PR. COMMISISONER OF INCOME TAX, vs. M/S TREEDOM FOUNDATION

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ITA/466/2019HC KarnatakaKAHC01040723201911 June 2021Bench: SATISH CHANDRA SHARMA,R. NATARAJ6 pages
AI SummaryDismissed

What did the High Court hold?

The Tribunal held that the CIT had summarily rejected the 80G application without recording satisfaction on the non-fulfilment of specific conditions. The High Court, following its earlier judgments, dismissed the revenue's appeal.

What were the facts?

The assessee, a trust formed in January 2018 for charitable purposes, applied for registration under Section 12A and approval under Section 80G. While 12A registration was granted, the 80G approval was rejected. The ITAT allowed the assessee's appeal against the 80G rejection.

What were the issues?

Whether the ITAT was correct in directing the grant of 80G approval despite the trust not having commenced activities, and whether the CIT properly recorded satisfaction for rejection.

Which sections of the Income-tax Act were involved?

Section 80G,Section 12A,Section 12AA

AI-generated summary — verify with the full judgment below

Cases cited in this judgment(2)Show list

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IN THE HIGH COURT OF KARNATAKA AT BENGALURU

DATED THIS THE 11TH DAY OF JUNE, 2021

PRESENT

THE HON'BLE MR. JUSTICE SATISH CHANDRA SHARMA

AND

THE HON'BLE MR. JUSTICE NATARAJ RANGASWAMY

ITA NO.466/2019

BETWEEN

1.

PR. COMMISSIONER OF INCOME TAX,

EXEMPTIONS,

UNITY BUILDING ANNEXE,

MISSION ROAD

BENGALURU – 560 027.

2.

INCOME TAX OFFICER,

(EXEMPTIONS)

WARD-2, BENGALURU.

... APPELLANTS

(BY SRI SANMATHI E I, ADVOCATE)

AND:

M/S TREEDOM FOUNDATION, NO.3, MSR WEST PARK CHURCH STREET, BENGALURU 560 001.

... RESPONDENT

(BY SRI SUDHEENDRA B R, ADVOCATE)

THIS ITA IS FILED UNDER SECTION 260A OF THE INCOME TAX ACT PRAYING TO FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW, SET ASIDE THE APPELLATE ORDER DATED 15.3.2019 PASSED BY THE INCOME TAX APPELLATE TRIBUNAL ‘A’ BENCH, BENGALURU IN APPEAL PROCEEDINGS NO. ITA NO.2646/BANG/2018 AS SOUGHT IN THIS APPEAL AND TO GRANT

SUCH ORDER RELIEF AS DEEMED FIT, IN THE INTERET OF JUSTICE.

THIS ITA COMING ON FOR HEARING THIS DAY, SATISH CHANDRA SHARMA J., DELIVERED THE FOLLOWING:

JUDGMENT

The present appeal is arising out of the order dated 15.3.2019 passed in ITA No.2646/Bang/2018 by the Income Tax Appellate Tribunal, Bangalore Bench.

2.

The facts of the case reveal that the respondent/assessee is a trust and it came into existence on 8.1.2018. The Trust was created with the aim and object to help the poor, to do environmental activities and other general public utility services. The assessee submitted an application on 8.2.2018 for grant of registration under Section 12A of the Finance Act in Form No.10A and for grant of approval under Section 80G of the IT Act of 1961 in Form No.10G. The application for grant of registration under Section 12A of the Finance Act was allowed by the Commissioner of Income Tax (Exemptions) vide order dated 29.8.2018. However, on 28.8.2018 an order was passed rejecting the application of the assessee for grant of approval under section 80G of the IT Act of 1961. Being aggrieved by the order dated 28.8.2018 the

assessee has preferred an appeal before the Income Tax Appellate Tribunal (hereinafter referred to as the ITAT) and the appeal was allowed by order dated 15.3.2019. Paragraphs 5 and 6 of the order reads as under; “5. According to Section 80G as well as Rule 11AA, what is required to be seen is, whether the 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- Sec.5 are fulfilled, the CIT is required to record his satisfaction before grant of approval under Sec.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 Assessee has been duly registered under Sec.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 Sec.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. The decision of the ITAT Jaipur in the case of Anand Incubation Centre Vs. CIT(E), Jaipur (2017) 86 Taxmann.com 250 (Jaipur) supports the plea of the Assessee in this regard.

