2012 (3) TMI 654 - AT - Income Tax

Summary

Issues Involved:
1. Error in rejecting the application for renewal of exemption u/s 80G(5).
2. Validity of exemption u/s 80G(5) in perpetuity.

Summary:

1. Error in rejecting the application for renewal of exemption u/s 80G(5):
The assessee appealed against the order dated 13th July 2011 by the Director of Income-tax (Exemptions), Delhi, which rejected the application for renewal of exemption u/s 80G(5)(vi) on the grounds that the assessee's activities were not charitable. The assessee argued that it was granted approval u/s 80G(5)(vi) from 1st April 2008 to 31st March 2011 and, being registered u/s 12A, the approval should be deemed extended in perpetuity unless specifically withdrawn. The Tribunal found that this issue was covered by earlier decisions, including the case of Educate India Society vs. DIT (E), where it was established that the rejection of renewal applications was not required as the exemption should continue in perpetuity unless withdrawn.

2. Validity of exemption u/s 80G(5) in perpetuity:
The Tribunal noted that the proviso to Section 80G(5)(vi) was omitted by the Finance (No. 2) Act, 2009, effective from 1st October 2009, which meant that approvals granted would be valid in perpetuity unless specifically withdrawn. This interpretation was supported by CBDT Circular No. 7/2010 and the Allahabad High Court's ruling in Babu Hargovind Dayal Trust vs. ITAT. The Tribunal concluded that the assessee's approval u/s 80G(5) should be deemed extended in perpetuity as there was no evidence of withdrawal. Consequently, the order rejecting the renewal application was vacated, and it was held that the approval would continue unless specifically withdrawn.

Conclusion:
The appeal filed by the assessee was allowed, and the order rejecting the renewal application was vacated. The approval u/s 80G(5) was deemed to continue in perpetuity unless specifically withdrawn. The order was pronounced in the open court on 30.03.2012.