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TMI Blog2012 (11) TMI 270X X X X Extracts X X X X X X X X Extracts X X X X ..... ution or fund an opportunity of being heard". 4. That rejection order of the learned DIT(E), New Delhi are received on 16th September, 2011 which is barred by time as prescribed in the Income Tax Rules, 1962 as the assessee filed application on 8th March, 2011. The time limit with in which the Commissioner shall pass an order either granting the approval or rejection the application, shall not exceed six months from the date on which such application was made." 2. Facts, in brief, as per relevant order are that the aforesaid foundation submitted an application in Form No.10G on 8.3.2011, seeking approval u/s 80G(5)(vi) of the Act. On receipt of the application, DIT(E) vide letter dated 6.4.2011 sought certain details as mentioned on page 1 of the impugned order. In response, the assessee after seeking few adjournments filed relevant details and documents. On perusal of these details and accounts for period relevant to the AYs 2009-10 and 2010-11, the DIT(E) noticed that the foundation was involved in charitable activity by giving scholarship, financial assistance and seminar for poor and needy people/students or children. To a query by the DIT(E), the assessee trust submitted yea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assistance through the above said trust created by the company which ultimately resulted the benefit of the commercial entity and not the general public at large. 6.In view of above facts and circumstances of the case, the contention of the applicant that it is doing charitable activity by helping poor and needy children in the form of scholarship and assistance is not tenable, as its activity is only for a particular section/group or employees of a company who is founder of the trust. 7.In view of above fact and of documentary evidences of charity that applicant is not involved in charitable activities and it could not be established that applicant satisfies the conditions laid out u/s 80G(5) of the Income-tax Act, 1961. Therefore, the appellant's application furnished in Form No.10G for exemption u/s 80G of the Income-tax Act, 1961 is rejected." 3. The assessee trust is now in appeal before us against the aforesaid findings of DIT(E). The ld. AR on behalf of the foundation while carrying us through the education grant policy framed by the trust for employees of M/s Select Holiday Resorts Pvt. Ltd. contended that the DIT(E) was not justified in refusing the approval u/s 80G(5)( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e higher education, study and research particularly in the field of travel tourism etc., is registered u/s 12A of the Act on 20th September, 1973 and all along approval u/s 80G(5)(vi) of the Act was being granted, latest being on 16th June, 2008 for the period 01.04.2008 to 31.03.2011. Even when the registration u/s 12A of the Act has not been withdrawn, the ld. DIT(E) declined to renew the approval u/s 80G(5)(vi) of the Act for the period after 31.3.2011 on the ground that scholarship/financial assistance was awarded to the children of the employees of Select Holiday Resorts (P) Ltd. and that not any other child apart from sons/daughters of employees of Select Holiday Resorts (P) Ltd., was the beneficiary . As pointed out by the ld. AR , financial assistance has been provided to only those employees in the wage category below Rs.10,000/- pm. There is nothing in the objects of the trust that only the employees of Select Holiday Resorts (P) Ltd. or their children alone would be the beneficiaries. There is no obligation cast on the trustees to prefer the employees of the aforesaid company and it is for the trustees to exercise their discretion. If a member of the public also happens ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vi) of the Act.. 5. Even otherwise, registration granted to the assessee as a charitable trust is subsisting and no material has been placed before us that the same has been or is intended to be withdrawn. In such circumstances, renewal of approval u/s 80G(5)(vi) of the Act could not be denied to the assessee as held by a coordinate Bench in Mayo College Old Boys Association(supra).Following this decision, similar view was taken in another decision dated 20.4.2011 by a coordinate bench in I.T.A. No.218/D/09 in the case of Maharishi Dayanand Education Society and decision dated 25.2.2011 in I.T.A. No.4456/D/09 in the case of Aggarwal Sabha. 6. Indisputably, in the instant case, approval u/s 80G(5)(vi) of the Act was granted until 31.3.2011. and vide application dated 8.3.2011, the assessee sought renewal of the approval for further period. In this connection in the case of M/s Association for Advocacy and legal initiatives, Lucknow Vs. CIT, the Lucknow Bench of ITAT vide their order dated 28.2.2011 in I.T.A. no.674/Luc./2010 while referring to omission of proviso to section 80G(5)(vi) of the Act w.e.f. 01.10.2009 by the Finance (no.2) Act of 2009 concluded that the approval once g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o to this clause provides that any approval granted under this clause shall have effect for such assessment year or years, not exceeding five assessment years, as may be specified in the approval. Due to this limitation imposed on the validity of such approvals, the approved institutions or funds have to bear the hardship of getting their approvals renewed from time to time. This is unduly burdensome for the bona fide institutions or funds and also leads to wastage of time and resources of the tax administration in renewing such approvals in a routine manner. Therefore, it is proposed to omit the proviso to clause (vi) of sub-section (5) of section 80G to provide that the approval once granted shall continue to be valid in perpetuity. Further, the Commissioner will also have the power of withdraw the approval if the Commissioner is satisfied that the activities of such institution or fund are not genuine or are not being carried out in accordance with the objects of the institution or fund. This amendment will take effect from 1st day of October, 2009. Accordingly, existing approvals expiring on or after 1st October, 2009 shall be deemed to. have been "extended in perpetuity un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otice against the proposed withdrawal to the assessee concerned and after giving a reasonable opportunity of being heard shall withdraw approval after recording reasons for doing so. The use of the word "shall" in the aforesaid proviso makes it mandatory for Commissioner of Income-tax to issue a show cause notice to the assessee against the proposed withdrawal of approval granted u/s. 80G(5) of the Act. However, in the present case no such show cause notice has been issued to the assessee. Therefore, we do not see any merit in this contention of the lad that the provisions contained in section 293C of the Act enables the ld. Commissioner of Income Tax to withdraw approval. We, therefore, considering the totality of the facts as discussed hereinabove are of the view that the ld. Commissioner of Income Tax was not justified in withdrawing approval once granted because the Legislature in all its wisdom has sought to omit this proviso to section 80G(5)(vi) of the Act and after omission of the said proviso, the approval once granted shall continue to be valid in perpetuity unless and until a show cause notice is issued by the concerned CIT showing his intention to withdraw already grant ..... X X X X Extracts X X X X X X X X Extracts X X X X
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