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Facts
The assessee, a charitable society, was denied registration u/s 80G of the Income Tax Act by the CIT(E) for incurring expenses on a cricket tournament and a talent function, which the CIT(E) deemed not in accordance with the trust's objects. The assessee argued these activities promote general public utility and are supported by vouchers.
Held
The Tribunal held that the CIT(E) had taken a different stand compared to when granting registration u/s 12A for the same activities. The expenses were considered minor and within the MOA's scope, thus the rejection of the 80G application was not justified.
Key Issues
Whether expenses on a cricket tournament and talent function, claimed to be for general public utility, are consistent with the assessee's objects for 80G approval, especially when similar activities were accepted for 12A registration.
Sections Cited
80G, 12A, 80G(5)
AI-generated summary — verify with the full judgment below
The appeal filed by the assessee is directed against the order dated 28-09-2024 passed by the Ld CIT(Exemptions), Mumbai rejecting the application filed by the assessee seeking registration u/s 80G of the Act as per the amended provisions of the Act.
The assessee herein is a charitable Society registered established in the year 1974. It was granted registration u/s 12A of the Act on 13-06-1974 by the Ld CIT, Mumbai. It was also granted approval u/s 80G of the Act on 07-05-2008. The Ld A.R submitted that, as per the amended provisions of the Act, the assessee society was required to make fresh application for registration u/s 12A of the Act and for approval u/s 80G of the Act. The assessee was granted permanent registration under the amended provisions u/s 12A of the Act in Form 10AC on 23-09-2021.
However, the application made by the assessee for approval u/s 80G of the Act under the amended provisions was rejected by the Ld CIT(E) with the following observations:- “After going through the submissions made by the assessee, it is noticed from the audited financial statement that assessee trust has made some major expenses on organizing cricket tournament and Nagher GOT Talent Function in F.Y. 2021-22 & 2022-23 which are not in accordance with the objects of the trust as per MOA. In view of the same, show cause was issued to the assessee in this regard and other additional information were also called for vide issue of show cause notice vide DIN & Notice No. ITBA/EXM/F/EXM43/2024-25/1069081887(1) dated 25.09.2024. In response, the assessee vide letter dated 26.09.2024 accepted that it has made expenses on cricket tournament and claimed that conducting sport event is in general public utility. The submission of the assessee is not sufficient and necessary compliance as per the provisions of I.T. Act is concerned. The word general public utility is not mentioned in the Objects of trust in MOA. Further the assessee has not explained about the expenses on Nagher GOT Talent which implies that the assessee is accepting that it has made the said expenses which are not in accordance with the objects of the trust. Since Approval under section 80G is to be accorded to the applicant after satisfying oneself of the genuineness of activities and the compliance of all the conditions mentioned in section 80G(5) clauses (i) to (v) of the Act. In the absence of necessary compliance by the Applicant, the undersigned is unable to arrive at a satisfactory conclusion on these parameters. As such the undersigned is left with no other option but to reject the application seeking approval under section 80G of the Act, as the limitation to decide on the application is 30.09.2024.” Hence, the assessee has filed this appeal.
We heard the parties and perused the record. We notice that the main deficiency noticed by the Ld CIT(E) is that the assessee has spent major expenses in organizing Cricket tournament and Nagher GOT talent function. According to the Ld CIT(E), they are not in accordance with the objects of the society. Hence he has doubted about the genuineness of the activities. However, the Ld A.R submitted that there cannot be any doubt with regard to the genuineness of the above said activities, as they have been actually conducted in order to promote the social, physical and all round progress of the society, which is one of the objects mentioned in the MOA. He submitted that the assessee organizes cricket tournament in an open ground without charging any fees for watching cricket. Further, the expenses incurred in GOT Talent program is also for the knowledge development of the general public at large. He submitted that the expenses incurred on these programs are duly supported by proper vouchers only. He further submitted that the Ld CIT(E) has granted registration u/s 12A of the Act under the amended provisions, meaning thereby, he did not found fault with the genuineness of activities, when the said registration was granted. Accordingly, he submitted that the Ld CIT(E) cannot take different view on the very same activities, while processing the application filed for getting approval u/s 80G of the Act.
The Ld D.R, on the contrary, supported the order passed by the Ld CIT(E).
We heard the parties and perused the record. We notice that the Ld CIT(E) has granted registration u/s 12A of the Act under the amended provisions after examining the memorandum of association as well as the very same activities carried on by the assessee. Admittedly, he was satisfied with the genuineness of the very same activities and further he had also accepted that they intra vires of objects clause of MOA. However, while processing the application filed for getting approval u/s 80G of the Act, the Ld CIT(E) has taken a different stand and in our view, the same is not correct. The Ld A.R submitted that the expenditure incurred on cricket tournament constitutes only about 0.48% of the total expenses and similarly small amount has been spent on GOT talent program. Further, it is stated that these activities are permitted by the objects of the MOA. Hence, we are of the view that the view taken by the Ld CIT(E) that both these activities are not in accordance with the objects of the assessee society is not justified. Accordingly, we are of the view that the rejection of the application filed by the assessee for granting approval is not in accordance with the law.
The Ld CIT(E) has rejected the application only for the above said reasons and we have held that the reasoning so given by the Ld CIT(E) is not correct. Hence, the assessee has presumably complied with all other conditions for getting approval u/s 80G of the Act. In that view of the matter, we are of the view that the assessee should be granted approval u/s 80G of the Act. Accordingly, we set aside the order passed by Ld CIT(E) and direct him to grant approval u/s 80G of the Act.
In the result, the appeal filed by the assessee is allowed.