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2020 (12) TMI 173 - AT - Income TaxExemption u/s 80G denied - assessee duly registered under section 12AA - CIT(E) was of the opinion that it is not possible to verify the genuineness of the objects and activities of the trust since there is no sufficient activities carried on by the assessee - HELD THAT - Presently in the institution totally 400-450 students are studying from LKG to 7th Standard. The appellant has provided details of the fee collection and expenditure spent from Assessment Year 2017-18, 2018-19 and 2019-20 - It can be rightly said that the assessee is carrying on its objects. Being so, there is no merit in the finding of CIT(E) that there are no sufficient activities carried on by the assessee. The original objects continue to exist and assessee is a charitable institution and assessee is eligible for continuation of recognition under section 12A/12AA of the Act. Principle of consistency is also in favour of the assessee as based on the factual position. The assessee is carrying on the same objects as approved by the Department. Being so, there is no justification for rejecting the application for renewal under section 80G The judgment relied on by the CIT(E) in its order is with regard to the fact that approval is not automatic since no charitable activities were being carried on by that assessee. In the present case, assessee filed details wherein assessee clearly demonstrated that assessee has been running the educational institution and it is not dormant and assessee being so, we direct the CIT(E) to grant the recognition under section 80G - Decided in favour of assessee.
Issues:
1. Recognition under section 80G denied by CIT(E). 2. Allegation of insufficient activities by the assessee trust. 3. Rejection of application for recognition under section 80G. 4. Justification for granting recognition under section 80G. Issue 1: Recognition under section 80G denied by CIT(E): The appeal was against the CIT(E)'s order denying recognition under section 80G of the Income Tax Act, 1961. The CIT(E) based the denial on the lack of verifiable activities by the assessee trust. He cited precedents where grant of exemption was not automatic if activities were not evident. The assessee argued that their main activities were education-related, running an institution recognized by the Government of Karnataka. Financial statements showed significant fees collected and expenditures incurred, supporting their claim of noticeable activities. Issue 2: Allegation of insufficient activities by the assessee trust: The CIT(E) contended that the trust had not carried out sufficient activities to warrant recognition under section 80G. However, the assessee argued that the trust's primary focus was on providing education, with around 400-450 students enrolled. They highlighted the charitable nature of their activities, emphasizing that they catered to poor students without any discrimination based on caste, creed, or religion. The assessee maintained that the trust's educational initiatives demonstrated substantial and ongoing activities. Issue 3: Rejection of application for recognition under section 80G: Despite the trust's registration under section 12AA and approval for relief of the poor and educational advancement, the CIT(E) rejected the application for recognition under section 80G. The assessee contended that the rejection was unjustified, especially since the trust had consistently engaged in charitable activities, as evidenced by their educational institution's operations. They argued that the CIT(E)'s reliance on specific judgments was misplaced and not applicable to their case. Issue 4: Justification for granting recognition under section 80G: The Tribunal analyzed the case, noting that the trust met the conditions for recognition under section 80G, as it was duly registered under section 12AA and engaged in charitable activities. The Tribunal found no merit in the CIT(E)'s assertion of insufficient activities, emphasizing the trust's continued pursuit of its approved objectives. The Tribunal upheld the principle of consistency, highlighting that the trust's activities aligned with the approved objects. Consequently, the Tribunal directed the CIT(E) to grant recognition under section 80G, allowing the appeal of the assessee. This comprehensive analysis of the judgment highlights the key issues raised, the arguments presented by the parties, and the Tribunal's decision in favor of granting recognition under section 80G to the assessee trust.
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