2015 (9) TMI 707 - AT - Income Tax

Approval under section 80G(5)(vi) - DIT (E) granting approval subject to the condition that such approval shall be given effect only after the amendment to the trust deed is carried out through civil court - Held that - Assessee has fulfilled all the conditions of clauses (i) to (v) of section 80G(5) and has also made necessary amendment to clause 3.2 of the trust deed confining its activity to India. That being the case, in our view, there is no occasion for the learned Director of Income-tax (Exemptions) to observe that the approval under section 80G(5)(vi) would be effective only from the date the amendment to the trust deed is effected through the civil court having jurisdiction over the matter. In our view, such observation of the learned Director of Income-tax (Exemptions) is not strictly in compliance to the directions of the Income-tax Appellate Tribunal in the order dated February 3, 2012. It is also relevant to note that the learned Director of Income-tax (Exemptions) is also satisfied that the assessee is eligible for approval under section 80G(5). As far as the decision of the hon ble Supreme Court in the case of CIT v. Kamla Town Trust 1995 (11) TMI 1 - SUPREME Court it is relevant to mention that the hon ble Andhra Pradesh High Court in the case of DIT (Exemptions) v. Ramoji Foundation 2015 (2) TMI 900 - ANDHRA PRADESH HIGH COURT taking note of the said decision has held that in a case where the trust is empowered under the trust deed to make amendment there is no need to approach civil court. - Decided in favour of assessee.

Summary

Issues:
Delay in filing appeal seeking condonation of delay, Approval under section 80G(5)(vi) of the Income-tax Act, 1961, Amendment to trust deed through civil court.

Detailed Analysis:
1. Delay in filing appeal seeking condonation of delay:
The appeal was filed by the assessee against an order dated January 11, 2013, passed by the Director of Income-tax (Exemptions), Hyderabad, granting approval under section 80G(5)(vi) of the Income-tax Act, 1961. The delay in filing the appeal was 587 days. The assessee sought condonation of delay, explaining that the delay was due to pursuing the matter before the civil court as directed by the Income-tax Appellate Tribunal. The Tribunal, after considering the submissions, condoned the delay, noting that it was caused due to bona fide reasons and admitted the appeal for hearing.

2. Approval under section 80G(5)(vi) of the Income-tax Act, 1961:
The assessee, a trust registered under section 12A of the Act, applied for approval under section 80G(5)(vi) on November 12, 2012. The initial denial of approval was based on the ground that the trust's activities were not confined to India. However, the trust later amended its deed to restrict activities within India. The Income-tax Appellate Tribunal remitted the matter back to the Director of Income-tax (Exemptions) for reconsideration. The Director insisted that the amendment to the trust deed must be carried out through a civil court, citing a Supreme Court decision. The Tribunal, after reviewing the facts and submissions, held that the trust had fulfilled all conditions for approval under section 80G(5) and directed the Director to grant approval without requiring a civil court order for the amendment.

3. Amendment to trust deed through civil court:
The Director of Income-tax (Exemptions) held that the trust deed amendment must be done through a civil court, as per a Supreme Court decision. However, the Tribunal disagreed, citing a judgment of the Andhra Pradesh High Court, which stated that if the trust deed empowers the trustees to make amendments, there is no need to approach a civil court. The Tribunal directed the Director to grant approval under section 80G(5)(vi) without insisting on a civil court order for the amendment.

In conclusion, the Tribunal allowed the appeal, emphasizing that the trust had fulfilled all conditions for approval under section 80G(5) and that the amendment to the trust deed did not require validation through a civil court, as the trust deed empowered the trustees to make such amendments.