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Income Tax Appellate Tribunal, DELHI BENCH: ‘B (Virtual Hearing
Before: SHRI BHAVNESH SAINI & SHRI O.P. KANT
ORDER PER O.P. KANT, AM:
These two appeals by the assessee are directed against a common order passed by the Commissioner of Income-tax (Exemption), New Delhi [in short ‘the Ld. CIT(A)’] rejecting registration of the assessee under section 12AA and under section 80G of the Income-tax Act, 1961 (in short ‘the Act’) respectively. 2. The grounds raised in the appeals are reproduced as under:
Grounds of appeal raised in ITA No. 9135/Del./2019
The Learned Commissioner of Income Tax (Exemptions) [ “Ld. CIT(E)”] has erred in law as well as in facts by rejecting the application for exemption u/s 80G of the Income Tax Act, 1961 (“the Act”) 2. The Ld. CIT(E) has erred in facts as well as in law by rejecting the application solely on the reason that charitable activities could not be substantiated. 3. The Ld. CIT(E) has erred in facts as well as law by disregarding the charitable objects as per the Memorandum of Association. 4. The appellant craves leave to add to, amend, alter, vary, omit or substitute the above statement of facts at any time before or during the course of the appellate proceedings.
Grounds of appeal raised in ITA No.9136/Del./2019
1. The Learned Commissioner of Income Tax (Exemptions) [ “Ld. CIT(E)”] has erred in law as well as in facts by rejecting the application for grant of registration u/s 12AA of the Income Tax Act, 1961 (“the Act”) 2. The Ld. CIT(E) has erred in facts as well as in law by stating that the activities of the Appellant are not charitable in nature and the Appellant was not able to establish genuineness of the activities. 3. The Ld. CIT(E) has erred in facts as well as in law by stating that the Appellant only incurred administrative expenditure and did not spend any amount on the charitable activities or activities w.r.t. it’s aims and objects despite surplus funds in Bank account. 4. The Ld. CIT(E) has erred in facts as well as in law by stating that Appellant had given factually wrong & misleading information about application of registration u/s 12A of the Act made by the Appellant in the past. 5. The Ld. CIT(E) has erred in facts as well as law by stating that the activity of Appellant pertained to some theoretical and academic research without any evidence of charitable activity. 6. The Ld. CIT(E) has erred in law as well as in facts by rejecting the application for exemption u/s 80G of the Act on the reason that charitable activities could not be substantiated. 7. The appellant craves leave to add to, amend, alter, vary, omit or substitute the above statement of facts at any time before or during the course of the appellate proceedings.
The briefly stated facts of the case are that the assessee initially filed application for registration under section 12AA of the act on 19/06/2018, which was dismissed on 21/12/2018 due to withdrawal of the same by the assessee. The present applications for registration under section 12AA and approval under section 80G of the Act were filed by the assessee on 28/03/2019. The assessee claimed to have worked in the field of improving the health and educational outcomes of the children, young people including mothers through programs like deworming, early childhood care, diarrhea and pneumonia management etc. The assessee carried research and provided technical assistance/consultancy to various government department engaged in the field of health and malnutrition -related problems. The registration under section 12AA was rejected by the Ld. CIT(E) vide impugned order dated 30/09/2019 mainly on the ground that no evidence of actual activities were submitted by the assessee and, therefore, genuineness of the activities of the assessee could not be established. The learned CIT(E) also mentioned that there was no change in the circumstances after the rejection of the ground of registration vide order dated 21/12/2018 with reference to earlier application for registration. Consequently, the approval sought under section 80G was also rejected. The relevant part of the order of the Ld. CIT(E) is reproduced as under:
“6. The applicant in its submission has submitted that the main objectives of the company in the immediate future is to work towards improving the health and educational outcomes of children, adolescents, young people including mothers through programs that focus on improving their overall well-being in the country. As such programs that focus on nutrition including iron supplementation and deworming early childhood care, diarrhea and pneumonia management and related interventions will be priorities for the applicant. The applicant is committed to adopt transparency on process and impact while working with government, policy makers, private sector, communities, institutions and other stakeholders to plan, design, implement, monitor, evaluate these operational models for cost effective and sustainable solutions and that the applicant’s objectives are primarily in the nature of researching, providing technical assistance / consultancy and relevant inputs / research documents / data to various government departments battling health and malnutrition related problems of the Indian society at large. The applicant is a research oriented entity working with various ministries (such as, ministry of women and child development, ministry of health and family welfare etc.). Though, vast & large aims & objectives have been enumerated but the applicant company has not submitted any documentary evidence of having entered into any MOU/ Agreement with any such central /state government Deptt/Ministry or any Communication with the aforesaid department without which the contentions of the applicant lacks substance and belies its contentions.
