9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2015 (1) TMI 109 - HC - Income TaxRejection of approval u/s 80G(5) Held that - Following the decision in COMMISSIONER OF INCOME TAX RAJKOT III Versus VIPASSANA TRUST 2015 (1) TMI 63 - GUJARAT HIGH COURT wherein the decision in NN. Desai Charitable Trust Versus Commissioner Of Income-Tax 1999 (5) TMI 11 - GUJARAT High Court wherein it has been held that the inquiry should be confined to finding out if institution satisfies prescribed conditions as mentioned in Section 80G of the Act - at the time of granting approval u/s 80G of the Act, what is to be examined is the object of the trust and so far as the aspect of income is concerned, same can be very well examined by the AO at the time of framing assessment - the assessee-Trust was refused recognition only on the ground that it had not spent 85 per cent of the amount towards the objects of the Trust - the Tribunal committed no jurisdictional error in issuing direction to grant recognition to the Respondent-Trust u/s 80G(5) of the Act as such no substantial question of law arises for consideration Decided against revenue.
Issues Involved:
1. Approval under Section 80G(5) of the Income Tax Act. 2. Verification of activities in accordance with the objectives of the trust. 3. Compliance with expenditure requirements under Section 80G(5)(i). 4. Scope of inquiry for approval under Section 80G(5). Issue-wise Detailed Analysis: 1. Approval under Section 80G(5) of the Income Tax Act: The appellant challenged the judgment and order dated 12.8.2014 by the Income Tax Appellate Tribunal, Rajkot Bench, Rajkot, which allowed the assessee-Trust's application for approval under Section 80G(5) of the IT Act. The Revenue's appeal was based on the rejection of the trust's application by the Commissioner, which was later overturned by the Tribunal. 2. Verification of activities in accordance with the objectives of the trust: The assessee-Trust submitted an application in Form No. 10G for approval under Section 80G(5), accompanied by the trust deed and registration certificate. The main objects of the trust were educational activities. The trust was asked to explain how its activities aligned with its objectives and to produce relevant documents. The trust's main activity, the Arthik Unnati Scheme, involved providing unskilled manpower, specifically security personnel to cooperative banks. The trust provided details and made written submissions, but the Commissioner rejected the application. 3. Compliance with expenditure requirements under Section 80G(5)(i): The Commissioner refused approval under Section 80G(5) on the grounds that the trust failed to spend 85% of its income as required. However, the Tribunal noted that the main objects of the trust were educational, social, and medical activities. The Tribunal referenced a Division Bench decision in the N.N. Desai Charitable Trust case, which clarified that the inquiry should focus on whether the institution satisfies the prescribed conditions in Section 80G. 4. Scope of inquiry for approval under Section 80G(5): The Tribunal and the High Court emphasized that the inquiry for approval under Section 80G(5) should be confined to whether the institution satisfies the conditions in Section 80G. The High Court reiterated that the actual assessment of income and compliance with expenditure requirements should be examined by the Assessing Officer during the assessment proceedings, not during the approval process. The High Court cited the Punjab & Haryana High Court's decision in "CIT vs. Surya Educational & Charitable Trust," which held that the extent and nature of activities are to be examined during assessment, not at the registration stage. Conclusion: The High Court concurred with the Tribunal's findings and dismissed the Revenue's appeal, stating that the issue was squarely covered by previous decisions. The Tribunal did not err in directing the Commissioner to grant recognition under Section 80G(5) of the Act, as the inquiry at the approval stage should focus on the objectives of the trust, not on the actual expenditure or assessment of income.
|
