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TMI Blog2019 (5) TMI 837X X X X Extracts X X X X X X X X Extracts X X X X ..... s' returns of income have been subject to the verification procedure under the Act, as for AYs. 2009-10, 2010-11 and 2012-13 (PB pg. 253-260). The competent authority has, in not allowing approval u/s. 80G(5)(vi), traveled outside his purview in-as-much he has questioned the need of the assessee to seek donations, i.e., in view of its' huge surplus and cash reserves. As long as the assessee's objects are charitable and its' activities not found not genuine, the onus for which is on the Revenue, approval u/s. 80G(5)(vi) could not be denied. A mere apprehension that the donations shall be misused is no ground for denying the said approval. As clarified by the Hon'ble jurisdictional High Court in CIT v. Sant Girdhar Paramhans Sant Ashram (in ITA No. 50 of 2018, dated 16.5.2018 / PB pgs. 320-324), the Revenue is at liberty to withdraw registration u/s. 12AA as well as approval u/s. 80G(5)(vi) in case it discovers such a misuse, i.e., donations solicited to secure admission to various professional, i.e., medical, paramedical and engineering, etc., colleges being run by the assessee-society. There is nothing on record, or in its' conduct, to doubt the assessee's intent or apprehend 'misu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... course possible to sift the chaff from the straw, i.e., distinguish between the actual voluntary contributions from such solicited and contrived ones. It therefore becomes incumbent on a higher appellate body, as the tribunal, to, instead of allowing the menance to prosper, strength the measures to check it, as by denying approval u/s. 80G. It is not beyond the pale of the tax jurisprudence to do so; rather, it is the bounden duty of the tribunal to do so. 3. We have heard the parties, and perused the material on record. 3.1 To begin with, it may be clarified that registration u/s. 12AA per se cannot be regarded as determinative of the approval u/s. 80G(5)(vi). That is, the registration u/s. 12AA shall not ipso facto result in grant of approval u/s. 80G(5)(vi), which would rather make the latter provision otiose. This stands clarified by the Hon'ble jurisdictional High Court in Sonepat Hindu Educational & Charitable Society v. CIT [2005] 278 ITR 262 (P&H), relied upon by the assessee (PB pgs. 15-20), para 14 of which, also read out during hearing, reads as under: '14. From the afore-extracted provisions, it is evident that the first and foremost requirement which the institu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he activities under rule 11AA(3). The same, vehemently argued before us, would therefore form the subject matter of the ensuing discussion. 3.3 The only basis cited is the absence of any demonstrated need for donations, which the assessee-society shall have a better access to in view of a tax advantage for the donors on being granted approval u/s. 80G(5)(vi), and the concomitant possibility of its' 'misuse'. The genuineness of the activities is essentially a matter of fact. The same no doubt has to be regarded in a broader perspective, having regard to the socio-economic context and conditions in which the assessee-society operates. We are also conscious that both the registration u/s. 12AA as well as approval u/s. 80G(5)(vi) are a part of the regulatory framework instituted to screen applications, and accord sanction. A larger play in the joints, which is also a characteristic of the interpretation of fiscal statutes, particularly where laying down conditionalities, is accordingly to be allowed (refer: Jain Brothers v. Union of India [1970] 77 ITR 107 (SC)). However, 'genuineness' of activities should ordinarily imply activities as undertaken and not that may possibly be in futu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l u/s. 80G. It may here be pertinent to draw attention to the observations of the Hon'ble jurisdictional High Court in Sonepat Hindu Educational & Charitable Society (supra), requiring the competent authority to enquire into the 'real purpose' of the applicant, i.e., distinct and apart from that stated in the memorandum of objects, as well as that in Sant Girdhar Paramhans Sant Ashram (supra), also read out during hearing, that a mere possibility of misuse cannot result in denial of approval. The need to ascertain the 'real purpose', as against the 'ostensible purpose', while granting approval u/s. 80-G(5)(vi) by the competent authority, is therefore to be weighed against, and ought not to denigrate to ousting applications on a mere possibility of misuse. That is, while the Revenue is empowered to, nay, duty bound to, ascertain the 'real purpose', as opposed to an 'ostensible purpose', a mere possibility of misuse (of donations) cannot have the sanction of law. Stated differently, the said possibility, for the same to result in a valid denial of approval in law, must be something more, what we have referred to as a 'distinct possibility'. The same would be a finding of fact, open t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion is to be necessarily forward looking, i.e., future oriented. This is as what it seeks to regulate concerns what is planned for or likely to be undertaken? Enquiry into the need for donations, the very purpose for which they are to be given, and the persons from whom they are expected to arise in-as-much as a better access to donations is an additional benefit that accrues to a charitable institution upon approval u/s. 80G (5), is not precluded, particularly considering the applicant to be flush with funds, and the fact that donations normally arise to a charitable institution to support its' activities, i.e., to meet the deficiency in its' funding. A non-satisfactory or an evasive answer, as in the present case by the assesseesociety, again, does not help it's cause. However, that would not translate into an inference as to the donations being sought for an ulterior purpose as imminent, particularly considering that the assessee-society has in the past not been shown to undertake any illegal activity, i.e., even when it had s. 80G approval (up to 31.3.2009), as well as the fact that giving an admission in lieu of consideration is illegal. True, it is not easy to identify the sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t authority to grant the said approval. The assessee shall, however, give a legal undertaking to the Revenue that it shall not seek contributions, directly or indirectly, from persons who (or whose wards seek admission) to various educational or training institutions run, or may be run, by the assessee-society. The order by the tribunal in Adesh Welfare Society (Regd.) (supra), relied upon, we are conscious, does not speak of any such stipulation. The said order, as it's reading would show, does not consider the aspect of the possible misuse of donations, i.e., as liable to misuse, given the dominant position the institutions offering professional courses enjoy vis-à-vis those seeking admission thereto, which we perceive as the principal, nay, the only issue arising in the present case. And which we have found in principle to be a relevant consideration, though has to be based on a firm footing. The assessee society has in fact through its' counsel strongly denied any such intention, claiming of it being an unfounded apprehension being entertained by the competent authority. It could not accordingly have any possible objection in binding itself to what it claims before us. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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