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2013 (10) TMI 528 - AT - Income TaxExemption u/s 11 and Deduction u/s 80G of the Income Tax Act educational institution - Held that - Assessee are charitable within the meaning of section 2(15) and the Income Tax Appellate Tribunal was right in holding that the respondent is entitled to exemption under section 11 of the Income Tax Act - authorities were fully satisfied that the activities of the assessee are for charitable purpose while granting the registration u/s 25 of the Companies Act and u/s 12A as well section 80G of the Income Tax Act. Therefore in the facts and circumstances of the case when no such objection was raised at the time of granting the earlier registration not once but at four occasions and under different provisions of Income Tax Act as well as under companies Act then the objections raised by the DIT are not sustainable Directed the DIT (Exemption) to grant approval/renewal u/s 80G(5)(vi) of the assessee Decided in favor of Assessee.
Issues:
1. Whether the refusal of renewal/registration u/s 80G by DIT (Exemption) to the assessee is justified based on the presence of Foreign Nationals as directors? Analysis: The appeal before the Appellate Tribunal ITAT Mumbai was against the order of DIT (Exemption) regarding the renewal of approval u/s 80G of the Income Tax Act. The main issue for consideration was whether the refusal of renewal/registration u/s 80G was justified when the assessee company had Foreign Nationals as directors, despite being incorporated under the Companies Act for charitable purposes. The DIT rejected the renewal application citing the presence of Foreign Nationals as directors, which, according to the DIT, violated the Indian Trust Act. The assessee argued that being a company registered under the Companies Act, the nationality of directors should not affect the approval under section 80G. The Tribunal noted that the objections raised by the DIT were not sustainable as the company's objects were found to be chargeable in nature, and the earlier approvals under section 80G were granted without any issue regarding the nationality of directors. The DIT's refusal was based on the presence of Foreign Nationals as directors, which the DIT believed contravened the Indian Trust Act. However, the Tribunal found that there was no legal provision prohibiting Foreign Nationals from being directors of a company registered under the Companies Act for availing benefits under section 80G. The Tribunal highlighted that the company's registration under section 25 of the Companies Act made it eligible for approval u/s 80G(5)(vi) for donations made after a specified date. The Tribunal also emphasized that the objections raised by the DIT were not raised during the earlier approvals granted to the assessee under different provisions of the Income Tax Act and the Companies Act. Therefore, the Tribunal set aside the DIT's order and directed the grant of approval/renewal u/s 80G(5)(vi) to the assessee company. In conclusion, the Tribunal allowed the appeal of the assessee, emphasizing that the presence of Foreign Nationals as directors of the company did not justify the refusal of renewal/registration u/s 80G by the DIT. The Tribunal held that the company's compliance with the requirements under the Companies Act and its charitable nature should be the determining factors for granting approval under section 80G, irrespective of the nationality of the directors.
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