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Income Tax Appellate Tribunal, BANGALORE BENCH ‘A’
Before: SHRI N.V VASUDEVAN & SHRI JASON P BOAZ
PER SHRI N.V VASUDEVAN, VICE PRESIDENT :
This is an appeal by the Assessee against the order dated 28.5.2018 of CIT(Exemption), Bangalore, rejecting an application for grant of recognition u/s.80G of the Income Tax Act, 1961 (Act) to the Assessee.
The Appellant is a charitable trust. The trust came to existence pursuant to deed of trust dated 3.5.1982 (with modifications to the trust deed by supplementary deeds dated 18.2.1983 and 24.2.2015). The objects of the trust was mainly to provide education. It is not in dispute that the Assessee has been granted registration u/s 12A of the Act by order dated 1.6.1982 and its objects have been accepted as charitable in nature and that its activities were genuine.
The Assessee made an application for grant of approval u/s.80G of the Act vide application dated 15.11.2017. The CIT( E) vide his letter dated 9.5.2018 called upon the Assessee to furnish details like copies of assessment orders u/s.143(3) of the Act for the preceding years, explain as to whether there were any tax arrears, explain as to why approval should not be denied because as per the objects the Assessee can establish and run places of worship and explain as to why its objects should not be considered as commercial in nature in so far as it relates to the activities of the trust to maintain tourists centers and provide facilities.
The Assessee vide its reply dated 19.5.2018 filed on 22.5.2018 before the office of CIT( E), Bangalore, giving various details and annexures. A copy of the same is available at pages 180 to 197 of the Assessee’s paper book. However, the application for grant of approval u/s 80G of the Act, the CIT(E) rejected the application for the following reasons: “However, on verification of Form No.10G and other submission filed by the applicant trust it is noticed that most of the neneficiary are for a specific religion and the activities are also religious in nature therefore the trust is not eligible for recognition. In the absence of relevant details, it is not possible to verify the genuineness of the activities of trust in this case.”
The CIT(E) also referred to the decision of the Hon’ble Karntaka High Court in the case of M/s Ganjam Nagappa & Son Trust Vs. DIT, 269 ITR 59 (Kar) and the Kerala High Court in the case of Self Employers Institution Vs. CIT 247 ITR 18 (ker) wherein it has been held that charitable nature of the objects of the trust and genuineness of its activities are required to be seen for grant of approval u/s.80G of the Act. For the above reasons, the CIT(E) rejected the application of the assessee for grant of approval u/s 80(5)(vi) of the Act.
Aggrieved by the order of the CIT(E), the assessee has preferred present appeal before the Tribunal.
The ld counsel for the assessee brought to our notice that in the reply to the shoc cause notice of the CIT( E), Bangalore dated 9.5.2018, the Assessee has explained as to how its objects were charitable in nature and not commercial or religious vide its reply dated 19.5.2018. He pointed out that none of those submissions were considered by the CIT( E), Bangalore. He pointed out that in the impugned order that the CIT(E) has not spelt out the conditions mentioned in sec. 80G(5) which has not been fulfilled by the assessee. He pointed out that the Assessee has been has granted registration u/s 12A of the Act and such registration is in force which means that the objects of the trust were charitable and that its activities were genuine. In these circumstances, he submitted that the CIT(E) ought to have granted the approval u/s 80G of the Act to the assessee.
The ld DR on the other hand pointed out that it was the duty of the assessee to satisfy the CIT(E) regarding existence of conditions for grant of approval u/s 80G of the Act. He placed reliance on the decision of Hon’ble Karnataka High Court in the case of Ganjan Nagappa & Son Trust (Supra). He also pointed out that examination of the activities of the trust was necessary before approval can be granted u/s.80G of the Act.
The ld counsel for the assessee on the other hand submitted that the decision in the case of Ganjan Nagappa & Son Trust (Supra) was not applicable to the present case for the reason that in the aforesaid case, it was the case of grant of renewal of recognition u/s 80G. He pointed out that on the facts of the case said case, the CIT(E) found that the assessee had done several acts warranting no renewal like withdrawal of substantial amount and use of the same for non charitable purposes. He pointed out in the present case no such facts were present and in the circumstances the action of the CIT(E) in refusing grant of registration is not justified.
We have carefully considered the rival submissions. It is not in dispute that the Assessee has been granted registration u/s 12A of the Act and such registration continues to remain in force. Therefore it cannot be said that the objects of the trust were not charitable and that its activities were not genuine as these are conditions for grant of registration and u/s.12A of the Act and for its continuance. The impugned order is silent on the reply of the Assessee dated 19.5.2018 to the CIT( E)’s show cause notice dated 9.5.2018. To that extent there is violation of principles of nature justice in as much as the submissions of the Assessee have not been considered and dealt with. In the circumstances, we are of the view that it would be fit and proper to set aside the order of the CIT ( E) and remand for fresh consideration by him of the reply of the Assessee dated 19.5.2018 and also afford further opportunity of being heard and file evidence to substantiate its case for grant of approval u/s.80G of the Act. We hold and order accordingly.
In the result, the appeal by the Assessee is treated as allowed for statistical purpose.