Renewal of exemption certificates under section 80G of Income Tax Act, 1961. - Income Tax - 931/CBDT

INSTRUCTION NO. 931/CBDT Dated : March 4, 1976 Section(s) Referred: 80G Statute: Income - Tax Act, 1961 Attention is invited to Instruction No 564 dated 3rd July 1973 (F.No. 180/46/72-IT-AI)* by which Commissioner of Income-tax were advised to grant renewal of the exemption certificates under section 80G of I.T.Act, 1961, for a period exceeding one year in suitable cases, subject to the overall limit of three years 2. Explanation 2 to Section 80G lays down that the deduction to which an assessee is entitled in respect of any donation made to an institution or fund to which subsection (5) of Section 80G applies shall not be denied merely on either or both of the following grounds:- (i) that subsequent to the donation, any part of the income of the institution or fund has become chargeable to tax due to non-compliance with any of the provisions of section 11, section 12 or section 12A; 3. The essential requirement, therefore, which would make a donation eligible for deduction would be that at the time of making the donation no part of the income of the institution or fund should have become chargeable to tax as contemplated in the situations described above. 4. A subsequent change in situation under which the institution becomes liable to tax would not dis-entitle the donors to exemption under section 80G unless steps are taken to have the exemption certificate withdrawn. Therefore, to safe-guard the interest of revenue, immediate remedial steps should be initiated as soon as the Income-tax Officer assessing the charitable Trust/Institution arrives at a finding that the Trust will not be satisfying the conditions of Section 11, 12, 12A or 13. It will, therefore, be the duty of the I.T.O. to immediately inform the C.I.T. so that the certificate can be withdrawn at once. Donations made thereafter will not, in turn, get the benefit of section 80G. 5. While reiterating their Instruction No 564 dated 3rd July, 1973 the Board, desire that the interests of revenue should be safeguarded by initiating remedial action as soon as it is noticed that a Trust will not be able to satisfy the requirements spelt out above.