2009 (12) TMI 683 - AT - Income Tax

Renewal of exemption under section 80G of the Income-tax - charitable trust - opinion of the Commissioner that certain objects are not for charitable purposes because they involve activities in the nature of trade commerce etc. assessee contended that once the approval is granted then it will be deemed to be continued in perpetuity unless specifically withdrawn Held that - Commissioner has considered all aspects and thereafter rejected the renewal of the assessee s application for exemption. Taking into consideration all these aspects and the detailed order of the learned Commissioner we do not see any reason to interfere in it - appeal of the assessee dismissed.

Summary

Issues:
- Rejection of application for renewal of exemption under section 80G of the Income-tax Act, 1961.
- Interpretation of aims and objects of the assessee for charitable trust status.
- Application of clause (vii) of section 80G(5) in the case.
- Consideration of evidence regarding institute's recognition and activities for exemption renewal.

Issue 1: Rejection of Application for Renewal of Exemption:
The assessee appealed against the rejection of the application for renewal of exemption under section 80G of the Income-tax Act, 1961. The Commissioner rejected the renewal application citing certain objects of the trust being of religious nature and not for charitable purposes as per section 80G. The assessee argued that the Finance (No. 2) Act, 2009, introduced clause (vii) in section 80G(5) to allow automatic renewal of exemptions granted before 31-3-2008. However, the Tribunal noted that the amendment aimed to exclude certain activities from charitable purpose definition and did not automatically renew exemptions. The Tribunal upheld the rejection of the renewal application based on the Commissioner's detailed analysis.

Issue 2: Interpretation of Aims and Objects for Charitable Trust Status:
The Commissioner analyzed the aims and objects of the assessee's charitable trust, noting over 27 objectives listed in the trust deed. It was observed that certain objectives were not for charitable purposes as they involved activities like trade or commerce. The Commissioner referred to Supreme Court decisions to determine the charitable nature of the aims and objects. The Tribunal agreed with the Commissioner's assessment that the wide amplitude of the objectives did not align with educational purposes, and certain objectives were deemed religious in nature, leading to the rejection of the renewal application.

Issue 3: Application of Clause (vii) of Section 80G(5):
The Tribunal considered the applicability of clause (vii) of section 80G(5) in the case, which was introduced to prevent undue hardship to genuine institutions and eliminate the need for frequent renewal of exemptions. The Tribunal clarified that the clause did not automatically renew exemptions but aimed to protect donors' interests. It emphasized that the assessee's case for exemption renewal needed independent evaluation, especially in light of the amended definition of "charitable purpose."

Issue 4: Consideration of Evidence for Exemption Renewal:
The Tribunal examined the evidence regarding the institute's recognition and activities to assess eligibility for exemption renewal. It was noted that the institute lacked formal recognition from government authorities or affiliations with recognized institutions. The Tribunal questioned the credibility of the institute's activities, such as training girls in stitching, based on the lack of substantial evidence like approved certificates or qualified personnel. The Tribunal agreed with the Departmental representative that the institute's accounts did not align with charitable actions, leading to the dismissal of the appeal and cross-objection.

In conclusion, the Tribunal upheld the rejection of the renewal application, emphasizing the need for genuine charitable activities and proper documentation to qualify for exemption under section 80G of the Income-tax Act, 1961.