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Income Tax Appellate Tribunal, A BENCH: BANGALORE
Before: SHRI WASEEM AHMED & SHRI KESHAV DUBEY
PAN NO :AABTA0843J APPELLANT RESPONDENT Appellant by : Ms. Sunaiana Bhatia, A.R. Respondent by : Smt. Srinandini Das, D.R. Date of Hearing : 15.04.2025 Date of Pronouncement : 21.04.2025 O R D E R PER KESHAV DUBEY, JUDICIAL MEMBER:
This appeal at the instance of the assessee is directed against the order of ld. CIT(Exemptions), Bangalore dated 8.11.2024 vide DIN & order No. ITBA/EXM/F/EXM45/2024-25/1070217435(1) rejecting the approval u/s 80G of the Income Tax Act, (in short “The Act) filed in Form No.10AB dated 29.6.2024. 2. The assessee has the raised following grounds of appeal:
The brief facts of the case are that the assessee trust is registered under sub-clause (i) of clause (ac) of sub-section (1) of section 12A of the Act vide Unique registration No. AABTA0843JE20213 dated 24.9.2021 from the assessment year 2022-23 to 2026-27. Further, the assessee trust has been granted the provisional approval dated 31/12/2021 under clause (iv) of first proviso to sub-section (5) of section 80G from 31.12.2021 to assessment year 2024-25 in Form No.10AC by the ld. PCIT/CIT. The assessee trust thereafter applied for permanent registration/ approval as per clause (iii) of first proviso to sub-section (5) of section 80G of the Act in Form No.10AB on 29.6.2024 vide Ack.no. 534264060290624.
3.1 The ld. CIT(Exemptions), Bangalore after granting opportunity of being heard rejected the approval u/s 80G of the Act on the ground that provisions of section 80G of the Act are applicable in the cases of receipts in the form of donation to certain funds as defined in section 80G(2) of the Act. Further the ld. CIT(Exemptions) held that as the receipts in the form of school bus fess, tuition fees and exam fees do not fall under the definition of 3.2 Aggrieved by the order of ld. CIT(Exemptions), Bangalore the assessee has filed the present appeal before us. The assessee has also filed the paper book comprising 114 pages containing therein the following documents:
Before us, the ld. A.R. of the assessee vehemently submitted that the ld. CIT(Exemptions) erred in rejecting the grant of approval u/s 80G of the Act on the ground that school bus fees, tuition fees and exam fees collected by the assessee trust for certain financial years do not fall under the definition of donation. Further, the ld. A.R. of the assessee submitted that for grant of approval u/s 80G of M/s. Anugraha Educataion Trust, Sullia Page 5 of 10 the Act, the ld. CIT(Exemptions) should only be satisfied about the genuineness of the activity of the trust and fulfillment of the conditions laid down in clause (i) to (v) of section 80G(5) of the Act.
The ld. D.R. on the other hand vehemently supported the order of the authorities below and submitted written submissions which are reproduced below for ease of reference and record:
We have heard the rival submissions and perused the materials available on record. It is an undisputed fact that the assessee has been granted registration under sub-clause (i) of clause (ac) of sub-section (1) of section 12A of the Act vide Unique registration No. AABTA0843JE20213 dated 24.9.2021 from the assessment year 2022-23 to 2026-27. We are of the considered opinion that the registration u/s 12A must have been granted only after the ld. CIT(Exemptions) calling for the document/information from the trust in order to satisfy himself about the genuineness of the activity of the trust or institution and compliance of such requirements of any other law for the time being in force by the trust or institution as are material for the purpose of achieving its object. Further, we also take a note of the fact that the ld. CIT(Exemptions) has also granted provisional approval under clause (iv) of first proviso to sub-section (5) of section 80G of the Act on 31.12.2021 vide Unique registration No.AABTA0843JF20229.
