2011 (11) TMI 501 - AT - Income Tax

Renewal of approval u/s 80G(5)(vi) denied - assessee being Charitable Institution enjoying approval u/s 80G for the period from 1.4.2007 to 31 03.2010 - Held that - Circular No.7/2010 (F.No.197/21/2010-ITA-I dated 27th October, 2010) issued by CBDT states that the existing approvals expiring on or after 1st October, 2009 shall be deemed to have been extended in perpetuity unless specifically withdrawn. Therefore, it has to be held that as assessee s existing approval was expiring on or after the 1st day of October, 2009, the same shall be deemed to have been extended in perpetuity unless specifically withdrawn. Where there is no statutory obligation on the assessee to seek renewal of the approval, then, the application filed by the assessee has no meaning as the statutory provisions will prevail. There is no material on record according to which it can be said that the approval granted to the assessee u/s 80G (5) was specifically withdrawn and what is rejected by the impugned order is the renewal application of the assessee which does not have any meaning in law as the assessee was not under an obligation to seek renewal as approval granted to it shall be deemed to have been extended in perpetuity - in favor of assessee.

Summary

Issues:
- Appeal against rejection of renewal of approval u/s 80G(5)(vi) of the Income-tax Act, 1961.
- Interpretation of statutory provisions regarding the renewal of approval u/s 80G.
- Application of Circular No.7/2010 by the CBDT regarding the validity of approvals granted u/s 80G.

Analysis:

1. The appeal was filed against the rejection of the renewal of approval u/s 80G(5)(vi) of the Income-tax Act, 1961. The assessee, a charitable institution, had applied for renewal on 27th December, 2010, after enjoying approval from 1.4.2007 to 31st March, 2010. The Director of Income-tax (Exemptions) (DIT (E)) rejected the renewal application on 13th July, 2011, citing the absence of certain required details.

2. The appellant argued that the proviso to Section 80G(5)(vi) was omitted by the Finance (No.2) Act, 2009, implying that approvals granted after 1st October, 2009, would be valid in perpetuity unless specifically withdrawn. The Circular No.7/2010 by the CBDT clarified this, stating that approvals expiring after 1st October, 2009, are deemed extended perpetually, unless withdrawn. The appellant cited a relevant judgment by the Allahabad High Court supporting this interpretation.

3. The DIT (E) contended that the renewal application was rightly rejected due to the lack of substantiating details. However, the Tribunal analyzed the statutory provisions and the CBDT circular, emphasizing that the approval granted to the assessee would continue in perpetuity unless withdrawn. As there was no evidence of withdrawal of approval, the Tribunal held that the rejection of the renewal application was not valid.

4. The Tribunal concluded that the appellant was not obligated to seek renewal as per the statutory provisions post the omission of the proviso to Section 80G(5)(vi). The approval granted to the assessee was deemed to be extended perpetually, and the rejection of the renewal application was vacated. The appeal was allowed in favor of the assessee, affirming the perpetual validity of the approval granted under Section 80G.

5. In summary, the Tribunal's decision was based on the interpretation of statutory provisions, the CBDT circular, and relevant case law, emphasizing that approvals under Section 80G granted after 1st October, 2009, are deemed to be extended perpetually unless specifically withdrawn, leading to the allowance of the appeal against the rejection of the renewal application.