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Income Tax Appellate Tribunal, “A’’ BENCH: BANGALORE
Before: SHRI GEORGE GEORGE K. & SHRI B.R. BASKARAN
PER B.R. BASKARAN, ACCOUNTANT MEMBER:
The assessee has filed this appeal challenging the order dated 28.6.2019 passed by Ld. CIT(Exemptions), Bengaluru rejecting the application filed by the assessee seeking recognition u/s 80G(5)of the Income-tax Act,1961 ['the Act' for short].
We heard the parties and perused the record. We notice that the assessee has submitted application seeking recognition u/s 80G of the Act before Ld. CIT(Exemptions) on 27.12.2018. The Ld. CIT(E) called for certain details and the same was furnished by the assessee. The Ld. CIT noticed that the assessee trust has generated excess of income over expenditure in the past two financial years. Accordingly,
M/s. Kourava Education Society, Hirekarur
Page 2 of 3 he took the view that th assessee has not carried out charitable activities and accordingly rejected the application of the assessee with the following observations:
“The reply submitted has been examined. As verified from the documents and financials submitted, the trust was granted registration u/s 12AA on 18.9.2018 as a trust with salient activities as education, medical relief, advancement of any other object of general public utility. As per the financials submitted by the trust in past two financial years the society has excess of income over expenditure. At the stage of recognition u/s 80G, the Commissioner in receipt of an application for recognition has to satisfy hikself about the objects of the trust or institution and the genuineness of its activities. In this connection, reliance is placed on the following decisions:- a) “The Hon’ble Karnataka High Court in the case of Ganjam Nagappa and Son Trust Vs. DIT€ reported in 269 ITR 59 have held that “Grant of exemption or renewal is not automatic in character. b) Hon’ble Kerala High Court in the case of Self Employers Institution Vs. CIT reported in 247 ITR 18 has held that where there is no material before the Commissioner to be satisfied of the genuineness of the activities of the trust is a valid reason for rejection. In the circumstances, the application for grant of recognition u/s 80G(5)(vi) of the I.T. Act, 1961, is hereby rejected. The assessee may re-apply at a later date after carrying out charitable activities.”
The provisions of section 80G(5) of the Act prescribes the conditions for recognizing a charitable trust u/s 80G of the Act. We notice that the Ld. CIT(E) has not examined the compliance of various conditions prescribed in section 80G(5) of the Act. Instead the Ld. CIT(E) has drawn adverse inference only for the reason that the assessee has generated excess of income over expenditure in the past two financial years, meaning thereby, the Ld. CIT(E) did not examine the activities carried on by the assessee and also compliance of M/s. Kourava Education Society, Hirekarur Page 3 of 3 various conditions prescribed u/s 80G(5) of the Act. The two case laws referred to by Ld. CIT(E) have been rendered in the context of facts prevailing in those cases. However, no such kind of deficiency has been pointed out by Ld. CIT in order to draw support of his decision. Under these set of facts, the order passed by Ld. CIT(E) cannot be sustained. Accordingly, we set aside the order passed by Ld. CIT(E) and restore the same to his file for processing the application of the assessee in accordance with law.
In the result, the appeal filed by the assessee is treated as allowed for statistical purposes. Order pronounced in the open court on 9th Sept, 2020