2019 (9) TMI 1465 - AT - Income Tax

Grant of registration u/s 80G(5)(vi) denied - genuineness of the activities for grant of approval under section 80G(5)(vi) of the Act cannot be verified - assessee was granted registration under section 12AA - HELD THAT - The object of grant of recognition under section 80G is to promote charitable activities and to mobilize resources which can be generated by the assessee trust from the potential donors as well as public at large. Therefore, denial of recognition under section 80G merely for the fact that the activities have not been carried out by the assessee trust and thus cannot be verified is not appropriate. CIT(E) has not spelt out non-fulfillment of any of the conditions specified under section 80G(5) of the Act, therefore, it is not a case where any of the conditions specified for grant of approval have not been fulfilled by the assessee trust. - Decided in favour of assessee.

Summary

Issues:
Appeal against denial of registration under section 80G(5)(vi) of the Act.

Analysis:
The appellant, a newly set up public charitable trust, appealed against the denial of registration under section 80G(5)(vi) of the Act by the learned CIT(E). The trust had already been granted registration under section 12AA of the Act. The dispute arose when the application seeking recognition under section 80G was rejected due to doubts regarding the genuineness of the trust's activities. The appellant argued that all necessary details were submitted, and there was no valid reason for denial. The learned CIT(E) did not specify any non-fulfillment of conditions under section 80G(5) of the Act.

Upon hearing both parties, the tribunal noted that the appellant trust was newly constituted and had applied for registration under sections 12AA and 80G within a short period. The tribunal emphasized that while examining the genuineness of activities for section 80G approval, the trust's establishment timeline must be considered. In cases where a trust is newly set up, it may not have had the opportunity to demonstrate its activities fully at the time of application. The tribunal highlighted that the purpose of section 80G recognition is to promote charitable activities and mobilize resources. Denying recognition solely based on unverified activities was deemed inappropriate, especially when no specific conditions under section 80G(5) were found unfulfilled.

Citing a similar case precedent, the tribunal directed the learned CIT(E) to grant registration to the appellant trust under section 80G of the Act. The decision was based on legal principles established by the Hon'ble Karnataka High Court and previous tribunal rulings. The tribunal concluded that the denial of approval solely due to the absence of activities from the trust's inception was unjustified. By aligning with the legal precedents and considering the circumstances of the case, the tribunal allowed the appeal, instructing the grant of registration under section 80G to the appellant trust.

In conclusion, the tribunal's decision favored the appellant trust, emphasizing the importance of considering the trust's new establishment status and the overarching objective of promoting charitable activities while granting recognition under section 80G of the Act.