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Issues involved: Appeal against rejection of application for approval u/s 80G(5) of the Income-tax Act, 1961 by Commissioner of Income-tax, Rajkot.
Summary: The appeal was filed by the assessee-trust against the order of the Commissioner of Income-tax, Rajkot-I rejecting the application for approval u/s 80G(5) of the Income-tax Act. The assessee-trust, engaged in charitable activities in the educational field, had applied for approval on 21.05.2012. However, the Commissioner rejected the application citing insufficient evidence of charitable activities and expenditure details. The assessee-trust did not provide the required information despite being asked by the Commissioner. The Commissioner concluded that the trust did not carry out substantial activities and failed to comply with the necessary requirements for approval u/s 80G(5) as per the Act and Rule 11AA. The assessee-trust appealed the decision on various grounds, arguing that they deserved approval u/s 80G(5). During the hearing, the Authorized Representative for the assessee-trust contended that only the object of the trust needed to be examined at the time of granting approval for exemption u/s 80G, and the application of funds could be reviewed during assessment. He referred to a judgment of the Punjab & Haryana High Court and an ITAT decision supporting this view. On the other hand, the Revenue representative supported the Commissioner's decision, emphasizing the lack of evidence provided by the assessee-trust regarding their expenditure towards charitable activities. After considering the arguments, the Tribunal referred to the Punjab & Haryana High Court's decision, which stated that the object of the trust should be examined during approval, and fund application could be reviewed during assessment. Following this precedent, the Tribunal set aside the Commissioner's order and directed the grant of approval u/s 80G(5) to the assessee-trust. Consequently, the appeal of the assessee-trust was allowed.
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