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Income Tax Appellate Tribunal, AGRA BENCH, AGRA
Before: SHRI A.D. JAIN & DR. MITHA LAL MEENA
PER BENCH:
These appealsby the assessee areon a common issue and therefore, they are being disposed of by this consolidated order.
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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
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.
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
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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.
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.”
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
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books of account or by producing the original vouchers for the
various expenses claimed.
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
The Trust has already been granted the registration u/s 12AA of the Act (APB, Pg.19). The CIT (E) has rejected assessee’s
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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.
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.
No contrary decision has been brought to our notice, by the Department.
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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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).
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