Since inception, the applicant company has received 3 donations, all from the same donor, Mr. Mukut Behari Lai Bhargava. The amounts received as donations were Rs.l3,65,000/-, Rs.40,00,000/- and Rs.60,00,000/- respectively. In the receipt, the applicant has mentioned that the donation is for undertaking technical assistant to Government of India for weekly Iron and Folic Acid supplementation (WfFS) Programme. No evidence of any actual Iron and Folic Acid supplementation to patients / public has been furnished. Further, how, when and to whom such technical assistance has been provided has not been furnished. The activity shown by the applicant pertained merely to some theoretical and academic research, without any evidence of anv charitable activity except for incurring some administrative expenses.
8. The provisions of section 12AA stipulate the following conditions for registration u/s 12A of the I.T. Act, 1961:-
(i) The objects of the society/Trust should be of charitable in nature. (ii) The activities of the society/Trust should be genuine.
in light of above facts that the applicant has not submitted true evidence for expenditure incurred towards the charitable activity, the genuineness of the activities of company could not be established. Therefore, the conditions for granting registration u/s 12AA is not satisfied. Accordingly, the application filed by the applicant for grant of registration u/s 12A is hereby rejected. 10. Since the applicant is not registered u/s 12A(a)of the Income Tax Act 1961, its application in form No.10G seeking approval u/s 80G is also rejected as charitable activities could not be substantiated.”
Before us, the learned counsel of the assessee referred to the paper-book filed electronically and submitted his arguments through video conferencing. He submitted that firstly, the earlier registration application was withdrawn by the assessee itself and therefore, consequent dismissal by the CIT(E) is not having any impact on the present application for registration. Further, he submitted that in view of the decision of the Hon’ble Allahabad High Court in the case of Baburam Education Society (2018) 96 taxmann.com 606 (Allahabad) for granting registration only the charitable nature of the object has to be seen. The learned Counsel referred to page 26 of the Paper-book and submitted that various objects of the assessee includes advising and consulting to government organization in relation to health and education of women and children. He submitted that the assessee has associated in health program activities of the government like distribution of the Iron/folic acid tablets, support district level teacher programs, support state health authorities in conducting program related to health. Accordingly, he submitted that the object of assessee being charitable in nature, the order of the CIT(E) might be quashed and the assessee might be directed to be registered under section 12AA of the Act.
The learned DR on the other hand submitted that the assessee has not filed any evidence of its association with Government of India or State Governments for carrying out or conducting its activities claimed in its objects. She also submitted that another organization, namely, Evidence India action .org, which is a USA based organization, is registered on the same address as that of the assessee. She supported the action of the learned CIT(E) for rejection of the registration in absence of evidences of activities carried out by the assessee.
We have heard rival submission of the parties on the issue in dispute through video conferencing. For registration u/s 12AA of the Act, the assessee must fulfill the twin conditions. Firstly, the objects of the society/trust should be charitable in nature and secondly, the activities of the society/trust should be genuine. We may note that the Hon’ble Allahabad High Court in the case of Baburam Educations Society (supra) held that where the trust has not commenced the charitable activities, in such circumstances the only object of the trust should be seen for grant of registration under section 12A of the act. But in the instant case the assessee has already received the donations of ₹13,65,000; ₹ 40,00,000/- and ₹ 60,00,000/- from one person, namely, Sri Mukut Behari Bargava and claimed to have received a donation for undertaking technical assistant to government of India for weekly Iron and folic acid supplementation (WIFS) but no evidence of such activities were furnished before the Ld. CIT(E) and therefore the decision relied upon the assessee is distinguishable. 6.1 Further, the reference by the Ld. CIT(E) of earlier rejection of the registration is misplaced because said rejection or dismissal of registration was in view of the withdrawal of the application by the assessee and therefore there was no decision on merit either on the object or the genuineness of the activity of the assessee. 6.2 We find that The Ld. CIT(E ) has not disputed the charitable nature of the activity of the assessee but the registration has been rejected mainly due to non-genuineness of the activity of the assessee concluded on the basis of non-submission of evidence by the assessee. Before us, the Ld. Counsel has accepted that various activities have been carried out by the assessee in furtherance of its objects till date. We have already held that the ratio in the case of Baburam Education Society (supra) is not applicable over the facts of the assessee and it is imperative to examine the genuineness of the activities of the assessee duly supported with the evidences. The genuineness of the activities would mean that the activities are not bogus or artificial or camouflaged by some means and whether the activities are in accordance with the object of the institution. In view of the facts and circumstances of the case, we feel it appropriate to restore the matter of registration under section 12AA of the Act back to the Ld. CIT(E) for examining the genuineness of the activities with the direction to the assessee to submit the necessary details of the activities carried out supported by the evidences. The appeal of the assessee against rejection of registration is accordingly allowed for statistical purposes.
7. The matter of approval u/s 80G of the Act is an action consequent to the registration, therefore, the appeal filed against rejection of approval u/s 80G is also restored to Ld. CIT(E ) for deciding afresh.
In result, both the appeals of the assessee are allowed for statistical purposes. Order pronounced in the open court on 25th June, 2020.