6.1 Now on going through the annexure to Form No.10AD dated 8.11.2024, we find that the ld. CIT(Exemptions) without application of mind and more particularly without understanding the fact of the case has completely misdirected herself in holding that provisions of section 80G of the Act are applicable in the cases of receipts in the form of donations to certain funds as defined in section 80G(2) of the Act by reproducing some portion of the sub-section (i) and sub-section (ii) of section 80G of the Act. Before us, even the ld. CIT DR fervently argued by submitting that section 80G of the Act provides deductions for donations made to certain specified funds, charitable institutions, or other approved entities whereas School fees paid to educational institutions are treated as payment of services without verifying the facts of the case. We are of the considered opinion that the ld. CIT(Exemptions) has decided the M/s. Anugraha Educataion Trust, Sullia Page 7 of 10 issue from the perspective of the donor who claims the deduction u/s 80G of the Act (Chapter VIA) from Gross Total Income after paying donation and not from the perspective of the institution/Trust being the donee who is seeking approval U/s 80G of the Act. Further, the Section 80G(1) of the Act talks about that in computing the total income of the assessee, there shall be deducted in accordance with and subject to the provisions of this section. Sub-section (2) of section 80G of the Act specify the sum referred to in sub-section (1). Therefore, we are of the considered opinion that while considering the application of the assessee trust for grant of approval/registration u/s 80G of the Act, the ld. CIT(Exemptions) has on a wrong standpoint had relied upon & reproduced the provisions of section 80G(1) & 80G(2) of the Act, which in our view is from the perspective of donor claiming deduction u/s 80G of the Act. However, in the present case, the assessee trust has applied for the approval u/s 80G of the Act and therefore, the provisions of section 80G(1) and 80G(2) of the Act are not applicable in the case of the assessee. In our view, these provisions are applicable for claim of deduction of the sum paid by way of donation to the Charitable organization. We are of the considered opinion that for the purpose of granting approval u/s 80G of the Act, the relevant section is sub-section (5). The ld. Commissioner(Exemptions) after receiving the application for granting approval u/s 80G of the Act shall call for such document or information and make such enquiry as he/she thinks necessary in order to satisfy himself/herself about the genuineness of the activity of such institution or fund and the fulfillment of all the conditions laid down in clause (i) to (v) as follows:
(5) This section applies to donations to any institution or fund referred to in sub-clause (iv) of clause (a) of sub-section (2), only if it is established in India for a charitable purpose and if it fulfills the following conditions, namely:-
(i)where the institution or fund derives any income, such income would not be liable to inclusion in its total income under the provisions of sections 11 and 12 [* * *] [ Certain words omitted by Act 21 of 1998, Section 29 (w.e.f. 1.4.1999).] [* * *] [ Certain words omitted by Act 20 of 2002, Section 30 (w.e.f. 1.4.2003).] [or clause (23-AA) or clause (23-C)] [ Substituted by Act 11 of 1987, Section 35, for " or clause (23-C)" (w.e.f. 1.4.1988).] of section 10:
[Provided that where an institution or fund derives any income, being profits and gains of business, the condition that such income would not be liable to inclusion in its total income under the provisions of section 11 shall not apply in relation to such income, if- (a)the institution or fund maintains separate books of account in respect of such business; (b)the donations made to the institution or fund are not used by it, directly or indirectly, for the purposes of such business; and (c)the institution or fund issues to a person making the donation a certificate to the effect that it maintains separate books of account in respect of such business and that the donations received by it will not be used, directly or indirectly, for the purposes of such business; (ii)the instrument under which the institution or fund is constituted does not, or the rules governing the institution or fund do not, contain any provision for the transfer or 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; ][*] [ The word " and" omitted by Act 32 of 1994, Section 24 (w.e.f. 1.4.1994).] (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 25 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, ] [Inserted by Act 11 of 1983, Section 39 (w.e.f. 1.4.1984).][* * *] [ Certain words omitted by Act 20 of 2002, Section 30 (w.e.f. 1.4.2003).][or is an institution financed wholly or in part by the Government or a local authority; ] [Inserted by Act 11 of 1983, Section 39 (w.e.f. 1.4.1984).][*] [ The word " and" omitted by Act 33 of 2009, Section 33 (w.e.f. 1.4.2009).] 6.2 In view of the above we are of the considered opinion that at the time of granting of approval u/s 80G of the Act, the authority has to satisfy herself that the chartable institution is established in India for charitable purposes and the activities of the assessee trust are genuine and the assessee trust also fulfilled all the conditions as mentioned above.
6.3 The ld. CIT(Exemptions) in our view has also not brought any material on record to show that the assessee trust activities are not genuine or the conditions as specified above are not fulfilled by the assessee trust. The mere fact that assessee being an educational institution received school bus fees, tuition fees and exam fees, the approval u/s 80G of the Act cannot be denied specially when it is establish for the charitable purposes within the meaning of section 2(15) of the Act and the registration u/s 12A of the Act has already been granted.
6.4 We are also of the considered opinion that the provisions of section 11 & 12 along with section 13 including application of fund collected by the charitable organization are to be examined during the course of assessment proceedings and not at the time of granting approval u/s 80G of the Act. The issue whether receipts in the form of school bus fees, tuition fees and exam fees do not fall under the definition of donation are not at all relevant in the present proceedings as it is not a case of claiming deduction of donation paid u/s 80G of the Act from the Gross total Income by the donor. In view of the above, we allow the appeal of the assessee trust and direct the ld. CIT(Exemptions) to grant approval u/s 80G of the Act to the assessee as applied in form 10AB on 29/06/2024. It is ordered accordingly.
In the result, appeal filed by the assessee is allowed.