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Income Tax Appellate Tribunal, CUTTACK BENCH, CUTTACK
Before: SHRI C.M. GARG, JM & SHRI MANISH BORAD,
PER MANISH BORAD, AM: The captioned appeal filed at the instance of assessee is directed against the order passed by the Ld. Commissioner of Income Tax(Exemption), Hyderabad (in short ‘the CIT(A)’), dated 29.05.2019 for the assessment year 2018-19.The assessee has raised following grounds of appeal:
For that, the order of the forum below is arbitrary, illegal, unjustified and erroneous and has been passed on improper application of mind, being devoid of merit as such deserves to be quashed in limine.
For that, the denial of grant of approval U/s 80G on the ground that, the assessee is acting as a contractor for implementation of the work entrusted by the granting agency deserves to be allowed
2 on the ground that, not only it is unjustified on the facts and in the circumstances of the case as contrary to legislative intentions but also, unwarranted as per the statutory provisions having intrinsic and inseggregable nexus with the work undertaken being solely for attainment of the objective of the society has to be allowed.
For that, the denial of grant of approval U/s 80G on the ground that, the assessee is acting as a contractor for implementation of the work entrusted by the granting agency and as such the activities of the society does not qualify as charitable activity is nothing but distortion of factual matrix and the grant of approval U/s 80G deserves to be allowed in absence of contravention of Sec 12A or any other provision of Income Tax Act, 1961 in this matter.
For that, the denial of grant of approval U/s 80G on the ground that, the assessee is acting as a contractor for implementation of the work entrusted by the granting agency and as such the activities of the society does not qualify as charitable activity is nothing but distortion of factual matrix and the grant of approval U/s 80G deserves to be allowed on the ground that, assuming & not admitting for a moment that, even if the assessee is acting as a contractor for implementation of the work entrusted by the granting agency and the activities are commercial activity, still then even incidental commercial activities are subject to Sec. 2(15) read with section 11 (4A) and there was no rhythm or rhyme for denial of grant of approval U/s 80G.
Brief facts of the case as culled out from the records are that the assessee is a society registered on 3rd November 1988. Main objects of the society includes livelihood improvement through seed bank & vegetable cultivation, horticulture plants promotion, training on vermin compost and compost production, livelihood improvement through
3 earning of Goat, country chicken rearing, nonfarm activities and NTFP business, awareness meeting on personal hygiene practice, malaria, dengue & diarrhea and other activities for the benefit of poor, medical relief and imparting of education. Registration u/s 12AA of the Act was granted vide Sr. No.33, 1994 with effect from 1st April 1993 and the same stands enforce. An application on form 10G was filed on 13.11.2018 seeking approval u/s 80G of the Income Tax Act. Informations as called for by the ld. CIT(E) was filed. However, it was held by the Ld. CIT(E) that the assessee being an implementing agency is acting as a contractor for implementation of the work entrusted by the granting agency and such activities cannot be claimed as charitable activities.
Accordingly assessee’s application for approval u/s 80G was rejected vide order dated 29.05.2019. 3. Aggrieved assessee is now in appeal before this Tribunal.
At the outset, Ld. counsel for the assessee referring to the paper book dated 2nd March 2021 containing 209 pages, copy of proposals of Implementation of Adolescent Health Programme, under NHM, Odisha stated that the case of the assessee squarely covered by the decision of Coordinate Bench Lucknow in the case of Samekit Mahila Evam Bal Vikas
4 Sansthan in ITANo.666/Lkw/2017 dated 16.11.2018 & Ratan Chand Chhattibhai Seva Samiti in ITANo.570/Lkw/2019 dated 16.12.2020, since the assessee also enjoys registration u/s 12A of the Act and without rejecting the same the assessee’s application u/s 80G of the Act cannot be rejected.
Per contra ld. DR vehemently argued supporting the order of ld. CIT(E).
