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Income Tax Appellate Tribunal, ‘B’ BENCH, BENGALURU
Before: SHRI JASON P BOAZ & SHRI PAVAN KUMAR GADALE
Appellant by : Shri Shivanand Halbhavi, CA. Respondent by : Ms. Neera Malhotra, CIT(DR) Date of hearing : 12/12/2018 Date of pronouncement: 13/12/2018 O R D E R
Per PAVAN KUMAR GADALE, JM :
The assessee-trust has filed the appeal against the order of the Commissioner of Income-tax(Exemptions), Bengaluru, passed u/s 80G(5)(vi) of the Income-tax Act, 1961 [hereinafter referred to as 'the Act' for short] dated 26/06/2018.
Brief facts of the case are that the assessee is a public charitable trust Registered u/s 12AA of the Act, vide registration u/s 12AA(1)(b)(i) of the Income-tax Act, 1961
Page 2 of 7 [hereinafter referred to as 'the Act' for short] dated 26/03/2013 and registration granted w.e.f. assessment year 2013-14. The main objects of the assessee-trust are promotion of charity, education and other objects of charitable in nature. The assessee-trust made an application in Form 10G for Recognition u/s 80G of the Act, on 05/12/2017. Subsequently notice was issued by the office of CIT(Exemption) to submit information and clarifications on application on or before 18/06/2018 and the case was also posted for hearing on said date. The assessee-trust has filed reply with details by speed post on 14/06/2018 and the same was received by the CIT(Exemptions). But on date of hearing none appeared on behalf of the assessee-trust or the authorized representative except the letter was sent by Trust through speed post which is not disputed. The CIT(Exemptions) examined the application and the information filed and finally concluded that the assessee-trust is running kinder garden school and the activities of the assessee do not come under the purview of charitable activities within the meaning u/s 2(15) of the IT Act and rejected the application for recognition u/s 80G of the Act by order dated 26/06/2018.
Aggrieved by the order of the CIT(Exemption), Bengaluru, the assessee-trust has filed the appeal before the Tribunal and raised the following grounds of appeal:
4. Before us, the learned AR of the assessee submitted that the assessee-trust has been undertaking charitable activities from constitution of the trust in 2011, Registered u/s 12AA of the Act and has filed paper book with evidences of filing of returns of income for the assessment years 2015-16, 2016-17, 2017-18 and copy of granting of registration u/s 12AA of the Act. Learned AR further emphasized that the CIT(Exemption), without granting adequate opportunity of hearing has, relied only on information available on record and ignored the details filed by speed post and came to unilateral conclusion that the activities of the trust are not charitable in nature and the activity of running of kinder garden school does not come within the purview of charitable purpose. The learned AR, in support of the case, relied on judicial decisions and prayed for allowing the above appeal.
5. Contra, the learned Departmental Representative opposed the submissions and explained that no proper explanations were filed by the assessee before the CIT(Exemptions) in hearing proceedings and supported the Page 4 of 7 order of the CIT(Exemptions) and prayed for dismissal of the case.
We have heard rival submissions and perused material on record. The sole crux of the disputed issue qua granting of recognition u/s 80G of the Act. Learned AR submitted that the assessee-trust was engaged in charitable activities from the year of incorporation i.e. 2011, maintaining Books of account and complied with income-tax provisions, drew attention to page 28 to 40 of the paper book where financial statements of the assessee-trust, statement of income for last three assessment years were filed and the assessee was granted registration u/s 12AA and supported with copy of registration certificate at page 23 and 24 of paper book granted effective from assessment year 2013-14.
We find the assessee-trust is registered u/s 12AA of the Act and has been filing income tax returns regularly, which is not disputed. The fact remains when application is filed by the assessee for recognition u/s 80G, the CIT(Exemptions) has considered information filed in Form 10G and ignored the facts and provisions u/s 12A. The assessee was granted registration u/s 12AA effective from assessment year 2013-14. The assessee has filed statement of income and copies of acknowledgment of income-tax returns for assessment years
Page 5 of 7 2015-16, 2016-17 and 2017-18. On perusing the order of the CIT(Exemptions), we noticed these facts are not emanating from the order of the CIT(Exemptions) or any observation by the CIT(Exemptions) on this vital material. The learned AR of the assessee relied on the decision of the Hon’ble ITAT, Mumbai, in the case of Green Acres Educational Trust vs. DCIT (2016) 70 taxmann.com 347(Mumbai)(Trib.) and Hon’be ITAT, Jaipur Bench in the case of Anand Incubation Centre vs. CIT(Exemptions) (2017) 86 taxmann.com 250(Jaipur-Trib.) to substantiate that when u/s 12AA registration has been granted and pre-schooling is part of education and there should not be any denial of approval u/s 80G of the Act. In the case of Green Acres Educational Trust (supra) Hon’ble ITAT held as under at para. 3.9, which is as under:
“3.9. Further, it is noted in the case of Life Shines Educational & Charitable Trust (supra) Chennai Bench of the Tribunal held that "pre-schooling' shall fall within meaning and scope of the 'education' as used u/s 2(15). Thus, in view of the aforesaid discussion and facts of this case, we do not find any justification in the view adopted by the Ld. DIT that pre-schooling is not part of education activity. In our considered view pre-schooling is very much integral part of the term 'education' as has been envisaged u/s 2(15) of the Act and we hold so.” In the case of Anand Incubation Centre (supra) it has been held at para 10 which is read as under:
“10. Further, on perusal of Section 80G(5) as well as Rule 11AA, what is required to be seen is whether the Page 6 of 7 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-section 5 are fulfilled, the CIT is required to record his satisfaction before grant of approval under section 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 appellant has been duly registered under section 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 section 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.” We are of the substantive opinion that the assessee-trust has filed requisite details required u/s 80G(5)(vi) by speed post and the same could not be explained in person due to various reasons. Further, the judicial decisions referred above and relied by the assessee are in support of claim of assessee’s prayer. But the fact remains the assessee could not file details as contemplated in supporting its case along with paper book in the hearing proceedings before CIT(Exemptions). In the interest of substantial justice, we provide one more opportunity to the assessee to substantiate its case along with evidences and the judicial decisions filed in the hearing proceedings. Further, the CIT(Exemptions) is at liberty to call
Page 7 of 7 for any further information and also consider the observations and judicial decisions discussed above. Further the assessee shall co-operate in submitting information and clarifications for early disposal of the application. Accordingly, We set aside the order of Rejection of CIT(Exemption) and restore the entire disputed issue to the file of the CIT(Exemption) to adjudicate afresh and allow the grounds of appeal for statistical purposes.
In the result the appeal of the assessee is allowed for statistical purposes.
Order pronounced in the open court on 13th December, 2018.