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Income Tax Appellate Tribunal, AMRITSAR BENCH, AMRITSAR.
Before: SH. SANJAY ARORA & SH. N. K. CHOUDHRY
IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AMRITSAR. BEFORE SH. SANJAY ARORA, ACCOUNTANT MEMBER AND SH. N. K. CHOUDHRY, JUDICIAL MEMBER I.T.A. No. 225/(Asr)/2017 Assessment Year:
Madad Charitable Foundation vs. Commissioner of Income Tax 33, D.R. Enclave, Ajnala Road, (Exemptions) Chandigarh Amritsar [PAN: AAETM 4336K] (Appellant) (Respondent)
Appellant by : Sh. Satish Bansal (C.A.) Respondent by: Smt. Parwinder Kaur, CIT-DR Date of Hearing: 26.11.2018 Date of Pronouncement: 02.01.2019 ORDER Per Sanjay Arora, AM: This is an Appeal by the Assessee directed against the Order u/s. 80-G(5)(vi) of the Income Tax Act, 1961 (‘the Act’ hereinafter) by the Commissioner of Income Tax (Exemptions), Chandigarh (‘CIT(E)’ for short) dated 28.03.2017, allowing approval to the assessee-appellant there-under with effect from Assessment Year (AY) 2017-18.
Take the appeal raises a sole ground, reading as under: ‘1. That the ld. CIT(Exemptions), Chandigarh has granted the approval u/s. 80G(5)(vi) with respect to “the activities, that could be construed as Charitable are mainly on providing Scholarship”, only, and not for all other activities of Charitable & Advancement of any other object of General Public Utility in nature, as specified in Trust Deed without mentioning any reason.’
2 ITA No. 225/Asr/2017 (AY) Madad Charitable Foundation v. CIT 3. Opening the arguments for and on behalf of the assessee-appellant, it was submitted by the ld. Authorized Representative (AR), Sh. Bansal, that the assessee’s only grievance, as projected per its’ Ground (supra), is the condition (ii), as under, which, inter alia, is one of the conditions subject to which the ld. CIT(E) has allowed approval to the appellant-trust u/s. 80-G(5)(vi) of the Act: ‘(ii) The activities that could be construed as charitable are mainly on providing scholarships.’
The said condition, he added, as a reading of the impugned order would bear out, is without mention or reference to any reason for the approving authority to, while granting approval, construe only one of the activities (objects) of the assessee as charitable. Why, if that be so, it would not be granted registration u/s.12AA (on 31. 08.2016); the trust deed having not undergone any change since, with the application u/s. 80-G having been moved soon after on 27.9.2016. He would then take us through the Trust Deed (PB pages 1-26), to show that each of the four objects per the object clause (4), enumerated at clauses 4.1 through 4.4, are charitable in nature. The approval, he would continue, rather than being made with reference to the objects of the applicant-trust, ought to be qua the satisfaction (or otherwise) of the conditions laid down in law, i.e., as per clauses (i) to (v) of section 80(G)(5). He, accordingly, prayed for the said condition (ii) to be expunged from the impugned order. The ld. Departmental Representative (DR) could not state any valid reason for the inclusion of the said condition by the ld. CIT (E).
We have heard the parties, and perused the material on record. It is, to begin with, not possible for us to accord our approval to the broad statement made by the ld. counsel, Sh. Bansal, during hearing that the approving authority consider an application for approval u/s. 80-G(5)(vi) without reference to the applicants’ objects. That the fund or institution is established in India for
3 ITA No. 225/Asr/2017 (AY) Madad Charitable Foundation v. CIT charitable purposes is the sine qua non for it being recognized u/s. 80-G(2)(a)(iv). Rather, the Hon’ble Courts have explained that it is permissible for the approving authority to, while construing the purpose of the trust, go beyond the objects of the trust, i.e., as set out in the Memorandum of Association or the trust deed. The purpose being to find the real purpose of the establishment of the trust, as against its’ ostensible purpose (refer: Sonepat Hindu Educational & Charitable Society v. CIT [2005] 278 ITR 262 (P&H), relied upon by the assessee). That said, we find no reason not to accept the assessee’s case. There is nothing in the trust deed, or the appellant’s activities, detailed in the ‘Notes on its activities’ forming part of its’ application in Form 10G (at PB page 44), as well as in reply (dated 25/2/2017) to the show cause letter (at PB page 47), or even in the financial statements (PB pgs. 29-33, 34-38), that would remotely suggest that the assessee is engaged only in educational objects (object clause 4.1), granting scholarships. In fact, as we observe, no scholarships have been provided by the assessee-trust as per the material on record, nor could the ld. DR point to any such. In other words, there is no basis for the said condition (ii), which we find to be more in the nature of an observation. We, accordingly, direct the ld. CIT(E) to issue a revised order u/s. 80- G(5)(vi) excluding the said condition (ii), or otherwise issue a rectification, which shall, in that case, form an integral part of the parent order. We decide accordingly.
In the result, the assessee’s appeal is allowed. Order pronounced in the open court on January 02, 2019 Sd/- Sd/- (N. K. Choudhry) (Sanjay Arora) Judicial Member Accountant Member Date: 02.01.2019 /GP/Sr Ps.
4 ITA No. 225/Asr/2017 (AY) Madad Charitable Foundation v. CIT Copy of the order forwarded to: (1) The Appellant: Madad Charitable Foundation 33, D.R. Enclave, Ajnala Road, Amritsar (2) The Respondent: Commissioner of Income Tax (Exemptions) Chandigarh (3) The CIT(Exemptions), Chandigarh (4) The CIT concerned (5) The Sr. DR, I.T.A.T. True Copy By Order