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Income Tax Appellate Tribunal, AMRITSAR BENCH, AMRITSAR
Before: DR. M. L. MEENA & SH. ANIKESH BANERJEE
Per Dr. M. L. Meena, AM:
The captioned appeal is filed by the assessee against the order of the learned principal Commissioner of income tax exemption, Chandigarh dated 29.11.2017, challenging therein, rejection of its application for grant of approval under section 80G (5) of the income tax act, 1961, by raising the following grounds:
The Ld. CIT(Exemptions) has erred in law and facts by not giving approval under section 80(G) of the Income Tax Act, 1961. 2. The appellant reserves the right to add, alter, modify and amend the grounds of appeal. 2. None has appeared on behalf of the assessee nor any written reply is filed on record despite the fact that the case has been fixed on multiple dates of hearing i.e. 30/08/2018; 23/01/2019; 14/03/2019; 11/06/2019; 27/06/2022; 26/07/2022; 15/09/2022; 09/11/2022; 23/02/2023; 25/04/2023; 17/05/2023 and 08/06/2023. Under the facts and circumstances, it is apparently clear that the Appellant Trust is not interested in pursuing the appeal any more. However, it is decided to adjudicate the appeal on merits, after hearing the learned CIT(DR) and considering the information available on records.
The appellant assessee trust has filed an application in form 10G dated 29.05.2017 in the office of Commissioner of income tax exemption for approval under section 80G (5) of the income tax act, 1961. The Ld. CIT (exemption) stated that the assessee is only running a school and collecting fee from the students. He has categorically stated that the real purpose of the trust is altogether different from the stated object in the memorandum of the society filed along with the statement of accounts in compliance to notice issued subsequent to the show cause notice to the assessee.
The Ld. CIT (exemption) has observed that the trust had utilised the public money raised through collection of fee from the students; donations from public, School bus fee etc., for the purpose of creating its own fixed
assets or cash balances by way of earning profit in manner of carrying out commercial activity and not for the purpose of the public utility at large. The Ld. CIT (exemption) has further stated that the appellant has failed to establish any nexus between the fund so raised by way of donation, school fee, Bus fee etc., and its application to the activities/object of the trust for the charitable purpose to the public at large. Accordingly, the Ld. CIT (exemption) has rejected the application of the appellant for grant of approval under section 80G (5) of the income tax act.
After hearing the Ld. DR at length, and considering the material facts available on record, we found that appellant trust has been running a school, and raising funds by way of collection of fee from the students, bus fees, hostel fee, etc., during previous financial year 2012–13 to 2015–16 as evident from the data extracted, into tabular form, by the Ld. CIT (Exemption) vide Para 5, Pg. 3 of the impugned order.
The Honorable Apex Court in the case of principal Commissioner of income tax, exemption versus servants of people society 2023/147 Taxmann.com, 79 (SC) has observed that interpretation of section 2(15) had undergone a change, due to the decision of apex court in the case of PCIT exemption versus Ahmedabad, urban development authority, 2022/143 Taxmann.com to 78 SC. The amended definition of section 215 states that in course of achieving objects of general public utility, the concerned trust, society or other such organization carry on trade, commerce or business or provide service and relation thereto for consideration provided that firstly the activities of trade, commerce, or business, or connected to achievement of its object of general public utility
in relation thereto, does not exceed the quantified limits that is 20% of total receipts of the previous year. In our view, the appellant trust is required to file fresh application for grant of registration under section 2(15) and consequently, the application for approval under section 80G(5) of the income tax act, 1961 before the principal Commissioner of income tax (Exemption). Accordingly, we consider it deem fit to remand the matter back to the file of the principal Commissioner, of income tax to adjudicate the matter of approval of 80G(5) in the light of the amended provisions of section 2(15) of the income tax act, on filing a fresh application by the appellant assessee trust in the prescribed format as per law. The PCIT exemption is directed to grant adequate opportunity of being heard to the assessee trust and dispose of the matter by passing a speaking order on merits as per provisions of amended law. No doubt, the assessee trust shall cooperate in the fresh proceedings before the principal Commissioner of income tax (exemption).
In the backdrop of the aforesaid discussion, the appeal of the assessee trust is disposed of in the manner discussed as above.
Order pronounced in the open court on13 /06/2023
Sd/- Sd/- (Anikesh Banerjee) (Dr. M. L. Meena) Judicial Member Accountant Member A.G/Doc*
Copy of the order forwarded to: (1)The Appellant (2) The Respondent (3) The CIT (4) The DR, I.T.A.T. True Copy By Order