Loading judgment…
Facts
The assessee, Baramati Vipassana Samiti, applied for registration under section 12A and approval under section 80G. The CIT(Exemptions) rejected both applications, primarily on the ground that the trust had not obtained prior permission from the Charity Commissioner for a loan of Rs. 1,15,800.
Held
The Tribunal held that the CIT(E) erred in rejecting the applications solely based on the lack of prior permission from the Charity Commissioner for a loan. The Tribunal found that the assessee's activities were charitable in nature and that the loan was a temporary, interest-free unsecured loan.
Key Issues
Whether rejection of registration u/s 12A and approval u/s 80G is justified solely on the ground of not obtaining prior permission from the Charity Commissioner for a loan.
Sections Cited
12A, 80G(5), 36A, 12AB, 2(15)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, PUNE BENCHES “A” :: PUNE
Before: DR.MANISH BORAD & SHRI VINAY BHAMORE
ORDER PER DR. MANISH BORAD, AM: These two appeals filed by the assessee are directed against the separate orders of ld.Commissioner of Income Tax(Exemption), Pune rejecting the application for grant of registration u/s.12A and 80G(5) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) respectively. For the sake of convenience, these two appeals were heard together and are being disposed of by this common order.
1. Rejection of Registration Application The learned Commissioner of Income Tax (Exemptions) ["CT(E)"] erred in rejecting the application for registration under section 12AB of the Income Tax Act, 1961, filed by the Appellant, without properly appreciating the facts of the case and the submissions made by the Appellant.
2. Rejecting the approval on the ground that provisions of section 36A of the Maharashtra Public Trust Act, 1950 is violated 2.1. The Ld. CIT(E) erred in rejecting the approval on the ground that the trust has raised the loans and permission from the Charity Commissioner under the provisions of Section 36A of the Maharashtra Public Trust Act, 1950, is not obtained and therefore held that the activities of the trust are not genuine and charitable in nature. 2.2. The CIT(E) failed to appreciate that the temporary loan taken by the Appellant was interest-free, unsecured hand loan and did not involve any personal benefit to the trustee or any detriment to the trust.
3. Failure to Assess Genuineness of Activities The Ld. CIT(E) erred in concluding that the trust's activities are not genuine solely on the basis of procedural aspects related to the loan transaction, without considering the substantive charitable activities carried out by the Appellant.
4. The assessee craves leave to add, amend, omit or alter any of the grounds before or at the time of the hearing.
5. Prayer The Appellant respectfully prays that: a) The rejection order dated 17/10/2024 passed by the Ld. CIT(F) be quashed.
& 2643/PUN/2024 [A] b) The application for registration under section 12AB of the Income Tax Act, 1961, be allowed. c) Such other and further relief as deemed just and proper in the circumstances of the case may please be granted.” 1.2 The Assessee in Appellant respectfully submits as under: 1. Rejection of approval u/s 80G(5) The learned Commissioner of Income Tax (Exemptions) ["CIT(E)"] erred in rejecting the application for approval under section 80G(5) of the Income Tax Act. 1961, filed by the Appellant, without properly appreciating the facts of the case and the submission made by the Appellant 2. Rejecting the approval on the ground that provisions of section 36A of the Maharashtra Public Trust Act, 1950 is violated 2.1. The Ld. CIT(E) erred in rejecting the approval on the ground that the trust has raised the loans and permission from the Charity Commissioner under the provisions of Section 36A of the Maharashtra Public Trust Act, 1950, is not obtained and therefore held that the activities of the trust are not genuine and charitable in nature and rejected the approval which is not in accordance with the provisions of section 80G 2.2 The Ld. CIT(E) failed to appreciate that section 80G independently has not provided for rejecting the approval for violation of any other law on parity of provision of section 12AB(1)(b)(i) (B). The order of Ld CIT(E) may kindly be vacated so far as the said finding is in absence of any explicit provision in section 80G(5). 2.3 The-Ld. CIT(E) failed to appreciate that the temporary loan taken by the Appellant was interest-free, unsecured hand loan and did not involve any personal benefit to the trustee or any detriment to the trust and therefore the approval u/s 80G(5) should not have been rejected. 2.4. The Appellant is in appeal before the Hon'ble Bench against the order of rejection of registration u/s 12AB of even date. The Hon'ble Bench may give the necessary direction considering the fact that concurrent appeal u/s 12AB Registration is before the Hon'ble Bench & 2643/PUN/2024 [A] The consequential relief in this appeal may kindly be allowed as per the law.
