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TMI Blog2009 (12) TMI 676X X X X Extracts X X X X X X X X Extracts X X X X ..... to the assessee thus causing violation to the principles of natural justice; 5. The fact that the Trust had received donation but has not started the construction of its building can be no basis for denial of exemption under section 80G; 6. Making of donation to another Trust running educational institutions pursuant to the objects of the assessee-Trust could be no ground in law to deny the exemption to the assessee-Trust; 7. There was no default on the part of the assessee in furnishing the information as CIT himself has conceded that the details were furnished on the last hearing." 2. In brief the facts relating to the issue of approval of exemption under section 80G of Income-tax Act involved in the grounds of appeal of the appellant-assessee are that the appellant filed its petition in Form No. 10G under rule 11AA on 29-12-2008 for grant of exemption under section 80G of the Act. 3. On receipt of the application the Commissioner of Income-tax called for the report from the Asstt. CIT, Range Noida, Noida vide this office letter dated 31-12-2008. In response to this letter, in his report dated 16-6-2009, the Asstt. CIT, Range Noida has submitted that even after 13 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation, but certainly considered that appearance before the Bench on 19-11-2009, for which he had specifically requested, was not very important for him for which he moved the application without specifying the unavoidable work. We are constrained to condemn this conduct of the trustee of the appellant-trust in taking the Tribunal for granted in expecting once it informs the Bench through an adjournment application, without moving the same through an authorised person, the Tribunal is bound to grant the adjournment. In these circumstances, we rejected the application for adjournment vide a separate order on record and, thereafter, proceeded the appellant ex parte and heard the ld. DR for the revenue, perused the record, and order of Commissioner of Income-tax as well as the relevant case law filed by the ld. DR, i.e., Kirti Chand Tarawati Charitable Trust v. DIT (Exemption) [1998] 232 ITR 11 (Delhi) and CIT v. Red Rose School [2007] 163 Taxman 19 (All.) and decided the appeal on merits. 8. Now, before proceeding to decide this appeal, we consider it appropriate to state certain facts borne out from the record of the Tribunal. In the instant case, the appellant-inst ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... similar heads. 8.2 After stating the relevant and important facts, we would like to state that relevant provisions of sub-rule (3) of Rule 11AA, read with section 80G states as follows: "The Commissioner may call for such further documents or information from the institution or fund or cause such inquiries to be made as he may deem necessary in order to satisfy himself about the genuineness of the activities of such institution or fund." 8.3 Firstly, we would like to take up ground No. 4 of the appeal of the assessee where the assessee seems to be aggrieved from the order of Commissioner of Income-tax as, according to the assessee, the Commissioner of Income-tax has relied solely upon the report of the Asstt. CIT dated 16-6-2009 which was not at all confronted to the assessee thus causing violation to the principles of natural justice. During the course of arguments, we simply put one question to the ld. AR for the assessee, i.e., whether the facts stated in the report of the Asstt. CIT were not correct, and his single answer was that facts stated in the report of the Asstt. CIT were not wrong. We fail to understand how such a report can prejudice the assessee if taken ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enquiry regarding genuineness of the activities cannot be stretched beyond this." 10. Before us, the learned AR for the assessee laid stress on his arguments that once the appellant has been granted registration under section 12AA, then for the purpose of granting approval under section 80G, the Commissioner should have confined himself to the scope of scrutiny only to the purposes as set out in the deed of trust without disagreeing to actual activities or activities whether started by the applicant or not. It was further contended that the scheme underlying this relevant provision of the Income-tax Act shows that the legislative intent to grant exemption from Income-tax to the donation made to a charitable trust makes the donation to a trust with charitable purposes as spelt out from the objects set out in the trust deed, then the donation must enjoy exemption though the assessee s charitable activity has not extended for imparting education except in the purchase of land from the date of inception of the trust and from the date of accumulation of corpus of the trust in the shape of donations received by the appellant. Perhaps, from this argument, the learned AR for the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t necessarily remain confined to the objects of the trust as set out in the deed of declaration but we should also look into the real purpose/object of the assessee which is distinguishable from the ostensible purpose to see whether the main charitable activity of the trust has been carried out by the appellant from the date of registration of the trust while considering the question of approval under section 80G of the Income-tax Act. 10.2 Further, Their Lordships in this very decision ( supra ), while laying importance for the grant of approval made following significant observations to show that how the donors could be trapped for making donations for the purpose of charitable activity with the appellant from the date of inception of the grant of registration under section 12AA have not even ventured to carry out the charitable activity as spelt out in the main object: "10. Once a trust has approval from the CIT, the trust can persuade the donors into making donations. The donors would be persuaded to make such donations influenced by the approval unmindful of the fact that their donations were going to be utilized for religious purpose as distinguished from charitable pu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rding a finding that the society failed in establishing that it has constructed school/college and it is imparting education and, consequently, failed to satisfy about the genuineness of the activities of the appellant society/institution. 10.4 In the instant case, undisputedly, the institution was granted registration under section 12A on 9-10-1996 but except procuring land for a sum of Rs. 13,13,721 out of the corpus funds/donation of Rs. 52,36,000 the appellant has not even started the construction activity of the building of school/college where it could impart education to students to achieve the main object of the society. It appears that during this entire period till date the society s main object was to muster as much donation towards corpus as it could, totally ignoring the responsibility of taking any steps towards achieving its main object of constructing school/college for imparting education. On the contrary, on examining the income and expenditure statement of the society, placed on record of the Tribunal, we find that in the years ending on 31-3-2006, 31-3-2007 and 31-3-2008, the society has merely incurred an expenditure of Rs. 9,613, Rs. 8,301 and Rs. 11,720 r ..... X X X X Extracts X X X X X X X X Extracts X X X X
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