TREEDOM FOUNDATION ,BANGALORE vs. THE INCOME TAX OFFICER (EXEMPTIONS) WARD-2 , BANGALORE

This is an appeal by the Assessee against the order dated 28.8.2018 of CIT(Exemptions), Bangalore refusing approval u/s.80G(5)(vi) of the Income Tax Act, 1961 [“the Act”].

The assessee is a trust which came into existence pursuant to a registered Deed of Trust dated 8.1.2018. The main objects for which the Trust was created was for the relief to the poor, environmental activities and other general public utility. The Assessee made applications on 8.2.2018 for grant of registration u/s.12A of the Act in Form No.10A and for grant of approval u/s.80G of the Act in Form No. 10G.

As far as application for grant of registration u/s.12A of the Act is concerned, the same was allowed by the CIT(E) vide his order dated 29.8.2018. However, on 28.8.2018 he passed the impugned order rejecting the application of the Assessee for grant of approval u/s.80G of the Act. The reason given in the impugned order is that the Assessee has not carried out any noticeable activities.

Aggrieved by the aforesaid order, the Assessee has preferred the present appeal before the Tribunal. We have heard the rival submissions. The limited objection raised by the ld. CIT(E) is that the assessee has not started significant activity and accordingly the application is not fit for grant of approval under Section 80G of the Act. In other words, the ld. CIT(E) has accepted the fact that the assessee has started certain activities as per its objects. The objects have been duly verified and approved as charitable objectives while granting approval under Sec.12AA of the Act. In our view, what is of relevance for the purposes of grant of approval under Sec.80G is, whether the objectives are charitable or not; the activities, so started, howsoever insignificant it may be, are genuine activities or not; and whether the same are in consonance with and in furtherance of the objectives of the assessee society.

According to Section 80G as well as Rule 11AA, what is required to be seen is, whether the institution/fund has been established in India for a charitable purpose or not. Secondly, it lays down certain additional conditions under clause (i) to clause (v) which are required to be fulfilled. Rule 11AA provides that where the CIT is satisfied that the conditions laid down in clauses (i) to (v) of sub-Sec.5 are fulfilled, the CIT is required to record his satisfaction before grant of approval under Sec.80G(vi). Where however, the CIT is satisfied that one or more of the conditions are not fulfilled, he is empowered to reject the application for approval after recording the reasons for such rejection. In the instant case, the Assessee has been duly registered under Sec.12AA which shows that ld. CIT has already verified its objectives and its establishment for charitable purposes. Regarding fulfilment of additional conditions specified in clause (i) to clause (v) of Sec.80G(5), we find that there is no recording of satisfaction regarding non-fulfilment of any of the conditions so specified and the ld. CIT(E) has summarily rejected the assessee's application. The decision of the ITAT Jaipur in the case of Anand Incubation Centre Vs. CIT(E), Jaipur (2017) 86 Taxmann.com 250 (Jaipur) supports the plea of the Assessee in this regard.

Since the only reason for not according approval u/s.80G of the Act was that the Assessee did not carry on any charitable activity and since that reason has been held to be not relevant for grant of approval, as a consequence, the approval u/s.80G of the Act should be allowed. We hold and direct accordingly.

In the result, the appeal is allowed.