2015 (10) TMI 1377 - AT - Income Tax

Renewal of approval granted u/s 80G(5) rejected - assessee is registered as a charitable trust u/s 12A of the Act since 1976 which is continuing till date - Held that - Plain reading of section 80G(5)would make it clear that an institution or fund would be eligible for approval firstly if it is established in India for charitable purpose and secondly if it fulfils the conditions prescribed under clause (i) to (v) of section 80G(5). So far as the first condition i.e., established in India for a charitable purposes is concerned, admittedly, the assessee is a trust established in India for charitable purpose is evident from the fact that it is registered u/s 12A of the Act but, which continues till date. So far as fulfilment of conditions prescribed under clauses (i) to (v) of section 80G(5) is concerned, there is neither any allegation nor any material brought on record to show that assessee has not fulfilled those conditions. That being the case, assessee is entitled for approval u/s 80G(5) of the Act. The reasons basing on which the DIT (E) has denied approval to the assessee are extraneous and beyond the scope of statutory provisions as contained u/s 80G(5) of the Act. Another important aspect which merits consideration is the assessee was granted approval u/s 80G(5)(vi) till 31-3-2003. Therefore, when there is no change in situation which existed when the renewal was granted to the assessee in 2000, there is no justifiable reason to deny approval to the assessee u/s 80G(5). Inclined to accept assessee s contention for grant of approval u/s 80G(5). - Decided in favour of assessee.

Summary

Issues involved:
1. Rejection of application for renewal of approval u/s 80G(5) of the Income Tax Act by the DIT (E), Hyderabad.

Detailed Analysis:
The appeal was against the order rejecting the assessee's application for renewal of approval u/s 80G(5) of the Act. The assessee, a charitable trust, was granted registration u/s 12A and approval u/s 80G(5)(vi) earlier, which was renewed till 31-3-2003. The DIT (E) rejected the renewal application citing reasons such as the failure to establish a museum for art objects as per the trust deed and the unavailability of art objects for public viewing. The learned AR contended that the trust's charitable nature was not doubted, and efforts were made to acquire land for the museum. The DIT (E) was not convinced and passed the impugned order. The learned DR supported the DIT (E) stating that the primary object of the trust was not achieved as there was no museum for public viewing of art objects.

The conditions for approval u/s 80G(5) were analyzed, including the requirement for charitable purpose, maintenance of separate accounts, and not using donations for business purposes. The DIT (E) refused approval based on the trust's alleged failure to support research programs, establish a museum, and make art objects available for public viewing. However, it was noted that the trust was registered as a charitable trust since 1976, and there was no evidence of non-compliance with the conditions of section 80G(5). The reasons cited by the DIT (E) were deemed extraneous and beyond statutory provisions. Since the trust was previously granted approval until 31-3-2003 without a change in circumstances, the denial of approval was deemed unjustified. The tribunal directed the DIT (E) to grant approval u/s 80G(5)(vi) to the appellant, with a caution that further renewal may be denied if conditions are violated.

In conclusion, the appeal by the assessee was allowed, emphasizing compliance with statutory conditions for approval u/s 80G(5) and overturning the DIT (E)'s rejection of the renewal application.