2013 (10) TMI 1170 - HC - Income Tax

Deduction u/s 80G(5) of the Income Tax Act Held that - Section 80G(5)(iv) requires an institution or fund to maintain accounts of its receipts and expenditure but the Director of Income-tax (Exemption), in his order dated September 24, 2010, has not alleged or stated that there was any such violation. The said order records that for the period ending March 31, 2008, and March 31, 2009, hardly any expenditure had been incurred and no charitable activities were performed - Case of the respondent- assessee was/is that they had spent Rs. 25,000 on 20 operations of disabled patients. Further, they had collected the corpus to establish a dharamshala - There was no violation of clause (iv) of section 80G(5) Decided against the Revenue.

Summary

Issues:
Challenge to order refusing registration under section 80G, Alleged violation of section 80G(5)(iv) regarding maintenance of accounts.

Analysis:
The High Court heard an appeal by the Revenue challenging the order of the Income-tax Appellate Tribunal that set aside the Director of Income-tax's decision to deny registration under section 80G to the respondent-assessee. The Tribunal noted that the respondent had been granted registration under section 12AA, which was not revoked. The Revenue contended a violation of section 80G(5)(iv) due to the respondent's alleged failure to maintain regular accounts of receipts and expenditure.

Regarding the alleged violation of section 80G(5)(iv), the Court observed that the Director of Income-tax's order did not mention any such violation. The order highlighted the lack of expenditure and charitable activities by the respondent for specific periods but did not specifically address the maintenance of accounts. The respondent's explanation for the increase in corpus funds and the intended charitable activities was noted. The Court found no evidence or discussion in the Director's order supporting the Revenue's claim of a violation of clause (iv) of section 80G(5).

Consequently, the Court dismissed the appeal, emphasizing the lack of merit in the Revenue's arguments and imposing costs on the appellant. The judgment clarified that the absence of evidence or findings regarding the alleged violation of section 80G(5)(iv) led to the dismissal of the appeal. The Court's decision was based on the specific provisions of the Income-tax Act and the lack of substantiation for the Revenue's claims.