2019 (4) TMI 1289 - AT - Income Tax

Recognition u/s 80G rejected - charitable activities are not carried out by the assessee - grant of registration u/s 12AA - HELD THAT - We found that the CIT(E) has granted registration u/s 12AA of the Act to the assessee and proof was furnished with copy of registration u/s 12AA of the Act dated 25/07/2018. We found that when the registration u/s 12AA of the Act was granted by the CIT(E) after verifying and satisfying requisite conditions complied by the assessee which is not disputed by the revenue and therefore, the assessee is eligible for recognition u/s 80G of the Act. As relying on M/s.Kuncham Mohan Raj Manjula Charitable Trust 2019 (3) TMI 1163 - ITAT BANGALORE restore this disputed issue to the file of the CIT(E) to adjudicate afresh granting of recognition u/s 80G in the light of grant of registration u/s 12AA and further the assessee should also be provided an adequate opportunity of hearing and shall cooperate in submitting information for early disposal of the application filed for recognition u/s 80G of the Act and allow the grounds of appeal for statistical purposes.

Summary

Issues:
1. Rejection of application for exemption u/s.80G(5)(vi) of Income Tax Act, 1961.
2. Determination of noticeable charitable activities for granting recognition u/s.80G.
3. Discrepancy in granting registration u/s 12AA and rejecting recognition u/s 80G.

Analysis:

1. The assessee appealed against the Commissioner of Income-tax (Exemption) [CIT(E)], Bengaluru's order rejecting the application for exemption u/s.80G(5)(vi) of the Income-tax Act,1961. The CIT(E) found that the assessee did not carry out noticeable charitable activities based on the Trust Deed information. The assessee contended that educational activities were conducted, submitted evidence, and argued that recognition u/s.80G should be granted as educational activities fall under charitable activities as per the Act.

2. The Appellate Tribunal observed that while the CIT(E) rejected recognition u/s.80G, registration u/s 12AA was granted to the assessee on the same day. The Tribunal noted that the CIT(E) found the lack of noticeable activities as a reason for rejection, which was deemed subjective. Citing a similar case, the Tribunal emphasized that rejection based on lack of noticeable activity was not sufficient grounds for denial of recognition u/s.80G. The Tribunal directed the matter to be reconsidered by the CIT(E) in light of the registration u/s 12AA and to provide the assessee with a fair hearing opportunity.

3. The Tribunal allowed the appeal for statistical purposes, restoring the issue of granting recognition u/s.80G back to the CIT(E) for fresh adjudication. The Tribunal highlighted the discrepancy in granting registration u/s 12AA and rejecting recognition u/s 80G on the same day, emphasizing the need for a consistent approach in evaluating charitable activities for exemptions under the Income Tax Act.

In conclusion, the judgment addressed the issues raised by the assessee regarding the rejection of recognition u/s.80G, emphasizing the need for a fair assessment of charitable activities and consistency in decision-making processes within the Income Tax framework.