SHRI RAMSIYA CHARITABLE AND EDUCATIONAL TRUST,GHAZIABAD vs. CIT (EXEMPTIONS), LUCKNOW

The brief facts of the case are that the assessee society had filed application for approval u/s. 80G(5) on 06.09.2017 with CIT(E), Lucknow. The ld. CIT(E) issued notice for examination of the records of the society, but the assessee failed to produce books of accounts and vouchers and income & expenditure account, receipt & payment account and balance sheet. On the basis of documents available with the CIT(E), he observed that the assessee has not carried out any charitable activity and that the assessee society has not performed any activity as per objects set out in the memorandum of society. He also referred to the decision of ITAT, Lucknow Bench in dated 26.02.2015, wherein registration u/s. 12AA was rejected by the Bench in the similar circumstances. Accordingly, the CIT(E) rejected the application for approval u/s. 80G(5) of the Act. Aggrieved, the assessee is in appeal before the Tribunal.

The ld. AR submitted that the assessee society has got registered u/s. 12AA by the CIT(E) Lucknow vide order dated 22.08.2017 placed at PB-28-29 in pursuance to the order of ITAT in appeal of the assessee bearing No. 2127/Del/2017 dated 10.07.2017 directing to grant registration after relying on the decision of jurisdictional High Court in the case of Hardayal Charitable & Educational Trust vs. CIT(2013) 32 taxmann.com 341 (All.). It was next submitted that the ld. CIT(E) has failed to consider the decision rendered by the Hon’ble jurisdictional High Court in the case of Hardayal Charitable & Educational Trust (supra) relied by the assessee before him. The ld. Counsel has further relied on the following decisions : (i) CIT v. Pujya Shri Jalarambapa & Matushri Virbaima Charitable Trust (appeal No. 119 of 2014 dated 11.11.2014 (Guj. HC) (ii) Samajik Pragya Prasar Samiti vs. CIT (ITA No. 343 of 2016 dt. 16.01.2018 (ITAT Agra.)

On the other hand, the ld. DR relied on the order of the CIT(E) and submitted that the assessee had not done any charitable activity nor produced financial statement nor books of accounts nor any vouchers. Therefore, no charitable activity was proved by the assessee before the ld. CIT(E). Before granting registration u/s. 80G(5), the CIT(E) has to be satisfied that the society/trust is engaged in the activities which are charitable in nature as per the aims and objects of the society. He also relied on the decision of Hon’ble Allahabad High Court in CIT vs. Rama Educational Society (2017) 88 taxmann.com 513 (All). In rejoinder, the ld. AR of the assessee submitted that this decision is not applicable to the present case, as the assessee is in initial stage of formation of the Trust and therefore, there was no question of carrying out any activity or maintaining the books of account whereas in the case law cited, the activities of the society stood started much earlier, as it was granted registration u/s. 80G which was valid upto 31.03.2004.

We have considered the rival submissions and have gone through the entire material available on record. It is not in dispute that the appellant had already been granted registration u/s. 12AA by the ld. CIT(E) Lucknow on 22.08.2017 in pursuance to the order of ITAT in appeal of the assessee bearing No. 2127/Del/2017 dated 10.07.2017 directing to grant registration after relying on the decision of jurisdictional High Court in the case of Hardayal Charitable & Educational Trust (supra) in the similar circumstances. It is also not in dispute that the assessee-trust is in initial stage of formation of the trust and hence, it was not feasible for the assessee either to carry out any activity or to produce the books of account before the ld. Authority below. We are, therefore, of the opinion that once the assessee has been granted registration without going into the activities of the assessee at the initial stage of formation of trust, the ld. CIT(E) was not justified to refuse approval to the assessee u/s. 80G(5) of the Act. Hon’ble Jurisdictional High Court in the case of Hardayal Charitable & Educational Trust (supra) has held that where the trust is at the initial stage and no activities have been carried out, only genuineness of the objects of the Trust has to be tested. Admittedly, in the instant case, the assessee trust has also not carried out any activity and it was the initiation of the Trust. Therefore, in view of these facts, the ld. CIT(E) was not justified to refuse approval u/s. 80G on this account. The decision relied by the ld. DR is not found applicable to the present case in view of the distinguishing features narrated by the ld. AR above. Accordingly, the appeal of the assessee is found to have merits and is fit to be allowed. The ld. CIT(E) is directed to grant approval u/s. 80G to the assessee.

In the result, the appeal is allowed.