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Income Tax Appellate Tribunal, DELHI BENCH ‘A’ NEW DELHI
PER SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER This appeal has been preferred by the assessee against the order passed by the Ld. Director of Income Tax (Exemptions), Delhi wherein vide order dated 13.8.2012, the assessee’s application for renewal of approval u/s 80G of the Income Tax Act, 1961 has been rejected.
The grounds of appeal read as under:-
“1. That on facts of the case and in law, the order passed by the Ld. Director of Income Tax (Exemptions) is illegal. 2. That on facts of the case and in law the Ld.
I.T.A. No. 5252/D/2012
DIT (Exemption) erred in not renewing the approval under section 80G(vi) on the ground that it does not fulfil the conditions laid down in section 80G(5) of the Income- tax Act. 3. The appellant craves to leave to add, alter amend/or modify any of the grounds of appeal at or before the hearing of appeal.”
The Ld. AR submitted that the assessee is registered u/s 12AA of the Act and was also enjoying the benefit of approval
u/s 80G (vi) of the Act which was valid up to 31.03.2008.
However, the application for the renewal of the approval has been rejected without affording a proper opportunity to the assessee to explain its case.
4. Learned Departmental Representative supported the order
of the Ld. DIT (E).
We have heard the rival submissions and perused the relevant material placed on record. In para 3 of the impugned
order, it is seen that the Ld. DIT(E) has rejected the application of the assessee entirely on the basis of documents submitted by the assessee and has noted as under:- “3. On perusal of the details of submitted, it is found from various documents that the company provides services on contract basis as it being having professional skills and personnel/technical resources in I.T.A. No. 5252/D/2012 the so called field of clients requirement. In lieu of the services provided the company gets fees from the clients with whom the contract is made. It is verified from contract made with 1) Madhya Pradesh Society for Rural Livelihood Promotion 2) Directorate of Farmer’s Welfare and Agriculture Development 3) Rajasthan Horticulture Development Society Whereas, the company has not done any charity in last four years from its own resources instead it worked as an agent or service provider on fees basis through contract made with different organisations. There is no own charitable activity of the company, the financial statement of the company shows income from Grants, Consultancy Income, Conference Receipts and Micro Finance Alliance Membership Fees and the expenses made are in respect of these income received as per the norms of the clients define/mentioned in the contract. The company is exactly selling its expertise in lieu of fees by way of consultancy, conferences and also by making member alliance from other organizations. The TDS were also deducted ( Rs.58,42,739/- for 2010 & Rs.29,12,454/- for 2009) by the parties who had made the payment to the applicant. It is very clear these are professional receipts It is not at all a charitable activity in any manner.
In view of the above facts, It is held that the company did not fulfill the conditions laid down for grant of exemption u/s 80G(5) of the Income Tax Act 1961. The applicant’s application furnished in Form No. 10G for renewal of exemption u/s 80G of the Income Tax Act, 1961 is hereby rejected.”
Thus, it is seen that the Ld. DIT (Exemptions) has not called for any clarifications/justifications from the assessee and has proceeded to adjudicate and reject the assessee’s application in contravention of the principles of natural justice. Therefore, in the interest of justice, we restore the issue to the file of the Ld. DIT (Exemptions) for fresh adjudication with the direction that the assessee be afforded a proper opportunity of being heard 3 before such adjudication.
In the result, the appeal of the assessee is allowed for statistical purposes.
Order pronounced in the open court on 29th June, 2016.