M/S SHRI HARI SADHNA SANSKAR SANRAKSHAN,GWALIOR vs. CIT EXMP., BHOPAL

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ITA 319/AGR/2016Status: DisposedITAT Agra16 January 20188 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the CIT(Exemption) was not justified in rejecting the applications. It relied on High Court decisions stating that the primary examination at the 80G approval stage is the object of the trust, while income aspects can be examined during assessment.

What were the facts?

The assessee societies/trusts applied for exemption under Section 80G(5)(vi) of the Income Tax Act. The CIT(Exemption) rejected their applications, citing concerns about the charitable nature of their activities and lack of proper documentation.

What were the issues?

Whether the CIT(Exemption) erred in rejecting the 80G approval based on the nature of activities and income, when the trust's objects were already examined for 12AA registration.

Which sections of the Income-tax Act were involved?

Section 80G(5)(vi),Section 12AA

AI-generated summary — verify with the full judgment below

Cases cited in this judgment(1)Show list

Detected automatically from the text. Citations are also linked where they appear in the judgment. The count shows how many other judgments on BharatTax rely on the same authority.

Income Tax Appellate Tribunal, AGRA BENCH, AGRA

Before: SHRI A.D. JAIN & DR. MITHA LAL MEENA

For Appellant: Shri R.K. Agarwal And Shri Rahul Agarwal, Advocates
For Respondent: Shri Inderjeet Singh, CIT DR
Hearing: 10/01/2018Pronounced: 16/01/2018

Heard together (2 matters)

ITA No. 343 /AGR/2016
ITA No. 319 /AGR/2016

Read from the judgment's own cause title. This page is filed under one of them.

PER BENCH:

These appealsby the assessee areon a common issue and therefore, they are being disposed of by this consolidated order.

2 ITA No. 343 /AGR/2016 ITA No. 319/Agr/2016

2.

The Commissioner of Income Tax (Exemption), rejected the assessee’s applications seeking exemption u/s 80G(5)(vi) of the Act.

ITA No.343/Agr/2016

3.

The ld. CIT(Exemptions) noted in the impugned order that

mere submission of documents is not the sole criteria for granting

approval u/s 80G(5) (vi) of the Act; that the appellant society is

primary focused in maintaining and augmenting its business of food

processing, sewing and weaving training and marble inlay work

without giving any element of charity to the public at large; and that

the request for registration by an institute that exists for commercial

interest without any act of charity, when viewed in the light of the

provisions mandated by law meets a dead end. He further observed

that the assessee society has failed to corroborate his claim of

charitable activity and the documents filed in the proceedings show

that applicant has not worked towards performance of the object set

out in the memorandum of the society.

4.

The ld. Counsel for the assessee contended that the ld.

CIT(Exemptions) was not justified in rejecting the application of the

assessee society for approval u/s 80G(5) of the I.T. Act for the

3 ITA No. 343 /AGR/2016 ITA No. 319/Agr/2016

reason that the assessee society has been granted registration u/s 12AA by the ld. CIT(E) vide order dated 04.05.2016 (APB-10 to 11); that in compliance to the questionnaire dated 20.10.2016 of the CIT(Exemptions), detailed written submissions have been filed before the CIT(E) vide letter dated 16.11.2016 (APB,17-18).Thus, both in law and on facts, the rejection of the application by the ld. CIT(E) u/s 80G(5)(vi) is illegal.

5.

For this purpose, he placed reliance on the decision of the Hon’ble Gujarat High Court in the case of ‘CIT vs. Puja Shri Jalrambapa and ‘MatushriVirbaima Charitable Trust,in Tax Appeal No. 1190 of 2014. The relevant Para 6 Page 21, is reproduced as under:

“6. Having heard the learned Counsel for the appellant- revenue and having gone through the material on record including the orders passed by the CIT(A) as well as the Tribunal, we are unable to accept the submission made by Mr. Desai that the decision of this Court, as referred herein above, would not apply to the case on hand. It is well settled position of law that at the time of granting approval under Section 80G of the Act, what is to be examined is the object of the trust and so far as the aspect of income is concerned, same can be very well examined by the AO at the time of framing assessment. However, in the case on hand, the assessee-Trust was refusedrecognition only on the groundthatTrust had not spent 85 per 'cent of the amount towards the objects of the Trust. The Tribunal, while passing the impugned order, relied on a decision of

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the Punjab & Haryana High Court in " CIT VS. SURYA EDUCATIONAL & CHARITABLE TRUST" [2011] 203 Taxmann 53, wherein, the High Court held that at the stage of registration under Section 12AA of the Act, the extent and nature of activities are not required to be examined and the same is required to be examined in assessment proceedings. Similar view is taken by this Court in Tax Appeal No, 306 of 2014 and the allied matters. In view of the above discussion, we are of the opinion that the Tribunal committed no error in issuing direction to grant recognition to the Respondent-Trust under Section 80G(5) of the Act. Since, the 'issue is squarely covered by the aforesaid decisions, we refrain ourselves from making any further observations. 7. In the result, the issue is answered in favour of the assessee and against the revenue. The present appeal fails and is DISMISSED. No order as to costs.”

