2012 (10) TMI 442 - HC - Income Tax

Refusal to grant renewal u/s 80-G - ITAT allowed the claim as registration of assessee trust u/s 12-AA is still subsisting - Held that - The object of Section 80-G moves further and beyond registration under Section 12-AA to provide for deductions in respect of donations to certain trusts/charitable institutions. Once the registration under Section 80GG has been granted, for which the registration under Section 12-AA is also necessary, the renewal cannot be refused, unless any material, which may either be withheld or concealed, has come to the notice of the Commissioner or that the Commissioner, on examining of the application of funds or income come to a conclusion, that the income has been used for the purposes other than the purposes for which the registration under Section 80GG was granted. As the registration under Section 12-AA has not been cancelled in the present case and the application for allowing benefit under Section 80-G was also allowed in the previous years. The trust has not added any new object in the trust deed nor there is any material by way of balance sheet or the utilisation of the income of the trust to come to a conclusion that activities which are not for charitable purpose the order of the Tribunal does not suffer from any error of law - in favour of assessee.

Issues:
1. Appeal against the order of the Income Tax Appellate Tribunal granting approval under Section 80-G of the Income Tax Act.
2. Rejection of renewal application for approval under Section 80-G by the Commissioner of Income Tax, Meerut.
3. Interpretation of Clauses 6 and 23 of the trust deed in relation to charitable activities.
4. Consideration of activities under Clauses 6 and 23 for renewal under Section 80-G.
5. Examination of the Tribunal's decision on the charitable nature of the trust's activities.
6. Legal grounds pressed by the Petitioner Counsel in support of the appeal.

Analysis:

1. The High Court heard the appeal against the order of the Income Tax Appellate Tribunal, which had set aside the Commissioner's decision to reject the renewal application for approval under Section 80-G of the Income Tax Act. The Tribunal considered the charitable nature of the trust's activities and the validity of its registration under Section 12-AA of the Act.

2. The Commissioner of Income Tax, Meerut, rejected the renewal application based on Clauses 6 and 23 of the trust deed, which were deemed unrelated to charitable activities. The Commissioner found these clauses insufficient for registration under Section 80-G, prompting the initiation of proceedings for withdrawal of registration.

3. The Tribunal overturned the Commissioner's decision, emphasizing that if one clause in the trust deed could be considered charitable, then all activities should be viewed in a similar light. The Tribunal accepted the trust's statement that the activities mentioned in Clauses 6 and 23 had not been carried out and deemed them charitable, thus supporting the renewal under Section 80-G.

4. The Petitioner Counsel raised legal grounds questioning the Tribunal's decision, arguing against the linkage between Sections 12-A and 80-G of the Income Tax Act. The Counsel also challenged the Tribunal's authority to grant exemption under Section 80-G based on the trust's activities not aligning with the definition of charitable purpose.

5. The High Court noted that the registration under Section 12-AA remained valid, and previous approvals under Section 80-G had been granted. There was no evidence to suggest that the trust's activities deviated from charitable purposes, warranting withdrawal of registration.

6. The Court emphasized the overlap in powers for registration and renewal under Sections 12-AA and 80-G, highlighting the necessity of genuine activities for maintaining approval. Ultimately, the Court found no legal errors in the Tribunal's decision and dismissed the Income Tax Appeal, affirming the approval under Section 80-G for the trust.

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