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2020 (5) TMI 16 - AT - Income TaxExemption u/s 11 - refusing to grant recognition u/s 80G - genuineness of the activities for grant of approval u/s 80G 5 (vi) cannot be verified - Assessee is a charitable trust established vide trust deed to run either with the college (education) and also to carry out charitable activities under relief of poor AND assessee obtained registration under section 12AA - HELD THAT - Undisputedly, assessee has been granted registration under section 12 AA of the Act, and that there is nothing on record brought out by authorities below, or Ld.CIT DR regarding violation of objects of Trust. Grant of approval/recognition u/s 80 G can act as catalyst to encourage prospective donors to look at intended activities/objects and possibly provide financial support through donations/contributions. In the facts of present case, assessee was holding valid registration under section 12 AA as on date of impugned order, which conversely means that Ld.CIT (E) was satisfied with objects of assessee in not disputing the registration under section 12 AA. Reasons cited by Ld. CIT(E)(supra), are not the requirements mandated by provisions of the act, and cannot be the basis for rejection of assessee s application for recognition under section 80G. We also notice that Ld.CIT(E) has not examined the application of assessee in terms of section 80 G (5) - we remand the question of grant of approval under section 80 G (5) (vi) to Ld.CIT (E) for fresh consideration - Decided in favour of assessee for statistical purposes.
Issues:
- Rejection of application seeking recognition under section 80G of the Income-tax Act, 1961 Detailed Analysis: The appeal was filed against the order of the Ld. CIT (Exemption), Bangalore, rejecting the application for recognition under section 80G of the Income-tax Act, 1961. The assessee, a charitable trust, had obtained registration under section 12AA of the Act but faced rejection for 80G recognition. The rejection was based on the grounds that the trust generated surplus annually, with a major portion of receipts from tuition fees, and therefore did not qualify for 80G recognition. The Ld. CIT (Exemption) emphasized the need to verify the genuineness of the trust's activities for granting approval under section 80G. The rejection was challenged by the assessee on the basis that the charitable nature of the trust's objects was evident, and all necessary details had been submitted. The Ld. AR argued that the rejection lacked a basis and cited precedents to support the appeal. The Ld. CIT (Exemption) justified the rejection by highlighting the need to assess the trust's activities and objectives for granting recognition under section 80G. However, the appellate tribunal noted that the rejection lacked a proper examination of the application in accordance with the provisions of the Act. The tribunal observed that the Ld. CIT (Exemption) had not evaluated the application under section 80G(5) of the Act and had not provided a valid reason for the rejection. In light of this, the tribunal referred to previous decisions where similar issues were remanded for fresh consideration. Consequently, the tribunal allowed the appeal for statistical purposes and directed the Ld. CIT (Exemption) to reevaluate the application for recognition under section 80G, ensuring proper opportunity for the assessee to present their case. In conclusion, the appellate tribunal found merit in the appeal challenging the rejection of the application seeking recognition under section 80G of the Income-tax Act, 1961. The tribunal emphasized the importance of a thorough evaluation of the trust's activities and objectives while considering such applications. The decision highlighted the need for proper assessment in accordance with the provisions of the Act and directed a fresh consideration of the application by the Ld. CIT (Exemption) to ensure a fair opportunity for the assessee to present their case.
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