3. The assessee craves leave to add, amend, omit or alter any of the grounds before or at the time of the hearing.
4. Prayer The Appellant respectfully prays that: a) The rejection order u/s 80G(5) dated 17/10/2024 passed by the Ld. CIT(E) may kindly be quashed. b) The approval u/s 80G(5) of the Income Tax Act, 1961, may kindly be allowed. c)Such other and further relief as deemed just and proper in the circumstances of the case may please be granted.”
: 2. Brief facts of the case are that the assessee filed an application in Form No.10AB under section 12(A)(1)(ac) of the Act, dated 20.04.2024 In order to verify the genuineness of the activities of the assessee and in compliance to requirements of any other law for the time being in force by the trust / institution as are material for the purpose of achieving its objects, a notice dated 05.06.2024 and 03/10/2024 was issued by ld.CIT(E) through ITBA Portal requesting the assessee to upload certain information / clarification. The assessee in response to the same filed details. After considering the reply of the Assessee, ld.CIT(E) rejected assessee’s application for registration u/s.12A of the Act on the ground that Trust has not & 2643/PUN/2024 [A] obtained permission from Charity Commissioner for the Loan of Rs.1,15,800/-, as per Maharashtra Public Trust Act, the relevant paragraph of the ld.CIT(A)’s order is reproduced here as under : “……….However, the same is not accepted as the trust has not obtained permission under section 36A of the Maharashtra Public Trust Act,1950 from the Charity Commissioner. Taking loans to meet the funds requirement cannot be accepted as an excuse for non-compliance as sec. 36A(3A) provides that “notwithstanding anything contained in sub-section (3), in exceptional and extraordinary situations where the absence of previous sanction contemplated under sub-section (3) results in hardship to the trust, beneficiary or Bonafide third party, the Charity Commissioner may grant ex-post-facto sanction to borrow moneys from any nationalized bank or the Scheduled Bank, by the trustees. Thus, the trust could have obtain ex-post facto permission from the Charity Commissioner. It, however, failed to do so.
7. Thus, considering the above facts discussed in the show-cause notice and discrepancies noticed, the undersigned is not satisfied about the charitable nature and the genuineness of activities of the assessee.”
2.1 Thus, ld.CIT(E) rejected the application only on one ground i.e.not obtaining permission of Charity Commissioner for the loan.
For the same reason, the ld.CIT(E) rejected the application for grant of approval under section 80G of the Act also.
Aggrieved with such order of ld.CIT(Exemption), the assessee is in appeal before the Tribunal.
ITA Nos.2642 & 2643/PUN/2024 [A] Submission of ld.AR : 5. Ld.AR filed a factual paper book and case law paper book. Ld.AR submitted that the Assessee Trust is organizing education and training in Vipassana. Ld.AR submitted that Vipassana is a Ancient Indian Meditation Technique. Assessee is organizing training and education of Vipassana. Ld.AR invited our attention to page 64 to 75 which were photographs to demonstrate residential courses conducted by assessee for Vipassana Training. Ld.AR invited our attention to the note on activities which explains the various courses conducted by assessee for Vipassana. Ld.AR submitted that ld.CIT(E) has not doubted the genuineness of the activities performed by the Assessee. Neither ld.CIT(E) has doubted the charitable nature of the Assessee’s activities. Ld.CIT(E) has denied 12A & 80G registration only on one issue that small loan of Rs.1,15,800/- was obtained from the Trustee for temporary purpose by the Trust. Ld.AR invited our attention to the paper book wherein PAN Number and Aadhar Card of the lender has been provided during the proceedings to the ld.CIT(E). Ld.AR invited our attention to the bank statement which is at page no.58 to 61 to demonstrate that all details were provided. Ld.AR submitted that & 2643/PUN/2024 [A] Loan was interest free and no asset of the trust has been mortgaged for the Loan.
