B.P.H.E Society, Ahmednagar V. CIT-I, Pune, Pune

ITA 111/PUN/2010

• Counselvise Citation: 11124514 RSA 2010
• Duration Of Justice: 1 year(s) 7 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-08-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 22-10-2012
• Assessment Year: misc
• Appeal Filed On: 21-01-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JATINDERSINGH NAV RATH
• Assessee Lawyers: S U PATHAK
• Keywords: Charitable institution
• Section: 80G; 12A; 6; 12; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE SHRI I C SUDHIR, JUDICIAL MEMBER AND SHRI G.S. PANNU, ACCOUNTANT MEMBER ITA NO 111/PN/10 B.P.H.E SOCIETY, .. APPELLAN T C/0 AHMEDNAGAR COLLEGE, STATION ROAD, AHMEDNAGAR PAN AAATT4050H VS. INCOME-TAX OFFICER (TECH.1), .. RESPONDENT PUNE. APPELLANT BY: SHRI S.U. PATH AK RESPONDENT BY: SHRI JATINDERSINGH NAV RATH ORDER PER G.S. PANNU, AM THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF THE COMMISSIONER OF INCOME-TAX-I, PUNE DATED 30.12. 2009 PASSED UNDER SECTION 80G5(VI) OF THE INCOME-TAX ACT, 1961 (IN SHORT THE ACT) REJECTING THE SOCIETYS APPLICATION IN FORM N O. 10G FOR APPROVAL UNDER SECTION 80G OF THE ACT. 2. THE FACTS, IN BRIEF, ARE THAT THE ASSESSEE IS AN EDUCATION SOCIETY REGISTERED IN APRIL, 1969. THE ASSESSEE HAS BEEN GRANTED APPROVAL UNDER SECTION 80G OF THE ACT FOR THE PERIO D 5.1.2001 TO 31.3.2004 VIDE ORDER OF THE COMMISSIONER OF INCOME- TAX DATED 21.1.2003. THE ASSESSEE-SOCIETY FILED AN APPLICATIO N DATED 19.6.2009 IN FORM NO. 10G SEEKING APPROVAL UNDER SE CTION 80G OF THE ACT. UPON SCRUTINY OF THE APPLICATION AND THE A CCOMPANYING DOCUMENTS, THE COMMISSIONER OF INCOME-TAX RAISED QU ERIES REGARDING DETAILS/EVIDENCE OF CHARITABLE ACTIVITIES , PROOF FOR FILING OF 2 FORM NO. 10 FOR FINANCIAL YEARS 2005-06 TO 2007-08 AS THERE WAS SURPLUS FOR THESE YEARS AND PROOF FOR SHOWING HUGE AMOUNT AS OTHER SOURCES, ETC. BEFORE THE COMMISSIONER OF INCOME-TAX , IT WAS STATED BY THE ASSESSEE THAT THE TRUST WAS RUNNING AN EDUCA TIONAL INSTITUTION AND CONDUCED VARIOUS COURSES AND ALL TH E STUDENTS FROM THE ECONOMICALLY WEAKER SECTIONS ENJOYED ECONOMICAL LY BACKWARD CLASS FACILITY. IT WAS FURTHER STATED THAT AS THE TRUST HAD INCURRED MORE THAN 85% OF THE INCOME DURING THE FINANCIAL YE ARS 2005-06 TO 2007-08, FORM NO. 10 FOR SUCH PERIOD WAS NOT FILED. AS TO THE QUERY REGARDING OTHER SOURCES, IT WAS STATED THAT MANY TYPES OF FEES WERE INCLUDED UNDER THE HEAD INCOME FROM OTHER SOURCES AND FEES USED TO BE PAID BY THE STUDENTS DIRECTLY IN THE BANK. TH E