2020 (4) TMI 88 - AT - Income Tax

Grant of recognition u/s 80 G denied - Assessee has obtained certification under section 12 a read with section 12 AA (1) (b) (i) of the act - HELD THAT - Undisputedly, assessee has been granted registration under section 12AA of the Act, and that there is nothing on record brought out by authorities below, or Ld. CIT DR regarding violation of objects of Trust. Grant of approval/recognition under section 80 G of the Act, can act as catalyst to encourage prospective donors to look at intended activities/objects and possibly provide financial support through donations/contributions. In the facts of present case, assessee was holding valid registration under section 12 AA of the Act, as on date of impugned order, which conversely means that Ld. CIT (E) was satisfied with objects of assessee in not disputing the registration under section 12 AA. Reasons cited by Ld. CIT(E)(supra), are not the requirements mandated by provisions of the act, and cannot be the basis for rejection of assessee s application for recognition under section 80G. We also noticed that Ld. CIT(E) has not examined the application of assessee in terms of section 80 G (5) of the Act. Thus, respectfully following the view taken by M/S. INDIC SCIENCE RESEARCH TRUST VERSUS THE COMMISSIONER OF INCOME-TAX (EXEMPTIONS) , BENGALURU. 2018 (7) TMI 1902 - ITAT BANGALORE we remand the question of grant of approval under section 80 G (5) (vi) of the Act to Ld. CIT (E) for fresh consideration the light of decisions referred to herein above. Needless to say, that Ld. CIT(E) will afford proper opportunity of being heard to assessee in accordance with law. Grounds raised by assessee stands allowed for statistical purposes.

Summary

Issues:
- Appeal against rejection of recognition under section 80G(5)(vi) of the Act

Analysis:
The case involves an appeal filed by the assessee against the order passed by the Ld. CIT (E), Bangalore, rejecting recognition under section 80G of the Income Tax Act. The assessee, an Association of persons, had obtained certification as a Charitable Trust under section 12AA of the Act. However, the application for registration under section 80G was rejected by the Ld. CIT (E) based on the grounds that the trust was generating surplus and most receipts were from membership fees and reimbursements, not meeting the criteria for recognition under section 80G.

The Ld. AR argued that the rejection was unjustified as the genuineness of the trust's objects and activities had been verified during the registration under section 12AA. The Ld. CIT (E) had granted registration under section 12AA, indicating satisfaction with the trust's objects. The Ld. AR contended that there was no basis for rejecting the application for recognition under section 80G, as no violation of the Act was established.

On the other hand, the Ld. CIT (DR) supported the rejection of the application for recognition under section 80G. The Tribunal observed that the assessee had valid registration under section 12AA, and there was no evidence of any violation of the trust's objects. The Tribunal referred to decisions of coordinate benches on similar issues and emphasized that recognition under section 80G could encourage donations and financial support for charitable activities.

The Tribunal found that the reasons cited by the Ld. CIT (E) for rejection did not align with the provisions of the Act and remanded the issue for fresh consideration. The Tribunal directed the Ld. CIT (E) to reevaluate the grant of approval under section 80G in light of the relevant decisions and provide the assessee with a proper opportunity to be heard. Consequently, the grounds raised by the assessee were allowed for statistical purposes, and the appeal was allowed.

In conclusion, the Tribunal set aside the rejection of recognition under section 80G and instructed a reassessment of the application, emphasizing the importance of proper consideration and adherence to the legal provisions in such matters.