2020 (2) TMI 1388 - AT - Income Tax

Grant of approval u/s. 80G - registration u/s. 80 G was denied to assessee due to lack of activities during initial stages - main objectives of the assessee was establishing and running educational institutions - HELD THAT - As relying on M/S. BHIMA FOUNDATION VERSUS THE COMMISSIONER OF INCOME-TAX (EXEMPTION) , BENGALURU. 2019 (9) TMI 1465 - ITAT BANGALORE assessee trust is newly set up and when approval u/s. 80 G is sought for and when period between formation of trust and examination of application of assessee for grant of approval u/s. 80 G of the Act was very short, it is not possible for such organisation to demonstrate actual carrying of its activities. This Tribunal placed reliance on decisi in case of DIT (E) v. Meenakshi Amma Endowment Trust, 2010 (11) TMI 853 - KARNATAKA HIGH COURT and came to the conclusion that for want of proof of activities of a trust, when trust was yet to commence its activities, an application for grant of registration u/s. 12A cannot be rejected. The Tribunal also placed reliance on decision of ITAT Jaipur Bench in the case of Anand incubation Centre 2017 (11) TMI 77 - ITAT JAIPUR wherein on identical facts, approval u/s. 80G was directed to be granted - we hereby direct Ld. CIT (E) to grant registration to assessee trust u/s 80G - Decided in favour of assessee.

Summary

Issues: Denial of registration under section 80G (V) (vi) of the Act to an educational trust due to lack of activities during initial stages.

Analysis:
1. The appellant, an educational trust, filed an appeal against the order denying registration under section 80G of the Act due to lack of activities during its initial stages.
2. The Tribunal noted that similar reasoning for denial of approval under section 80G was overturned in previous cases, where trusts were newly established and had not commenced activities at the time of application.
3. Citing the decision of the Hon’ble Karnataka High Court, the Tribunal emphasized that the genuineness of activities should be viewed in the context of the trust’s establishment.
4. The Tribunal highlighted that denial of recognition under section 80G solely based on the absence of activities by a newly set-up trust is inappropriate, especially when all conditions specified for approval have been fulfilled.
5. Referring to previous judgments, the Tribunal directed the Ld. CIT (E) to grant registration to the assessee trust under section 80G of the Act, as the trust was newly constituted and had applied for approval within a short period after its establishment.
6. Consequently, the appeal filed by the assessee was allowed, and registration under section 80G was directed to be granted by the Ld. CIT (E).

This detailed analysis of the judgment highlights the key points, legal reasoning, and precedents considered by the Tribunal in overturning the denial of registration under section 80G of the Act to the educational trust.