Ld.AR also relied on the order of ITAT in the case of Prerana Samajik Sanskrutik Bahuddeshiya Shikshan Sanstha vs CIT(E) in vide order dated 09.07.2024. Therefore, ld.AR pleaded that assessee may be granted registration under section 12A of the Act. Ld.AR submitted that there is no provision in the section 80G for the ld.CIT(E) to reject assessee’s application on account of taking small loan of Rs.1,15,800/-. Therefore, the order under section 80G is bad in law, and hence assessee may be granted registration under section 80G(5) of the Act.
On the other hand, ld.Departmental Representative(ld.DR) for the Revenue supported the order of ld.CIT(E).
Findings & Analysis : 8. We have heard both the parties and perused the material on record. On perusal of the order under section 12A(1)(ac)(vi) of the Act, it is observed that ld.CIT(E) has rejected assessee’s application only one ground i.e. Assessee had not taken prior permission of Charity Commissioner before taking Loan of Rs.1,15,800/-. & 2643/PUN/2024 [A] Ld.CIT(E) was of the opinion that at least post-facto permission should have been taken. It is noted that ld.CIT(E) has not discussed about the activities of the Assessee, it means ld.CIT(E) has accepted that activities of the assessee are charitable in nature. We have perused the paper book filed by the assessee. It is observed that assessee has conducted various training courses for Vipasana Training which is a Ancient Meditation Technique. We have also perused the trust deed and noted that following are the objects of the trust : i) To establish and operate centres and secular educational institutes for teaching of and training in Vipassana as taught by S.N.Goenkaji in the Tradition of Sayagyi U Ba Khin; open to all irrespective of caste, creed, gender, religion or nationality. ii) To acquire lands and buildings for the purposes of establishing centers and institutes; iii) To Hold/Host Vipassana courses, arrange lectures, discourses and seminars for teaching of and add educational training in Vipassana; without taking any fees or charges for Teaching, and for the standard Lodging & boarding facilities provided by the center. iv) To otherwise promote and further the spread of the awareness and practice of Vipassana Meditation in the region of the Trust and throughout the world. v) The trust shall not carry on any Activiti for earning profit. However, if any income is generated out of/on account of trust activities/properties the same will be solely applied / utilized in furtherance of trust objects. The beneficiaries are public at large and not any specific community/individuals. & 2643/PUN/2024 [A] 8.1 Thus, we are of the opinion that objects and activities of the trust are charitable in nature as defined in Section 2(15) of the Act. As far as the issue of obtaining a meagre loan of Rs.1,15,800/- is concerned, it is observed that assessee had submitted PAN and Aadhar of the Lenders. The ld.CIT(E) has not doubted the genuineness of the loan. During the proceedings, a letter has been submitted which states that assessee has applied for post-facto permission from Charity Commissioner with reference to the said loan. Thus, as stated by ld.CIT(E) in his order, the assessee has applied for post-facto permission. It is observed that on identical facts, ITAT Nagpur in the case of Prerana Samajik Sanskrutik Bahuddeshiya Shikshan Sanstha vs CIT(E) in has allowed the assessee’s appeal and directed ld.CIT(E) to grant registration under section 12A of the Act. In these facts and circumstances of the case, we are of the opinion that Assessee is eligible for registration under section 12A(1)(ac) of the Act. Accordingly, we direct the ld.CIT(E) to grant registration u/s.12A of the Act to the assessee. Accordingly, grounds of appeal raised by the assessee are allowed.
ITA Nos.2642 & 2643/PUN/2024 [A]
In the result, appeal of the assessee in is allowed.
10. The instant appeal is against the order framed by ld.CIT(A) denying grant of approval u/s.80G(5) of the Act. On identical facts, we have held that assessee is eligible for registration under section 12A of the Act in earlier paragraphs. The ld.CIT(E) has denied 80G(5) of the Act only on one ground that assessee has not obtained prior permission from Charity Commissioner for the loan of Rs.1,15,800/-. It is observed that there is no provision in Section 80G(5) of the Act, wherein ld.CIT(E) can deny registration under section 80G(5) on account of failure to obtain prior permission from Charity Commissioner for the Loan of Rs.1,15,800/-. Therefore, the order under section 80G(5) of the Act is bad in law. Hence, we direct the ld.CIT(E) to grant registration under section 80G(5) of the Act to the assessee. Accordingly, grounds of appeal raised by the assessee are allowed.
ITA Nos.2642 & 2643/PUN/2024 [A]
To sum up, both appeals of the assessee are allowed. Order pronounced in the open Court on 3rd April, 2025.