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TMI Blog1999 (5) TMI 11X X X X Extracts X X X X X X X X Extracts X X X X ..... he Act, income from any property held for charitable purposes, and under clause (d) of section 11(1) of the Act, income in the form of voluntary contributions made with a specific direction that they shall form part of the corpus of the trust or institution are not liable to be included in the total income of the previous year of the person in receipt of the income. Under section 12 any voluntary contributions received by a trust created wholly for charitable or religious purposes or by an institution established wholly for such purposes (not being contributions made with a specific direction that they shall form part of the corpus of the trust or institution) are for the purposes of section 11 deemed to be income derived from property held under trust wholly for charitable or religious purposes and the provisions of section, 11 as well as section 13 would apply. Section 12A of the Act envisages that the provisions under section 11 and, section 12 making certain income of trust or institution, wholly for charitable or religious purposes, exempt from inclusion in the computation of total taxable income would not apply unless an application for registration of the trust or institutio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ificate of an institution, donations to which qualify for deduction under section 80G, was being issued by the respondents. In pursuance of these statutory provisions effective from October 1, 1991, the petitioner applied for the approval of the trust for the purposes of section 80G and it was granted to the petitioner, in the first instance, on January 10, 1992, which was valid up to March 31, 1993. Thereafter, the approval was renewed for a further period of five years extending up to March 31, 1998. The petitioner, on the expiry of the period of approval, applied for renewal. That application has been rejected by the respondent Commissioner by the impugned order dated February 18, 1999. Before making the order, a notice was given to the petitioner on December 7, 1998, inviting clarifications of the petitioner on certain aspects of the matter. Ultimately, the only reason that prevailed with the Commissioner of Income-tax to deny the application for approval for a further period reads thus in the impugned order : "I have considered the submissions made by the trustee. For grant of recognition under section 80G(5) certain conditions have to be satisfied. The first condition as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rom. Since all donations generally are not treated as eligible for deduction, but only such donations as are made to funds or institutions named in sub-section (2) of section 80G are eligible for such deduction and as noticed by us above, it also includes a general clause "any fund or institution to which this section applies" a provision was needed to identify the trusts or funds or institutions not specifically named in the statute, but fell in that category. That object was achieved by enacting sub-section (5) of section 80G which helps identify the funds or institutions donation to which qualifies for deduction under section 80G. It provides that the funds or institutions referred to in subsection (2)(a)(iv) are such whose income would not be liable to be included in its total income under the provisions of sections 11 and 12 or clause (22) or clause (22A) or clause (23) or clause (23AA) or clause (23C) of section 10. Prior to the insertion of clause (vi), it being not a statutory requirement, even in the absence of a certificate under section 80G, it was possible for a donor to satisfy an Income-tax Officer independently about the eligibility of donation made by him for deduct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... derives income which is not ordinarily includible in its total income. The liability to assessment is not affected by issuance of recognition certificate or approval certificate issued under clause (vi) of sub-section (5) of section 80G nor it depends upon the fact whether the donor ultimately gets deduction in respect of such donation. It may be relevant to take cognisance that all donations are not in their entirety eligible for deduction. There exists a maximum limit also for such eligibility and donations beyond such limit by a person may not get deduction, even if it is to an approved institution under section 80G. Likewise, actual inclusion of any income in the assessment of the donee as taxable income, does not affect the entitlement of the donor to claim deduction under section 80G, if on the date when he made the donation the conditions were fulfilled. That was the law before the insertion of clause (vi) and apart from the fact that by introducing clause (vi) with rule 11AA, a method of proving the eligibility to claim deduction has been, provided by the statute, there has been no alteration in the substantive provision, that is to say, entitlement of the donor to claim d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pect. This we have noticed only for the purpose of showing, firstly, that as on the date when donation is made which is the relevant date for the purposes of claim of donor to deduction under section 80G it is not possible to point out what shall be the exact state of affairs that will exist at the close of the year nor is it possible for the person considering the application for approval, which requires to consider whether the income derived by such trust would not be liable to be included in its total income, to determine, as on the date of application whether the income which will henceforth be derived by the trust asking for approval, if it is otherwise eligible to claim exemption from the inclusion of such income in the taxable income, would in fact be entitled to sustain that claim to the fullest extent or not at the time of assessment. That is the jurisdiction and authority of the Assessing Officer to enquire into and make appropriate order at the time when assessment of the trust is being made. The authority examining the question whether a fund or institution is eligible to be certified for the purposes of section 80G is not to act as an Assessing Officer and pronounce up ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nal purposes and not for purposes of profit was not to be included in total income. Now if an approval is sought by such institution, what the approving authority can seek to enquire is whether the applicant university or educational institution which is solely existing for educational purposes, and whether its purpose is not to earn profit. Under clause (23) exemption is in respect of the income of an association or institution established in India which may be notified by the Central Government in the Official Gazette having regard to the fact that the association or institution has as its object the control, supervision, regulation or encouragement in India of the games of cricket, hockey, football, tennis or such other games or sports as the Central Government may, by notification in the Official Gazette, specify in this behalf. The application for approval in respect of any such institution, if it falls within clause (iv) of sub-section (2) of section 80G, an enquiry by the Commissioner could only extend to find out whether the association or institution is so notified under section 10(23). It cannot by itself examine the validity or correctness of the notification nor can it ..... X X X X Extracts X X X X X X X X Extracts X X X X
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