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TMI Blog2019 (5) TMI 855X X X X Extracts X X X X X X X X Extracts X X X X ..... ision/plan of the applicant/assessee to undertake a project in the future of opening vridh ashram cannot be the reason for denying approval as being not part of its stated object, since as rightly pointed out by the assessee, the assessee has not undertaken the activity and it cannot be denied approval for contemplating carrying out in the future an activity not as per its stated objects since it can very well modify its objects when doing so . In the absence of any finding of the CIT(E), as required by law for granting approval u/s 80G regarding the charitable character and genuineness of the activities carried out by the assessee/applicant, we consider it fit to restore the issue back to the CIT(E) to reconsider the application of the assessee afresh and thereafter pass an order in accordance with law. We may add that the assessee be given due opportunity of hearing in this regard. Appeal of the assessee allowed for statistical purposes. - ITA No.987/Chd/2018 - - - Dated:- 10-5-2019 - Shri Sanjay Garg, Judicial Member And Smt. Annapurna Gupta, Accountant Member For the Assessee : Shri Sudhir Sehgal, Adv. For the Revenue : Shri G ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... counsel for the applicant attended this office and filed reply in response to above noted queries. As regard the rationale for donations when there is no history of donations in the past, applicant stated that it is running educational institutions and receiving fees and development fund from student and upto date the same was sufficient enough to meet the relating expenses but during the last F.Y. applicant has a deficit of ₹ 45.46 lakhs and to cover this deficit and future deficit it requires donations. This contention of the applicant Is not acceptable because allowing donations to professional institutions would lead to an open acknowledgement/acceptance in respect of capitation fees etc. a facet that has been negated by the judiciall authorities. This can t be allowed in a case which has been operating on the basis of an assured fee structure. Further the applicant failed to highlight the cogent reason of sudden deficit in the F.Y. 2016-17, when in the preceeding years applicant was into huge income/profits. The predominant purpose of the applicant has been running education and engineering courses. Allowing exemption of donations to such entities may ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eping in view all of above it is safe to conclude that applicant has failed to discharge its onus to prove its claim for approval u/s 80G. The real purpose for seeking exemptions to donations i.e. construction of Vridh Aashram is not brought out in the absence of the proposed activity from the objects clause as also the lack of FCRA clearance for seeking donations from abroad. In the light of the above, I have no option but to proceed on merits and deny the approval to the applicant u/s 80G of Income Tax Act, 1961. 4. Aggrieved by the same the assessee has come up in appeal before us raising the following grounds: 1. That the CIT (Exemption), Chandigarh has erred in rejecting the application for grant of registration U/s 80G of the Act. On the basis that the assessee is charging fees for running the educational institution and in the circumstances does not require funds or has not received the donations in the past. The condition for granting exemption u/s 80G is that assessee is genuinely working for charitable purposes and has provided all the necessary documents as specified in the law. Providing education is charitable activity as defined ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the charitable character of the assessee trust was to be looked into for the purposes of grant of approval and this in the present case was not in dispute since the applicant/assessee had been granted registration as a charitable trust u/s 12AA of the Act and was being assessed as carrying out charitable activities for assessment year 2014-15 u/s 143(3) of the Act. The Ld. counsel for assessee contended that the approval could not have been denied for the reason that it was charging fees for running educational institute since it is obvious that carrying out any activities involved incurring cost both capital as well as revenue for which fees have to be charged. The Ld. counsel for assessee contended that the applicant/assessee need not to justify taking donations for the purpose of grant of approval u/s 80G(5)(vi) of the Act and, therefore, the denial of approval for the reason that since it had a large asset base there was no valid reason for taking donation, was not justified. The Ld. counsel for assessee further pointed out that the denial of approval for the reason that the applicant/assessee intended opening a Vridh Ashram which was not as per his stated objects was also no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... application at any time of the whole or any part of the income or assets of the institution or fund for any purpose 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 accounts of its receipts and expenditure; 8[* * *] (v) the institution or fund is either constituted as a public charitable trust or is registered under the Societies Registration Act, 1860 (21 of 1860), or under any law corresponding to that Act in force in any part of India or under section 259 of the Companies Act, 1956 (1 of 1956), or is a University established by law, or is any other educational institution recognised by the Government or by a University established by law, or affiliated to any University established by law, [[***]] or is an institution financed wholly or in part by the Government or a local authority; [***] [(vi) in relation to donations made after the 31st day of March, 1992, the institution or fund is for the time being approved by the Commissioner in accordance with the rul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns for such rejection in writing : Provided that no order of rejection of an application shall be passed without giving the institution or fund an opportunity of being heard. (6) The time limit within which the Commissioner shall pass an order either granting the approval or rejecting the application shall not exceed six months from the [end of the month in] which such application was made : Provided that in computing the period of six months, any time taken by the applicant in not complying with the directions of the Commissioner under sub-rule (3) shall be excluded.] 8. Clearly, for the purpose of grant of approval what is to be seen by the Commissioner is that the institution or fund seeking approval is established for charitable purpose and is genuinely carrying out the activities of the institution or funds and further that it fulfills all the conditions laid down in clauses (i) to (v) of section 80G(5) of the Act. The conditions specified in the section are primarily to the effect that the Commissioner has to ensure that the Fund or Institution seeking approval is appropriately constituted as specifie ..... X X X X Extracts X X X X X X X X Extracts X X X X
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