2012 (8) TMI 390 - AT - Income Tax

Renewal of certificate u/s 80G - refusal on ground that applicant trust had not carried out any charitable activities in the last three years and had not incurred any expenditure - trust came into existence vide Trust Deed dated 17-11-1997 - this was the case of fourth renewal - no change in facts and circumstances of the case and also in the objects of the assessee trust - Held that - Until and unless, the conditions mentioned in Section 80G(5) are not violated, refusal for grant/recognition u/s 80G cannot be made. Also, there is also no material on record to show that, what are the change in the facts and circumstances from the earlier years when the approval and recognition u/s 80G was granted and certificate has been issued. thus, matter should be restored back to the file of the DIT(E), who will not only consider the submissions of the assessee but also examine the conditions as laid down u/s 80G(5) - Decided in favor of assessee for statistical purposes.

Summary

Issues:
Renewal of certificate under Section 80G denied based on lack of charitable activities in the last three years.

Analysis:
The appeal was filed against the order refusing the renewal of the certificate under Section 80G by the Director of Income Tax (Exemption). The trust was granted registration under section 12A and had also been granted certificates under Section 80G previously. However, the Director noticed that the trust had not carried out any charitable activities in the last three years and had not incurred any expenditure. The Director held that since the trust had not engaged in charitable activities, the purpose of granting approval under Section 80G was defeated. The decision was influenced by the judgments in the cases of Madani Musafir Khana Welfare Society and Vishwa Budha Parishad, where it was held that approval under Section 80G cannot be granted if the trust is not engaged in charitable activities for the benefit of the public.

The appellant argued that there had been no change in the facts and circumstances of the case or in the trust's objects. They provided detailed explanations of their charitable activities, focusing on preserving Indian heritage through inscribing manuscripts on Tadpatras. The trust employed artisans and pundits for this purpose, with expenditures being capitalized. The appellant emphasized that the trust had been granted certificates under Section 80G in the past and had not withdrawn its registration under Section 12A. They submitted financial audited statements to support their case.

The Court observed that the Director did not specify which conditions of Section 80G(5) were not fulfilled or violated by the trust. Refusal for grant or renewal under Section 80G cannot be solely based on the absence of charitable activities in the last three years. The Court highlighted the importance of examining the conditions of Section 80G(5) and assessing any changes in facts or circumstances from previous years when the approval was granted. The Court concluded that the matter should be sent back to the Director for reevaluation, considering the submissions of the appellant and the conditions under Section 80G(5), ensuring the appellant is given a fair opportunity to present their case.

In conclusion, the appeal was allowed for statistical purposes, and the matter was remanded back to the Director for a fresh assessment in line with the observations made by the Court.