2016 (10) TMI 929 - HC - Income Tax

Eligibility of deduction u/s 80G - ITAT allowed the claim - Held that - Impugned order of the Tribunal has on the basis of the clear provision of Section 80G of the Act recorded that the respondent assessee completely satisfies / fulfills all the conditions specified in Section 80G(5) of the Act for the purposes of availing benefit under Section 80G of the Act. This coupled with the fact that the Revenue itself has also not taken any proceedings to have the registration cancelled, would itself imply that the Revenue does consider the Trust to be a genuine trust. It is an undisputed position before us that the respondent assessee satisfies all conditions for approval of the trust under Section 80G of the Act. Therefore, it is not open to the Authorities to refuse approval by imposing conditions which are not mentioned in Section 80G of the Act. In the above circumstances, the impugned order of the Tribunal is unexceptional. - Decided against revenue

Summary

Issues:
Challenge to order of Income Tax Appellate Tribunal regarding approval under Section 80G of Income Tax Act, 1961 for Assessment Year 2011-12.

Analysis:
1. The main issue in this case is whether the Tribunal was justified in setting aside the order of the DIT (E) and allowing the appeal of the assessee despite contravention of provisions of the Bombay Public Trust Act, 1950. The respondent, a Charitable Trust registered under Section 12AA Act, had its application for renewal of approval under Section 80G of the Income Tax Act rejected due to obtaining an unsecured loan without prior approval. The Tribunal found that the trust fulfilled all conditions under Section 80G(5) and that a breach of the Bombay Public Trust Act does not disqualify it from approval under Section 80G. The absence of action from the Revenue and Charity Commissioner indicated the trust's genuineness, leading to the appeal being allowed.

2. The appellant argued that the trust was not genuine as it regularly borrowed and repaid funds from third parties. However, the Tribunal's order was based on the trust's compliance with Section 80G conditions and lack of cancellation proceedings by the Revenue. The Tribunal's decision was deemed appropriate as the trust met all requirements for approval under Section 80G, and authorities cannot impose additional conditions not specified in the Act for approval. Consequently, the Tribunal's order was upheld, and the appeal was dismissed without costs.

In conclusion, the High Court upheld the Tribunal's decision, emphasizing that the trust's compliance with Section 80G conditions and lack of action from the Revenue indicated its genuineness, despite the breach of the Bombay Public Trust Act. The Court found no substantial question of law in the case and dismissed the appeal.