THE COMMISSIONER OF INCOME TAX (EXEMPTIONS), CHANDIGARH vs. M/S MAHABIR EDUCATIONAL WELFARE SOCIETY

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ITA/13/2019HC Punjab & HaryanaPHHC01147081201830 January 2023Bench: MS. JUSTICE RITU BAHRI,MRS. JUSTICE MANISHA BATRA3 pages
AI SummaryDismissed

What did the High Court hold?

The High Court dismissed the appeal filed by the revenue. The Court held that the mere fact that the assessee-Trust had never received donations previously was not a relevant criterion for denying approval under Section 80G. Similarly, the maintenance of FDRs by the Trust could not be a criterion to deny approval, especially when these FDRs were maintained to obtain accreditation with regulatory authorities for professional colleges. The Court relied on its own previous judgment in ITA-54-2019 (The Commissioner of Income Tax (Exemptions), Chandigarh vs. M/s Shri Panchayati Gaushala Society). The Court found that the revenue had not been able to show that the view taken by the Tribunal was erroneous or that the order of the Tribunal was legally unsustainable. The registration under Section 12AA of the Act itself is not sufficient for approval under Section 80G, but the Tribunal had considered the genuineness of the aims and objects while granting 12AA registration and recorded reasons for granting 80G approval, which were not sustained by the revenue.

What were the facts?

The Commissioner of Income Tax (Exemptions), Chandigarh (appellant/revenue) filed an appeal under Section 260A of the Income Tax Act, 1961, challenging an order dated 12.06.2018 passed by the Income Tax Appellate Tribunal (ITAT), Chandigarh. The ITAT had allowed an appeal filed by M/s Mahabir Educational Welfare Society (respondent/assessee) against an order dated 30.11.2017 passed by the CIT (Exemptions). The CIT (Exemptions) had rejected the assessee's application for approval under Section 80G(5)(vi) of the Act. The ITAT noted that the assessee-Trust had been granted 12AA Registration, which had not been revoked. The ITAT also observed that the assessee had never received donations previously and maintained Fixed Deposits (FDRs) to obtain accreditation for professional colleges, which were not grounds to deny 80G approval.

What were the issues?

1. Whether the Tribunal erred in allowing approval under Section 80G(5)(vi) of the Income Tax Act, 1961, to the assessee-Trust, despite it having never received donations and maintaining FDRs. Assessee's Contention: The judgment does not record any specific arguments made by the assessee before the High Court. However, the ITAT's reasoning, as reflected in the judgment, suggests that the grant of 12AA registration, the genuineness of the trust's aims and objects, and the maintenance of FDRs for accreditation and as a cushion for operational needs were considered sufficient. The assessee's appeal to the ITAT was allowed. Revenue's Contention: The revenue contended that the assessee's failure to receive donations and the maintenance of FDRs were valid grounds for denying approval under Section 80G(5)(vi). The revenue sought to quash the ITAT's order.

Which sections of the Income-tax Act were involved?

Section 260A,Section 80G(5)(vi),Section 12AA,Section 11,Section 12

AI-generated summary — verify with the full judgment below

ITA-13-2019 1 IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH ITA-13-2019 Date of decision:- 30.01.2023 The Commissioner of Income Tax (Exemptions), Chd ....Appellant vs. M/s Mahabir Educational Welfare Society ...Respondent CORAM: HON'BLE MS. JUSTICE RITU BAHRI HON'BLE MRS. JUSTICE MANISHA BATRA Present: Mr. Varun Issar, Jr. Standing counsel for the appellant. *** Ritu Bahri, J. (Oral) The present appeal has been filed under Section 260A of the Income Tax Act, 1961 (for short 'Act 1961') seeking quashing of order dated 12.06.2018 passed by Income Tax Tribunal, Division Benches 'B', Chandigarh. Brief facts of the case are that an appeal was filed by the respondent-assessee against order dated 30.11.2017 of CIT (Exemptions), Chandigarh passed under Section 80 G (5) (vi) of Act 1961 , before the ITAT, Division Benches 'B', Chandigarh. The appeal was allowed on 12.06.2018 and hence the present appeal. A bare perusal of impugned order shows that it is an admitted fact that the assessee-Trust has been granted 12AA Registration, which has not been revoked. The mere fact that the assessee Trust has never received donations earlier is not a relevant criteria. Further merely on the fact that the FDR's are being maintained by the Trust cannot be made a criteria to deny approval under Section 80G. These FDR's were maintained in order to get GAURAV ARORA 2023.02.22 15:02 I attest to the accuracy and integrity of this document

ITA-13-2019 2 accreditation with the Regulatory authorities, which managed the professional colleges etc. Reference at this stage can be made to judgment of this Court passed in ITA-54-2019 titled as The Commissioner of Income Tax (Exemptions), Chandigarh vs. M/s Shri Panchayati Gaushala Society, decided on 20.01.2020 wherein similar issue was examined and in para No. 8, 9, 11 and 13, it has been observed as under:- “8. Section 12A of the Act provides conditions for applicability of Sections 11 and 12 of the Act. Section 12AA of the Act provides for procedure of registration for availing the benefits under Section 12A of the Act. Under Section 12AA(1)(a) of the Act the Principal Commissioner or the Commissioner in order to satisfy himself about the genuineness of the activities of the trust or institution can call for such document or information as he deems necessary. If satisfied about genuineness of object, he passes the order registering the trust or institution, otherwise rejects the application. 9. Under Section 80G of the Act recognition is given to trust or institution for the purpose that assessee giving donations to such institution becomes entitled to claim deduction of the amount donated. Sub-section 5 of Section 80G of the Act stipulates the conditions for application of Section 80G of the Act to the donations made to any institution or fund referred to in sub clause (iv) of Clause (a) of Sub Section (2). 11. The objection that the amount in FDRs had enhanced will not enhance the case of the revenue. There is not even an iota of evidence to establish that the amount was not being utilised for the aims and objects of the society but for some other purpose. The amount only gives a protection to the society for daily needs, if the occasion so arises that there is scarcity of funds as the society has almost 350 cows to take care and to feed. It cannot be ruled out that such a cushion may be required considering the nature of the work done by the society 13. There is no quibble on the proposition that registration under Section 12AA of the Act itself would not be

ITA-13-2019 3 enough for approval under Section 80G of the Act. The Tribunal has only considered that aims and objects of the society have been found genuine while granting registration under Section 12AA of the Act and for granting approval under Section 80G of the Act, the reasons have been recorded and the denial of approval not sustained. Learned counsel for the revenue has neither been able to show that the view taken by the Tribunal is erroneous nor any material on record is shown to hold that the order of the Tribunal is legally unsustainable.” Learned counsel for the appellant has not been able to cite any law contrary to the above. The present appeal is thus dismissed. (RITU BAHRI) JUDGE 30.01.2023 (MANISHA BATRA) G Arora JUDGE Whether speaking/reasoned : Yes/No Whether reportable : Yes/No

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