2018 (1) TMI 929 - AT - Income Tax

Applications seeking exemption u/s 80G(5)(vi) - substantial portion of the amount received by the Trust is incurred on the construction of the temple for which a significantly high construction cost is reflected in the balance sheet - Held that - It is admitted fact that the assessee are granted registration u/s 12AA. It is well settled position of law that at the time of granting approval under Section 80G, what is to be examined is the object of the trust and so far as the aspect of income is concerned, same can be very well examined by the AO at the time of framing assessment. In the cases of the assessee trust and society, the objectives have already been examined by the CIT(E) while granting registration u/s 12AA. The 80G(5) subsists the 12AA so far as examination of charitable nature of objectives is concerns. Thus, both on facts and in law the assesses case are squarely covered by CIT vs. Puja Shri Jalrambapa and Matushri Virbaima Charitable Trust (2014 (11) TMI 1165 - GUJARAT HIGH COURT). Respectfully following the Hon ble Gujarat High Court in the case of CIT vs. Puja Shri Jalrambapa and MatushriVirbaima Charitable Trust (Supra), we, find the grievance of the assessee society and trust justified and therefore, direct the CIT(E) to grant approval u/s 80G(5)(vi). - Decided in favour of assessee.

Summary

Issues: Rejection of exemption u/s 80G(5)(vi) of the Income Tax Act by the Commissioner of Income Tax (Exemption) - Assessment of charitable activities and compliance with registration requirements under Sections 12AA and 80G.

In the judgment, the Appellate Tribunal considered the rejection of exemption u/s 80G(5)(vi) of the Income Tax Act by the Commissioner of Income Tax (Exemption) for the assessee society. The Commissioner noted that the society primarily focused on commercial activities like food processing, sewing, and weaving training, lacking charitable elements. The Tribunal reviewed the submissions made by the assessee, highlighting the registration granted under Section 12AA and arguing that the rejection of the application under Section 80G(5)(vi) was unjustified. The Tribunal referenced a decision of the Gujarat High Court emphasizing the examination of the trust's object for granting approval under Section 80G. It was noted that the Tribunal found no error in directing recognition under Section 80G(5) due to the trust's compliance with registration requirements. The Tribunal ruled in favor of the assessee, dismissing the appeal against the revenue.

Regarding another appeal related to registration under Section 80G(5), the Tribunal addressed the rejection of the application by the Commissioner of Income Tax (Exemption) based on high construction costs for a temple. The assessee contended that the reasons for rejection were unrelated to registration, emphasizing compliance with income tax returns and conditions for registration. The Tribunal acknowledged the registration granted under Section 12AA and cited precedents to support the assessee's case. Noting the absence of contrary decisions from the Department, the Tribunal held that the objectives of the trust had been examined during registration under Section 12AA, aligning with the requirements for approval under Section 80G. Following the Gujarat High Court decision, the Tribunal directed the Commissioner to grant approval under Section 80G(5)(vi), allowing the appeals of the assessees.

In conclusion, the Tribunal's judgment focused on the assessment of charitable activities and compliance with registration requirements under Sections 12AA and 80G. It emphasized the importance of examining the trust's objectives for granting approval under Section 80G, highlighting the need for alignment between the objectives assessed during registration under Section 12AA and the charitable nature of activities. The Tribunal ruled in favor of the assessees, directing the Commissioner to grant approval under Section 80G(5)(vi) based on the compliance and justification presented by the assessees.