2018 (7) TMI 1902 - AT - Income Tax

Grant of approval u/s 80G(5)(vi) denied - application for grant of registration u/s 12A(a)approved - denial of approval u/s 80G(5)(vi) as assessee has not furnished sufficient detail or proof on the activities of trust - not possible to verify the activities of trust - HELD THAT - We are of the view that the contentions put forth by the learned counsel for the assessee are acceptable. The reasons assigned for not granting approval u/s 80G(5)(vi) is directly contradictory to the action of the CIT(E) in granting registration u/s 12A of the Act. The genuineness of the activities of the trust have by implication been accepted by the CIT(A) by his action in granting approval u/s 12A of the Act. We therefore set aside the order of the CIT(E) and remand the question of grant of approval u/s 80G(5)(vi) of the Act to the CIT(E) for fresh consideration in the light of the decisions referred to by the learned counsel for the assessee before us. The CIT(E) will afford opportunity of being heard to the assessee. - Appeal of the assessee allowed for statistical purposes.

Summary

Issues:
- Appeal against refusal of approval u/s 80G(5)(vi) of the Income-tax Act, 1961.
- Contradiction between approval u/s 12A and refusal of approval u/s 80G(5)(vi).
- Requirement of genuineness of activities for approval u/s 80G(5)(vi).
- Application of legal precedents in similar cases.

Analysis:
1. The appeal was filed against the refusal of approval u/s 80G(5)(vi) of the Income-tax Act, 1961 by the Commissioner of Income-tax(Exemptions), Bengaluru. The appellant, a charitable trust formed to propagate ancient Indian culture through education, had obtained registration u/s 12A of the Act, but approval u/s 80G(5)(vi) was denied.

2. The appellant contended that the conditions for registration u/s 12A, including the genuineness of activities, were satisfied, leading to the grant of registration. It was argued that the same genuineness of activities should apply for approval u/s 80G(5)(vi). Citing legal precedents, the appellant highlighted that absence of activities at the time of registration cannot be a basis for refusal of approval u/s 80G(5)(vi).

3. The Tribunal referred to a case where the High Court held that registration cannot be refused solely based on absence of charitable activities at the time of application, especially when the trust is newly formed. The Tribunal emphasized that the genuineness of the trust's objects should be considered for registration, not the immediate activities. Therefore, the Tribunal allowed the appeal, setting aside the refusal of approval u/s 80G(5)(vi) and remanding it for fresh consideration.

4. The Tribunal noted the contradiction between the approval u/s 12A and the refusal of approval u/s 80G(5)(vi). It concluded that by granting registration u/s 12A, the CIT had implicitly accepted the genuineness of the trust's activities, making the refusal of approval u/s 80G(5)(vi) inconsistent. The Tribunal directed the CIT to reconsider the approval application in light of the legal principles discussed during the appeal hearing.

5. In the final order, the Tribunal allowed the appeal for statistical purposes, indicating that the refusal of approval u/s 80G(5)(vi) was set aside, and the matter was remanded for fresh consideration. The decision was pronounced in an open court on 20th July 2018.