6.

Since the only reason for not according approval u/s.80G of the Act was that the Assessee did not carry on any charitable activity and since that reason has been held to be not relevant for grant of approval, as a consequence, the approval u/s.80G of the Act should be allowed. We hold and direct accordingly.”

3.

The revenue being aggrieved by the order has preferred the present appeal and it was argued before this Court that the assessee/trust was formed on 8.1.2018 and no activities

were carried out by it till the date of application for approval under Section 80G of the IT Act of 1961. Various other grounds were also raised.

4.

This Court has admitted the appeal on the following substantial question of law;

“(1) Whether, on the facts and circumstances of the case, the Tribunal is right in directing the respondent to grant registration under Section 80G of the Act as well ignoring the fact that though the assessee – trust was formed on 9-1-2018 no activities were carried on by it till the date of application for approval under Section 80G of the Act?

(2) Whether on the facts and circumstances of the case, the Tribunal is right in not appreciating the fact that the assessee has failed to prove with financial statements and activities carried out earlier, that they are charitable in nature as provided under Rule 11AA(3) of the Rules, 1962?

(3) Whether on the facts and circumstances of the case, the Tribunal is right in not considering the fact that satisfaction on the part of the authority granting approval for recognition under Section 80G is necessary in terms of Section 80G read with Rule 11AA of the Act?

(4) Whether on the facts and circumstances of the case, the Tribunal is right in not following the decision of the jurisdictional High Court in the case of Ganjam Nagappa & Sons Trust (Supra). Wherein, it has been held that ‘grant of exemption or renewal is not automatic in character’, in allowing the assessee’s appeal?”

5.

This Court has already decided an identical issue in the case of Principal Commissioner of Income Tax (Exemptions) v. M/s OLA Foundation, in ITA.No169/2019, decided on 19.3.2021. Not only this, this Court earlier also has decided another similar appeal in ITA.No.320/2014 in similar facts and circumstances of the case. Paragraphs 4 and 5 of the judgment in ITA.No.169/2019 reads as under; 4. Learned Counsel for the assessee has vehemently argued before this Court that a Division Bench of this Court in I.T.A.No.320/2014 has answered the similar question of law in favour of the assessee. The order passed by the Division Bench of this Court reads as under:

“We have heard Sri E.I.Sanmathi, learned Counsel for the appellant and perused the record.

2.

These appeals have been filed raising the following substantial question of law:

“Whether the Tribunal was correct in holding that the assessee trust must be granted registration under Section 12A and recognition under Section 80G of the Income Tax Act despite the fact that it had not commenced activities and therefore, failed to satisfy the conditions laid down in Section 12AA(1)(b) of the Act?”

3.

Learned Counsel for the appellant does not dispute the fact that the question involved in these appeals is squarely covered by the judgment of this Court rendered in the case of Director of Income Tax (Exemptions) Vs. Meenakshi Amma Endowment Trust (2013) 354 ITR 219 (Karn).

4.

For the reasons given in the judgment of a co- ordinate Bench of this Court in the aforesaid case, we are of the opinion that no substantial question of law arises for determination by this Court. The

appeals are accordingly dismissed. There shall be no order as to costs.

5.

In the light of the judgment delivered by the Division Bench, as the lis involved has already been decided, the questions framed are answered in favour of the assessee and against the revenue. Resultantly, the appeal standsdismissed.

6.

In light of the aforesaid, as this Court has already decided ITA No.169/2019 and ITA No.320/2014, the substantial questions of law framed in this appeal are answered in favour of the assessee and against the revenue.

The net result is that the appeal is dismissed.

Sd/- JUDGE

Sd/- JUDGE

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