We have heard rival contentions of the parties and perused the material available on record. This fact is not disputed at the end of revenue, the assessee enjoys the registration u/s 12A of the Act since 1st April 1993 which was granted to the assessee for carrying out charitable activities. The aims and objects of the society appearing at pages no.85 to 87 of the paper book clearly shows that the society is running for providing charitable activities as defined u/s 2(15) of the income Tax Act. Also perusal of the paper book shows that various charitable activities are consistently being carried out by the assessee society which majorly includes livelihood development, climate smart agriculture, sustainable forest protection Practices, water harvesting, education programme, child protection, Adolescent Health Programme, women empowerment, capacity building etc. Audited financial
5 statements for F.Y.2015-16 to 2017-18 duly reflects that the grant in aid and other receipts are received for carrying out charitable activities and the same are duly applied by the society as per its aims and objects.
Under these given facts and circumstances where the assessee society enjoys the registration u/s 12A/AA of the Act and the same is not rejected, whether the Ld. CIT(E) was justified in rejecting the application for approval u/s 80G of the Act?
This issue has been dealt by the Coordinate Bench Lucknow in the case of Samekit Mahila Evam Bal Vikas Sansthan (supra) under the similar facts and circumstances and relying on the judgments of Hon'ble Gujarat High Court in the case of Hiralal Bhagwati vs. CIT 246 ITR 188(Guj.) has held as under:
Heard. In „Hiralal Bhagwati‟ (Supra), rightly relied on by the assessee, it has been held that once registration 12A of the Act stands granted, the application u/s 80G(5) cannot be rejected. The Agra Bench of the ITAT has followed this legal position vide order dated 08.03.2018, passed in „Dr. Gyanendra Goel Foundation, Maa Saraswati Hospital Vs. CIT(Exemptions)‟, (authored by one of us, the Vice President). Therein, it has been held as under:
“
We have heard the parties and perused the material on record. At the outset, it is seen that registration u/s 12AA(1)(b)(i) of the I.T. Act was granted to the appellant Institution vide order dated 05.04.2016 (APB, 16-18). It is not disputed that this registration has hitherto not been revoked or cancelled. The ld. CIT(E) has observed, interalia, that approval u/s 80G(5) of the Act is not a mechanical process, wherein the according of registration u/s 12AA of the Act at one end would result in the issuance of approval u/s 6 80G(5) at the other. Consistent judicial opinion in this regard, however, is otherwise. The issue is, as such, no longer res integra.
In “Hiralal Bhagwati vs. CIT”, 246 ITR 188 (Guj.), while holding that once registration u/s 12AA of the Act was granted, the order rejecting the application u/s 80G(5) of the Act was liable to be quashed, the Hon‟ble High Court observed that the registration of a charitable trust u/s 12A of the Act is not an idle or empty formality; that this is apparent from the provisions of Section 12A; that it requires that not only an application should be filed in the prescribed form, setting out the details of the origin of the trust, but also the names and addresses of the trustees and/ or Managers should be furnished; that the CIT has to examine the objects of creating the trust as well as an empirical study of the past activities of the applicant; and that the CIT has to examine that it is really a charitable trust or Institution eligible for registration. The Hon‟ble High Court took into account the submission that once registration u/s 12A of the Act is granted, a grant of benefits under the act cannot be denied; that the ITO was not justified in refusing the benefits under the act which would otherwise accrue under the registration; that if there was no registration, the Revenue would have been justified in submitting that the benefit cannot be granted, but where the application for registration is submitted and the registration has been granted, the benefit cannot be denied. 7. “Hiralal Bhagwati” (Supra) was followed by the Agra ITAT in “Maa Bhagwati Samagra Utthan Trust vs. CIT” vide order (APB, 72- 75) dated 18.03.2011, in ITA No. 293/Agr/2009, holding that when the CIT has granted registration u/s 12AA of the Act after examining the genuineness of the activities of the Trust, it is not proper for the CIT to reject the application of the trust for the benefit of exemption u/s 80G(5) of the Act by holding that the activities of the trust are not genuine.