6.

Ld. DR on the other hand, placed strong reliance on the

impugned order contending that the CIT(Exemptions) has

specifically recorded in his order that assessee has not produced

the books of account or vouchers; that assessee society is not

solely existent for charitable purposes; that huge amounts are being

received for membership fees/voluntary contributions; that huge

amounts is generated sale of items prepared under food

processing, sewing & weaving training programme and sale of

marble inlay work items; that the appellant society failed to

corroborate even a single expenses by either verifying them in the

5 ITA No. 343 /AGR/2016 ITA No. 319/Agr/2016

books of account or by producing the original vouchers for the

various expenses claimed.

7.

The ld. DR further submitted that the institute existed for

commercial purposes without any act of charity with primary focus in

maintaining and examining its business of food processing, sewing

and weaving training programme in marble inlay without giving any

element of charity to public at large. He also submitted that the

applicant society could not provide any detail, which appears an

attempt to camouflage the financial statements and expenses so as

to create a mirage of charity so as to fraudulently secure tax benefit

in lieu of the same. Further, the society has failed to corroborate his

claim of charitable activities as evident from the documents filed in

the proceedings show that the applicant has not worked towards

verification of object set out in the memorandum of society has

rightly relied by the ld. CIT(Exemptions), Lucknow with a decision of

ITAT, Lucknow Bench in ITA No. 809/Lkw/2014 dated 26.02.2015.

ITA No. 319 /AGR/2016

8.

The Trust has already been granted the registration u/s 12AA of the Act (APB, Pg.19). The CIT (E) has rejected assessee’s

6 ITA No. 343 /AGR/2016 ITA No. 319/Agr/2016

application for grant of registration u/s 80G(5) of the Act., vide para

2, for the reason that the substantial portion of the amount received

by the Trust is incurred on the construction of the temple for which a

significantly high construction cost is reflected in the balance sheet.

9.

Challenging the impugned order, the ld. counsel for the

assessee submitted that the reasons recorded by the ld.

CIT(Exemptions) are not related to the grant of registration;that the

assessee is regularly filing its returns of income; that the statement

of receipt and expenditure accounts were filed before the

CIT(Exemptions); that the assessee trust has no income for the

A.Ys 2013-14, 2014-15 and 2015-16 and only the donation as a

corpus contribution is received and initiated for the specific purpose

of the construction of the temple; that the assessee has complied

with all the conditions as laid down under Rule 11AA for grant of

registration; that the CIT(Exemptions) has not pointed out any

discrepancy in the application or violation in the condition so as to

reject the registration as applied by the appellant; that this capital

expenditure is fully covered by the conditions for allowing of the

deduction u/s 80G of the Act and that the trust has been granted the

registration u/s 12AA of the Act.

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In support, the ld. AR placed reliance on the decision of ‘CIT 10. vs. Puja Shri Jalrambapa and Matushri Virbaima Charitable Trust’, (Guj) (Supra) and the ITAT, Agra Bench in the case of Bhagwati Samagra Uthan Trust vs. CIT (Copy filed) in ITA No. 293/Agr/2009,dated 15.05.2009, A.Y. 2009-10.

11.

No contrary decision has been brought to our notice, by the Department.

12.

It is admitted fact that the assessees are granted registration u/s 12AA of the Act.It is well settled position of law that at the time of granting approval under Section 80G of the Act, what is to be examined is the object of the trust and so far as the aspect of income is concerned, same can be very well examined by the AO at the time of framing assessment. In the cases of the assessee trust and society, the objectives have already been examined by the ld. CIT(E) while granting registration u/s 12AA of the Act. The 80 G(5) subsists the 12AA so far as examination of charitable nature of objectives is concerns. Thus, both on facts and in law the assesses’ case are squarely covered by ‘CIT vs. Puja Shri Jalrambapa and Matushri Virbaima Charitable Trust’ (Supra).

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13.

Respectfully following the Hon’ble Gujarat High Court in the case of ‘CIT vs. Puja Shri Jalrambapa and MatushriVirbaima Charitable Trust (Supra), we, find the grievance of the assessee society and trust justified and therefore, direct the CIT(E) to grant

approval u/s 80G(5)(vi).

14.

In the result, appeals of the assessees are allowed.

Order pronounced, in the open Court on 16/01/2018. Sd/- Sd/- (A. D. JAIN) (DR. MITHA LAL MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated:16/01/2018 Aks Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR

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