2020 (2) TMI 891 - HC - Income Tax

Exemption u/s 11 - assessee continuing to be registered u/s 12AA - extension of exemption under Section 80G of the Act which was denied by the subordinate authorities - HELD THAT - Tribunal correctly relied upon the judgment of this Court in CIT Vs. Shri Vishav Namdhari Sangat 2013 (2) TMI 294 - PUNJAB HARYANA HIGH COURT holding that Circular No. 5/2020 and Circular No.7/2010 issued by Central Board of Direct Taxes had given perpetuity to the exemptions granted under Section 80G(5) of the Act and consequently, allowed the exemption to continue. - Decided in favour of assessee

Summary

Issues involved:
1. Interpretation of Section 80G of the Income Tax Act, 1961.
2. Registration requirements under the Societies Registration Act, 1860.
3. Compliance with utilization of trust property for stated objects.
4. Allegations of creating a trust for vested interests.
5. Validity of amending a trust declared irrevocable.

Analysis:
1. The appeal was filed against the ITAT's order denying an application for extension of exemption under Section 80G of the Income Tax Act. The Tribunal relied on a judgment holding that Circulars issued by the CBDT had given perpetuity to exemptions under Section 80G(5). The primary issue was whether the ITAT was correct in allowing the exemption to continue based on this judgment.

2. The questions of law framed included the ITAT's direction for registration instead of re-examination in light of a judgment by the Allahabad High Court. The issue raised was whether the ITAT had the authority to direct registration without proper satisfaction by the Registering Authority. Additionally, the necessity of registration under the Societies Registration Act, 1860, when already registered as a Trust was questioned.

3. The ITAT's decision was also challenged regarding the utilization of trust property for the stated objects. The appellant argued that the trust had not applied the property to the extent required by law, raising concerns about compliance with the trust's objectives.

4. Allegations were made that the trust was created for vested interests, with promoters using it to dispose of capital assets tax-free under the guise of charity. The ITAT's decision to disregard these allegations was a point of contention in the appeal.

5. Lastly, the validity of amending a trust originally declared irrevocable was disputed. The ITAT's decision to overlook the amendment made by a supplementary trust deed was a subject of debate in the appeal.

In conclusion, despite the acknowledgment of the judgment in a similar case, the High Court dismissed the appeal, indicating that the ITAT's decision was upheld. The judgment did not find merit in the appellant's arguments, leading to the dismissal of the appeal and disposal of any pending applications.