawn. The Hon'ble Allahabad High Court in Babu Hargovind Dayal Trust vs ITAT(2011) held that exemptions granted post 1.10.2009 shall be continued perpetually unless withdrawn. The Tribunal directed the DIT(E) to consider this aspect and treat the approval of exemption granted earlier to the assessee in perpetuity if it was to expire on or after 1.10.2009, obviating the need for renewal.

Issue 2: Non-consideration of Board Circular by the learned DIT(E)

The assessee contended that the learned DIT(E) ignored the Board Circular dated 3.6.2010 and 27.10.2010 while rejecting the renewal of exemption u/s 80G. The Tribunal noted that the deletion of the proviso to Section 80G(5)(vi) had not been taken into account by the DIT(E) in the rejection. Consequently, the Tribunal directed the DIT(E) to reconsider the matter, providing the assessee with a fair opportunity to present all necessary details and decide the issue in accordance with the law.

In conclusion, the Tribunal allowed the appeal filed by the assessee, directing the DIT(E) to treat the approval of exemption granted earlier u/s 80G to the assessee in perpetuity if it was to expire on or after 1.10.2009. The Tribunal emphasized the significance of the omission of the proviso to Section 80G(5)(vi) and the applicability of the Board Circular in such cases.