In “N.N. Desai Charitable Trust vs. CIT”, 246 ITR 452 (Guj), it was held, interalia, that while considering the certification of the Institution for the purpose of Section 80G, inquiry should be confined to finding out if the Institution satisfies the prescribed conditions as mentioned in Section 80G; that it is well settled that at the time of granting the application u/s 80G, what is to be examined is whether the trust is registered u/s 12A and the objects of the trust; that so far as the aspect of income is concerned, the same can be very well examined by the Assessing Officer at the time of framing assessment; and that the Authority examining the question whether a trust/Institution is eligible to be certified for the purposes of Section 80G is not to act as an AO. 9. “N.N. Desai”, (Supra) was followed by the Pune ITAT in “B.P.H.E. Society vs. ITO”, in ITA No. 111/PN/2010, vide order dated 30.08.2011, holding that when the CIT is to examine an application seeking recognition u/s 80G, he is not required to act as an AO and decide upon the claim of the assessee in respect of his assessment of income; that the actual assessment of the assessee and its actual liability to tax are matters to be decided only in the assessment proceedings; and that since the assessee was (in that 7 case, as herein also) registered u/s 12A of the Act and such registration continued, the assessee fulfilled the conditions prescribed u/s 80G(5)(i) of the Act. 10. “N.N. Desai” (Supra) has also been followed in “Marathi Vidyan Parishad Nashik Vibhag vs. CIT, Nashik”, (APB, 95-102), by the Pune Tribunal, vide order dated 20.05.2016, in ITA No. 1465/PN/2014. 11. “N.N. Desai” (Supra) was also followed in “CIT vs. Pujya Jalarambpa & Matushri Virbaima Charitable Trust” (APB, 84-88), by the Rajkot Tribunal in ITA No. 249/Rjt/2014, vide order dated 30.05.2014. This order of the Tribunal stands approved by the Hon‟ble Gujarat High Court in “CIT vs. Pujya Shri Jalarambapa & Matushri Virbaima Charitable Trust” 55 taxmann.com 52 (Rjt). 12. “Pujya Shri Jalarambapa”(Supra) rendered by the Hon‟ble Gujarat High Court has been followed by this Bench in “M/s Samajik Pragya Prasar Samiti, Agra vs. CIT(E)” (APB, 76-83) vide order (authored by one of us, the ld. AM) dated 16.01.2018, in ITA No.343/Agr/2016. 13. No decision contrary to the above case laws has either been referred by the ld. CIT(E) in the impugned order, or cited before us.”
In the present case, it remains undisputed that the registration granted u/s 12A(a) of the Act w.e.f. 01.04.2008, vide order dated 22.09.2008, passed by the ld. CIT, continues hitherto. As such, the ld. CIT(E) has erred in rejecting the assessee‟s application u/s 80G(5) of the Act. The order under appeal is, therefore, reversed. The application filed by the assessee u/s 80G is allowed.
The above decision was subsequently followed in the case of Ratan Chand Chhattibhai Seva Samiti (supra) for the similar issue.
Ld. DR could not controvert this fact that the issue raised in the instant appeal is squarely covered by the decision of Lucknow Bench in the case Samekit Mahila Evam Bal Vikas Sansthan (supra). We, therefore, respectfully following the same and under the given facts where the assessee society enjoys the registration u/s 12AA of the Act which is active and not rejected by the revenue authorities, Ld. CIT(E) erred
8 in rejecting the assessee’s application u/s 80G(5) of the Act. Thus, the finding of Ld. CIT(A) is reversed. The application filed u/s 80G is allowed.
In the result, Appeal of the assessee in ITANo.249/CTK/2019 is allowed
Order pronounced in the open court on 21/12/ 2021. (सी.एम.गगा) (मिीष बोरड़) कटक Cuttack; ददनाांक Dated /12/2021 Patel/Sr. P.S. आदेश की प्रनिलऱपप अग्रेपषि/Copy of the Order forwarded to : 1. अऩीलाथी / The Appellant- प्रत्यथी / The Respondent-
ITO(TDS/TCS), Rourkela 3. आयकि आयुक्त(अऩील) / The CIT(A), 4. आयकि आयुक्त / CIT ववभागीय प्रनतननधध, आयकि अऩीलीय अधधकिण, कटक / DR,
ITAT, Cuttack गार्ा पाईल / Guard file. 6. सत्यावऩत प्रनत ////
आदेशािुसार/ BY ORDER,
(Senior Private Secretary) आयकर अपीऱीय अधिकरण, कटक/ITAT, Cuttack