AMBESH SOBHAGYA MEWAD CHARTIABLE TRUST,MUMBAI vs. CIT (E ), MUMBAI

The facts relating to the above said issue are stated in brief. The assessee is a charitable trust formed by a Memorandum of Association dated 01-03- 2013. The assessee applied to Ld CIT (Exemptions) seeking registration u/s 12AA of the Act and it was granted registration u/s 12AA of the Act w.e.f. AY 2015-16, vide order dated 30-07-2015 passed by Ld CIT (Exemptions).

Thereafter, the assessee filed application on 21-02-2015 seeking recognition u/s 80G of the Act. The Ld CIT (Exemptions) passed order on 27- 04-2016 granting recognition u/s 80G of the Act, however, with the rider that the approval is valid for the donations received after 27-04-2016 only. The assessee is aggrieved by the order so passed by Ld CIT (Exemptions). The 2 Shri Amesh Sobhagya Charitable Trust contention of the assessee is that the approval should have been given by Ld CIT(Exemptions) from the date of filing of application.

We heard the parties and perused the record. The undisputed fact is that the assessee has filed its application seeking recognition u/s 80G of the Act on 21.02.2015 and the Ld CIT(Exemptions) has passed the order on 27.4.2016 granting approval, i.e., after expiry of more than one year from the date of filing of the application. However, the Ld CIT (Exemptions) have put a rider that the approval is valid for the donations received after 27.04.2016, i.e., from AY 2017-18 onwards.

The recognition u/s 80G of the Act is granted to a Charitable institution/trust in terms of sec.80G(5)(vi) of the Act, as per which the donations given to the charitable trust/institution are eligible for deduction u/s 80G of the Act in the hands of the donor. The objective in introducing the registration was to enable the charitable trust/institution to mobilise more funds by way of donations, which will help it to implement/achieve its objectives for the benefit of public at large. Hence the recognition so granted by Ld CIT u/s 80G of the Act is going to help the public at charge. We notice that the provisions of Rule 11AA(6) of the IT Rules prescribe a time limit of six months from the end of the month in which application was made for passing order. The above said time limit shall be extended by the delay caused by the assessee in complying with the conditions prescribed by the Ld CIT. In our view, the object behind above said provision is that the order u/s 80G(5)(vi) should be passed as early as possible.

Viewed from the objective behind introduction of approval procedure prescribed u/s 80G of the Act, we are of the view that the Ld CIT (Exemptions) should have granted approval from the date of filing of application. Hence we do not find any justification on the part of Ld CIT(Exemptions) in granting recognition only from the date of passing of the order. If the approval given from the date of passing of order is considered to be correct for a moment, the 3 Shri Amesh Sobhagya Charitable Trust donations, if any, collected by the assessee in anticipation of the approval from the period commencing from the date of filing of application till the date of passing of order may not be eligible for deduction u/s 80G of the Act, putting the assessee as well as the donors in a jeopardy. This could not have been the intention of the legislature. Hence, in the interest of natural justice, we are of the view that the recognition should have been granted by Ld CIT (Exemptions) from the date of filing of application by the assessee.

In view of the foregoing discussions, we modify the order passed by Ld CIT (Exemptions) and grant recognition u/s 80G of the Act from the date of filing of application i.e., 21.02.2015 relevant for assessment year 2015-16 onwards. Accordingly we direct Ld CIT (Exemption) to issue appropriate orders.

In the result, the appeal filed by the assessee is allowed. Order has been pronounced in the Court on 7.6.2018.