2018 (11) TMI 1817 - AT - Income Tax

Denying the registration u/s 80G(5)(vi) - appellant- society is registered u/s 12A - CIT(E) has rejected the application moved by the assessee u/s 80G on the ground that the assessee is not engaged in any charitable purpose whereas the assessee society is formed for charitable purposes and it is engaged in charitable activities as per its bye law - HELD THAT - In Hiralal Bhagwati 2000 (4) TMI 14 - GUJARAT HIGH COURT rightly relied on by the assessee it has been held that once registration 12A of the Act stands granted the application u/s 80G(5) cannot be rejected In the present case it remains undisputed that the registration granted u/s 12A(a) of the Act w.e.f. 01.04.2008 vide order dated 22.09.2008 passed by the ld. CIT continues hitherto. As such the ld. CIT(E) has erred in rejecting the assessees application u/s 80G(5) of the Act. The order under appeal is therefore reversed. The application filed by the assessee u/s 80G is allowed.

Summary

Issues Involved:
- Denial of registration under section 80G(5)(vi) of the Income Tax Act, 1961 by the CIT(Exemptions)

Detailed Analysis:

Issue 1: Denial of registration under section 80G(5)(vi)
The appeal was filed by the assessee against the order of the CIT(Exemptions) denying registration under section 80G(5)(vi) of the Income Tax Act, 1961. The grounds of appeal raised by the assessee included contentions regarding the rejection of the application for approval, the charitable nature of the society, acceptance of returns at nil income, and the genuine nature of the society's activities. The CIT(Exemptions) had rejected the application on the basis that the society was not engaged in any charitable purpose.

Issue 2: Registration under section 12A of the Act
The counsel for the assessee argued that the society was registered under section 12A of the Act by the CIT-I, Lucknow, and that the rejection of the application under section 80G was unfounded as the society was formed for charitable purposes and engaged in charitable activities as per its bye laws. The counsel also highlighted that the registration under section 12A was continuing, and therefore, approval under section 80G should not have been refused.

Issue 3: Examination of books of account
The counsel further contended that the CIT(Exemptions) did not examine the books of account provided by the assessee for verification before rejecting the application for approval under section 80G(5)(vi) of the Act. The counsel referred to relevant case laws to support the argument that once registration under section 12A is granted, the application under section 80G(5) cannot be rejected solely based on the nature of activities.

Judgment and Conclusion:
The Tribunal reversed the decision of the CIT(Exemptions) and allowed the appeal, stating that the registration granted under section 12A of the Act was continuing, and therefore, the rejection of the application under section 80G(5) was erroneous. The Tribunal relied on legal precedents to support the decision that once registration under section 12A is granted, the benefits under section 80G cannot be denied. The order under appeal was reversed, and the application filed by the assessee under section 80G was allowed.