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TMI Blog2017 (5) TMI 633X X X X Extracts X X X X X X X X Extracts X X X X ..... table activities - Held that:- Regarding the activities carried out by the appellant towards achievement of its charitable objectives, the CIT(E) has stated that the assessee has entered into memorandum of understanding with Digital Empowerment Foundation on dated 10.08.2015 with a focus to benefit the inaccessible people in the villages of India with wireless connectivity.” Further, the ld CIT(E) noted that the assessee has alloted funds of ₹ 26,35,440/- for solar work at Guatemala City and ₹ 51,94,250/- for solar work at Philippine. The ld CIT(E) therefore acknowledges all these facts and the only reason stated to be non carrying out any significant activity by the assessee. In our view, given the fact that the assessee has only been incorporated around an year back and there are actions which are taken by the assessee towards achieving its charitable objectives which are not doubted, the approval under section 80G cannot be denied solely on this ground and to this extent, we do not concur with the ld CIT(E). The fact remains that the assessee has not obtained the approval under section 11(1)(c) of the Act and in absence of the same, the application under section 8 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dition that such income would not be liable to inclusion in its total income under the provisions of section 11 shall not apply in relation to such income, if (a) the institution or fund maintains separate books of account in respect of such business; (b) the donations made to the institution or fund are not used by it, directly or indirectly, for the purposes of such business; and (c) the institution or fund issues to a person making the donation a certificate to the effect that it maintains separate books of account in respect of such business and that the donations received by it will not be used, directly or indirectly, for the purpose of such business; (ii) the instrument under which the institution or fund is constituted does not, or the rules governing the institution or fund do not, contain any provision for the transfer or application at any time of the whole or any part of the income or assets of the institution or fund for any purposes other than a charitable purpose; (iii) the institution or fund is not expressed to be for the benefit of any particular religious community or caste; (iv) the institution or fund maintains regular acco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at it would receive would not be liable to inclusion in its total income under the provisions of section 11 and 12 of the Act. 2.4 It was accordingly submitted that in view of the above submission, the assessee company fulfill all the conditions laid down for approval u/s 80G(5)(vi) of the I. T. Act, 1961 and the objections raised by the Ld. CIT (Exemption) are not relevant in the context of approval sought for. The necessary directions may accordingly been given to the Ld. CIT(Exemption) to grant approval u/s 80G(5)(vi) of the I.T. Act, 1961 to the assessee company. 3. We now refer to the relevant findings of the Ld. CIT(E) which are under challenge before us. The same are reproduced as under:- 3. From the plain reading of section 80G(5) and rule 11AA, it becomes clear that activities carried on by the organization as well as maintenance of accounts are to be given due importance at the time of granting exemption u/s 80G(5). The trust has the following main object:- 1. To encourage traditional and rural handicrafts skills as well as to reassess and provide support to those with talents and protect their partnership. 2. To help the artisans change the traditi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , it is seen that the applicant has allotted funds of ₹ 26,35,440/- for solar work at Guatemala City and ₹ 51,94,250/- for solar work at Philippine. Thus, the applicant primarily intends to carry out the activities outside India. As per the provisions of the Act, the activities outside India cannot be carried out without obtaining prior approval from competent authority u/s 11(1)(c). 6. Thus, it can be seen the applicant his simply collected funds and has not carried out any significant charitable activities. In view of this, the case does not seems to be fit for granting exemption u/s 80G at this stage. 4. We have heard the rival contentions and perused the material available on record. Regarding the first contention of the ld. AR, it was submitted that the requirement of Section 80G is that the institution should be established in India for a charitable purpose and it nowhere mentions that the scope of activities to be carried out within India or outside India. As per the ld. CIT(E), the assessee has alloted funds of ₹ 26,35,440/- for solar work at Guatemala City and ₹ 51,94,250/- for solar work at Philippine and on basis of these facts, it was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stated as one of the conditions subject to which the approval has been granted under section 12AA(1)(b) of the Act wherein it is stated that As per clause NO. 4 of the MOA, the applicant company intends to work outside India, therefore exemption under section 11 12 will be allowed subject to approval u/s 11(1)(c) from the competent/prescribed authority as per the Income tax Act, 1961. 4.4 Neither any contentions has been raised by the ld AR before this Bench nor there is any material available on record to suggest that the assessee has contested the applicability of section 11(1)(c) in its case or for that matter, the grant of the approval under section 12AA subject to fulfillment of such condition of seeking the necessary approval under section 11(1)(c) of the Act. Further, the facts as noted by the ld CIT(E) that the assessee has already alloted funds of ₹ 26,35,440/- for solar work at Guatemala City and ₹ 51,94,250/- for solar work at Philippine, it shows clearly not just the intent but actual conduct of the assessee where it likes to carry out activities outside of India. Therefore, the applicability of section 11(1)(c) remains undisputed before us. 4.5 No ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plication before the ld. CIT (E) for grant of registration u/s 12AA(1)(b) of the Act as well as an application seeking approval u/s 80G(5)(vi) of the Act. Interestingly, on the same date i.e, 27.06.2016 when the approval under section 12AA(1)(b) was granted by the ld CIT(E), the application under u/s 80G(5)(vi) was rejected. 4.6 On perusal of Section 80G(5) as well as Rule 11AA, what is required to be seen is whether the institution/fund has been established in India for a charitable purpose or not. Secondly, it lays down certain additional conditions under clause (i) to clause (v) which are required to be fulfilled. Rule 11AA provides that where the CIT is satisfied that one or more of the conditions specified in clause (i) to clause (v) of section 80G(5) are not fulfilled, he shall reject the application for approval after recording his reasons for such rejection. In the instant case, the appellant has been duly registered under section 12AA which shows beyond any doubt that ld CIT has already verified the genuineness of the objects and its activities are not doubted by the CIT. Hence, having granted registration u/s 12AA, the first condition regarding establishment of institu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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