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Income Tax Appellate Tribunal, DIVISION BENCHES ‘B’, CHANDIGARH
Before: MS. DIVA SINGH & SHRI B.R.R.KUMAR
PER DIVA SINGH
The present appeal has been filed by the assessee assailing the correctness of the order dated 30.11.2017 of CIT(Exemptions), Chandigarh passed u/s 80G(5)(vi) on the following grounds : 1. That the order of Learned Commissioner of Income Tax (Exemptions) is bad and against the facts & Law. 2. That the Learned Commissioner of Income Tax (Exemptions) has wrongly denied the approval u/s 80G (5)(vi) requested by the appellant.
The ld. AR referring to the impugned order submitted that the assessee is running colleges under the name and style of Mahabir College of Education and Mahabir Engineering College. The assessee has been granted registration u/s 12AA and its claim for approval u/s 80G was denied on the grounds that the assessee Trust has never received donations in the earlier years. The need of the same, as such was questioned. It was also noticed that since the assessee Trust had sufficient accumulated funds and had been maintaining FDRs, the need for donations accordingly was held to not arise. 3. The ld. AR aggrieved by the order carried us through the reasoning and submitted that the very purpose for seeking approval u/s 80G was in order to receive donations as on account of this specific shortcoming, the
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assessee Trust was unable to get any donations. Apart from that, it was his submission that the FDRs maintained with Punjab & Sind Bank of Rs. 35 lacs was for the purposes of meeting the requirements of AICTE and similarly the maintenance of the other FDRs noticed by the CIT (Exemptions) was necessitated for meeting the requirements of NCET, the controlling Regulatory Technical Bodies. It was also his submission that as per law, 85% of the profits have to be utilized in terms of the statutory requirements and there is no violation of law. Accordingly, it was his submission that the denial of registration to the assessee was based on presumptions and prejudices and contrary to law and facts. 4. The ld. CIT-DR on the other hand supporting the impugned order submitted that the assessee Trust is charging fees for educational institutions, as such there is a profit motive and there is no need for donations. It was his submission that the CIT (Exemption) has taken note of the fact that there is no dearth of money with the assessee Trust as FDRs are being maintained and it was emphasized that never in the past, any donations have been taken. 5. We have heard the rival submissions and perused the material on record. We note on going through the impugned order that it cannot be upheld. The said conclusion has been arrived on a consideration of the reasons set out in the impugned order which we note are not relevant for the grant of approval. In the facts of the present case, the admitted fact on record is that the assessee Trust has been granted 12AA Registration which has not been revoked. The mere fact that the assessee Trust has never received donations earlier is not a relevant criteria. Similarly, the fact that the FDRs are being maintained by the Trust in compliance with Regulatory Authority or for that matter even otherwise by itself cannot be a criteria to deny approval u/s 80G. The fact that these FDRs were maintained in order to get accreditation with the Regulatory authorities which managed the professional colleges etc., is an argument which we note on facts in the present case is not rebutted by the Revenue. The fact that the assessee Trust may function sometime in the future contrary to the mandate of Section 12AA can then be addressed if the need so arises by withdrawing the said approval but only as and when the facts supporting such an action warrant action and then to by following the due procedures under law. However, denial of approval u/s 80G in the
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facts of the present case cannot be upheld. The tax authorities are directed to grant necessary approval. Said order was pronounced in the Open Court at the time of hearing itself. 6. In the result, appeal of the assessee is allowed. Order pronounced in the Open Court on 12.06. 2018.
Sd/- Sd/-
(Dr.B.R.KUMAR) (DIVA SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER
‘Poonam’ Copy to: 1. The Appellant 2. The Respondent 3. The CIT 4. The CIT(A) 5. The DR Asstt. Registrar ITAT,Chandigarh.