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Income Tax Appellate Tribunal, “C” BENCH, CHENNAI
Before: SHRI N.R.S. GANESAN & SHRI A. MOHAN ALANKAMONY
आदेश /O R D E R
PER N.R.S. GANESAN, JUDICIAL MEMBER:
This appeal of the assessee is directed against the order of the Commissioner of Income Tax-I, Madurai, dated 23.09.2014, rejecting approval under Section 80G of the Income-tax Act, 1961 (in short 'the Act').
There was a delay of 12 days in filing the appeal by the assessee. The assessee has filed a petition for condonation of delay. We have heard the Ld. counsel and the Ld. D.R. We find that there was sufficient cause for not filing the appeal before the stipulated time. Therefore, we condone the delay and admit the appeal of the assessee.
Sh. A.S. Sriraman, the Ld.counsel for the assessee, submitted that the assessee applied for approval under Section 80G of the Act. According to the Ld. counsel, the assessee-society was registered under Section 12AA of the Act. The Administrative Commissioner by an order dated 23.09.2014 rejected the application of the assessee on the ground that establishment of public places of worship and prayer halls are in the nature of religious purpose. Therefore, such an object cannot be allowed under Section 80G of the Act. Referring to Section 80(5) (i) of the Act, the Ld.counsel pointed out that when an institution incurs expenditure which is of religious nature, for an amount not exceeding 5% of the total income, it shall be deemed to be an institution or fund for which the provisions of Section 80G would apply. According to the Ld. counsel, the Commissioner failed to consider these provisions of the Act. The Ld.counsel further and above 5% of the total income, therefore, the assessee is entitled for approval under Section 80G of the Act.
On the contrary, Sh. Pathlavath Peerya, the Ld. Departmental Representative, submitted that admittedly the assessee is a religious and charitable one. One of the objects of the Trust is to establish places of worship and prayer halls.
According to the Ld. D.R., the presence of even one religious object in the deed would disentitle the assessee for approval under Section 80G of the Act.
We have considered the rival submissions on either side and perused the relevant material on record. Section 80G(i)(b) of the Act reads as follows:-
“80G(5B) Notwithstanding anything contained in clause (ii) of sub-section (5) and Explanation 3, an institution or fund which incurs expenditure, during any previous year, which is of a religious nature for an amount not exceeding five percent of its total income in that previous year shall be deemed to be an institution or fund to which the provisions of this section apply.”
In view of the above provision in the Act, when the expenditure does not exceed 5% of the total income for the previous year, then such a society/institution shall be deemed to be an institution to which the examined the expenditure incurred by the assessee in the previous year. Even though the assessee claims that no expenditure was incurred exceeding 5% of the total income, the Commissioner has not examined the same. Therefore, this Tribunal is of the considered opinion that the Commissioner has to re-examine the matter afresh. Accordingly, we set aside the order of the Commissioner and the entire issue is remitted back to his file. The Commissioner shall re-examine the issue in the light of the provisions of Section 80G(5B) and thereafter decide the same in accordance with law, after giving reasonable opportunity to the assessee. It is made clear that in case the Commissioner decides to grant approval under Section 80G of the Act and the expenditure incurred by the assessee exceeded 5% of the total income in any of the previous year, then the Commissioner is at liberty to withdraw the approval for the year in which the expenditure exceeded 5% of the total income.
With the above observation, the appeal of the assessee is allowed for statistical purposes.
Order pronounced on 12th June, 2015 at Chennai.