2016 (7) TMI 944 - AT - Income Tax

Approval u/s 80G(5) rejected - as per CIT(a) assessee has not started the activities as per the object - Held that - Having granted registration u/s 12AA the first condition regarding establishment of institution for charitable purposes is fulfilled. Regarding satisfaction of additional conditions specified in clause (i) to clause (v) of section 80G(5) there is no dispute as apparent from the order of the ld CIT. As can be seen from Revenue s stand of rejection of earlier applications filed by the appellant the approval under section 80G is closely linked to approval under section 12AA. Now once the registration under section 12AA has been granted the approval under section 80G should not be denied unless the case of the appellant falls under non-fulfillment of one or more of the conditions specified in section 80G(5) which is not the case before us. Regarding the activities carried out by the appellant towards achievement of its object for establishment of the hospital and medical college it cannot be said that assessee has not yet commenced any activity. The CIT has accepted that assessee has taken steps for implementation of its objects in as much as it has acquired the land converted the land for institutional use for setting up the hospital project appointed the architect. carried out soil testing etc. All these activities are towards the achieving the objects of the trust. The registration under section 25 of the companies Act has been granted on 13.10.2012 subsequently the land was acquired on 29.3.2013 and thereafter other activities like conversion of land use appointment of architects and soil testing has been done. The project of setting up hospital and medical college is a complex project requiring various approvals clearances etc which the appellant has been complying with. It is critical that as part of fund raising programme for this project the appellant has sought the approval under section 80G whereby the donations can be accepted for approved purposes and the project can be expedited. The approval under section 80G will thus aid and provide the necessary support in successful completion of the project. In our view ld CIT (Exemption) was not correct in denying the approval under section 80G(5) to the appellant.- Decided in favour of assessee.

Summary

Issues Involved:
Appeal against rejection of exemption u/s 80G(5) of the IT Act, 1961 by CIT (Exemptions), Jaipur.

Detailed Analysis:

Issue 1: Grounds of Appeal
The appeal was filed by the assessee against the order of CIT (Exemptions), Jaipur dated 16.07.2015. The grounds of appeal included errors on facts and in law in rejecting the application for exemption u/s 80G(5) of the IT Act, 1961, and holding that the assessee had not started activities as per the object.

Issue 2: Background and Applications
The company was incorporated under the Companies Act, 1956, with the main object of establishing a hospital and medical college. The assessee applied multiple times for registration u/s 12A and approval u/s 80G(5)(vi), facing rejections based on various grounds such as not carrying out charitable activities and not being registered u/s 12AA.

Issue 3: CIT's Rejection and Assessee's Arguments
The CIT rejected the application for exemption u/s 80G(5) citing that no activities had been started as per the objects, with only capital expenditure activities being carried out. The assessee argued that all requirements for approval were fulfilled, steps were taken towards implementing the objects, and the CIT's observation on the lack of activities was incorrect.

Issue 4: Tribunal's Analysis and Decision
The Tribunal noted the appellant's previous applications and the reasons for rejection by the CIT. It emphasized that registration under section 12AA indicated the genuineness of the objects. The Tribunal found that the activities undertaken by the appellant towards establishing the hospital and medical college justified the approval under section 80G(5). It distinguished a previous case and directed the CIT to grant approval under section 80G(5) to the appellant.

Conclusion:
The Tribunal allowed the appeal filed by the assessee, directing the CIT(Exemption) to grant approval u/s 80G(5) of the IT Act, 1961 to the appellant. The decision highlighted the importance of fulfilling conditions for approval and commencing activities towards the stated objects for charitable purposes.