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TMI Blog2008 (4) TMI 396X X X X Extracts X X X X X X X X Extracts X X X X ..... hearing before us, there was good deal of discussion on the objections raised by the Assessing Officer in the course of assessment years 2003-04 and 2004-05 and arguments on merits were advanced by both the sides. However, as learned CIT(A) is in season of the matter, we refrain from making any specific observations on these aspects. Suffice to say that prima facie correctness of the findings of the Assessing Officer cannot be said to be entirely free from doubt and, in any event, these findings at best challenge assessee s compliance with certain rule and procedures which do not, in any way, challenge the fact charitable activities actually having been carried out. Therefore, based on these findings, one cannot come to the conclusion that the charitable activities of the assessee society were not genuine in any event, as we have stated earlier as well, all that the learned CIT has to see, for the purpose of deciding whether or not the approval is to be granted for the purpose of section 80G is whether or not the conditions of section 80G(5)(i) to (v) are satisfied, and, as per the mandate of rule 11AA(4), once these conditions are satisfied, he has to grant the approval. Genuinen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - Maintaining accounts in respect of such unauthorized collections separately, viz., under miscellaneous account, and taking it directly to the balance sheet without admitting it as income; - Collecting from the students contribution to development fund which, considering the same are over and above the normal fees are in the nature of capitation fees; - Taking such development funds directly to the balance sheet without routing the same through profit & loss account; - Treat donations which have not been specifically given towards corpus donation as 'corpus donation' and thus not showing such donations as income, where the same should have been so shown as per the provisions of section 12(1). 3. It was in this backdrop that the CIT required the assessee applicant to show cause as to why, in view of the above findings against the assessee in the assessment orders for the assessment years 2003-04 and 2004-05 and in view of the fact that there has been a denial of complete exemption under sections 11 and 12, the assessee should not be deemed to be not complying with the provisions of section 80G(5)(i). It was explained by the assessee that the denial of exemption under section 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the institution or fund for the last three years or since inception, whichever is less, and (iii) copies of accounts of the institution or fund for the last three years or since inception, whichever is less. The CIT is also empowered to call for further documents or information from the trust or institution, or cause such enquiries to be made, as he deems fit, in order to satisfy himself about the genuineness of activities of such trust or institution. Where the CIT is satisfied that all the conditions laid down in clauses (i) to (v) of section 80G(5) are fulfilled by the applicant trust or institution, the CIT is to grant the approval specifying the year or years for which such approval is valid. In case the CIT is not satisfied about these conditions being satisfied, he shall reject the application for approval, after recording reasons for such rejection in writing. The provisions of section 80G(5)(i) to (v), on the basis of which the CIT has to grant or reject the application seeking approval under section 80G, are as follows:-- "(i) where the institution or fund derives any income, such income would not be liable to inclusion in its total income under any of the provisions o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... additional evidence as the assessee received the above notification after proceedings before the CIT were already concluded. Having heard the parties on the petition seeking admission of this additional evidence, we deem it fit and proper to admit the same. By way this notification, exemption under section 10(23C) is granted on the following conditions:-- (i) The assessee will apply its income or accumulate for application, wholly and exclusively to the objects for which it is established; (ii) The assessee will not invest or deposit its funds (other than voluntary contributions received and maintained in the form of jewellery, furniture, etc.) otherwise than in any one or more of the forms or modes specified in sub-section (5) of section 11; (iii) This notification will not apply in relation to any income being profits and gains of business, unless the business is incidental to the attainment of the objectives of the assessee and separate books of accounts are maintained in respect of such business; (iv) The assessee will regularly file its return of income before the IT authority in accordance with the provisions of the Income-tax Act, 1961; (v) In the event of dissolution, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ess of the charitable activities or on the basis of his apprehensions about possible non-fulfilment of the conditions subject to which exemption from income if granted. 9. In our considered view, [for the purpose of deciding on whether or not to grant approval under section 80G, a CIT has to only examine whether or not the conditions set out in section 80G(5)(i) to (v) are satisfied. The first and foremost thing to be seen is whether or not any income earned by the assessee is not being liable to inclusion in its total income under any of the provisions of sections 11 and 12 or clause (23AA) or clause (23C) of section 10. It has to be borne in mind that since the assessee is granted approval for the future years, and since there is no way that anyone can have the clairvoyance of knowing whether or not the assessee will be able eventually to comply with the conditions, if any attached to the exemptions, as long as the exemption is available in principle arid as long as the assessee can reasonably claim to be able to satisfy the conditions attached to such exemption, one has to proceed on the basis that the condition laid down under section 80G(5)(i) is satisfied. It cannot (be) ope ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 80G(5)(v), the CIT has to ensure that the assessee institution or fund has the nature of one of the organizations specified in that clause. The societies registered under Societies Registration Act, 1960, as admittedly the assessee is, are one such form of organization. This condition is also therefore satisfied. In the course of hearing before us, there was good deal of discussion on the objections raised by the Assessing Officer in the course of assessment years 2003-04 and 2004-05 and arguments on merits were advanced by both the sides. However, as learned CIT(A) is in season of the matter, we refrain from making any specific observations on these aspects. Suffice to say that prima facie correctness of the findings of the Assessing Officer cannot be said to be entirely free from doubt and, in any event, these findings at best challenge assessee's compliance with certain rule and procedures which do not, in any way, challenge the fact charitable activities actually having been carried out. Therefore, based on these findings, one cannot come to the conclusion that the charitable activities of the assessee society were not genuine in any event, as we have stated earlier as well, a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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