COMMISSIONER OF INCOME-TAX WAS NOT IMPRESSED WITH THE SUBMISSIONS O F THE ASSESSEE AND CONSEQUENTLY, HE REJECTED THE ASSESSEES APPLIC ATION IN FORM NO. 10G SEEKING APPROVAL UNDER SECTION 80G OF THE A CT BY OBSERVING AS FOLLOWS: HOWEVER, THE CASE OF THE SOCIETY WAS UNDER SCRUTIN Y FOR AY 2007-08 AND DURING THE ASSESSMENT PROCEEDINGS, THE AO, VIZ. THE ADDL.CIT, AHMEDNAGAR RANGE, AHMEDNAGAR, OBSERVED THAT THE PRO VISIONS OF SECTION 13(1)(C) WERE VIOLATED FOR THE RELEVANT PER IOD QND DENIED THE EXEMPTION CLAIMED OF RS 2,62,24,003/- SHOWN AS SURP LUS IN THE INCOME & EXPENDITURE ACCOUNT. TAKING INTO ACCOUNT THIS ASPEC T OF THE CASE, IT IS TO BE HELD THAT SECTION 13(1)(C) IS VIOLATED FOR THE P ERIODS FOR WHICH RENEWAL IS SOUGHT FOR. FOR THIS REASON, THE APPLICATION IN FORM NO. 10G MADE BY THE APPLICANT SEEKING APPROVAL U/S 80G IS HEREBY RE JECTED. AGGRIEVED WITH THE ORDER OF THE COMMISSIONER OF INC OME-TAX, THE ASSESSEE IS IN APPEAL BEFORE US. 3. BEFORE US, LEARNED COUNSEL FOR THE ASSESSEE HAS SUBMI TTED THAT THE COMMISSIONER HAS DENIED THE APPROVAL UNDER SEC. 80G OF T HE ACT ON UNJUSTIFIED GROUND. ACCORDING TO THE LEARNED COUNSEL THE ASSESSEE SA TISFIES ALL THE CONDITIONS PRESCRIBED UNDER SECTION 80G(5) AND THEREFORE, THE COMMISSIONER OUGHT TO HAVE GRANTED THE APPROVAL UNDER SECTION 80G OF THE ACT. IT IS SUBMITTED THAT THE REASON ADVANCED BY THE COMMISSIONER, NAMELY, THAT THE ASSESSEE HAD 3 VIOLATED THE PROVISIONS OF SECTION 13(1)(C) OF THE ACT A ND THEREFORE, IT WAS INELIGIBLE FOR THE APPROVAL UNDER SECTION 80G IS NOT RELEVANT. IT HAS BEEN SUBMITTED THAT THE AFORESAID STAND OF THE COMMISSIONER I S BASED ON THE ASSESSMENT FRAMED BY THE ASSESSING OFFICER FOR ASSESSMENT YEAR 2007-08. IN ANY CASE, IT IS POINTED OUT THAT THE ASSESSEE IS IN APPEAL AGAINST SUCH STAND OF THE ASSESSING OFFICER BEFORE THE COMMISSIONER OF INCOME-TAX (APPEALS). ON THE MERITS OF THE STAND TAKEN BY THE ASSESSING OFFICER ON THI S ASPECT, DETAILED ARGUMENTS HAVE BEEN MADE OUT TO THE EFFECT THAT THERE WAS NO VIOLATION OF SECTION 13(1)(C OF THE ACT. NOTWITHSTANDING SUCH ARGUMENTS, IT IS SUBMITTED THAT IN THE IMPUGNED PROCEEDINGS THE COMMISSIONER IS ONLY REQUIR ED TO PRIMA FACIE APPRECIATE THAT THE CONDITIONS PRESCRIBED IN CLAUSES (I ) TO (V) OF 80G(5) HAVE BEEN SATISFIED OR NOT. IT IS SUBMITTED THAT THE ASSESSEE CO NTINUES TO BE REGISTERED UNDER SECTION 12A OF THE ACT AND THIS BY ITSELF SHOWS THA T CONDITION IN CLAUSE (I) OF SECTION 80G(5) STANDS FULFILLED. ON THIS ASPECT, RELIANCE HAS BEEN PLACED ON FOLLOWING DECISIONS: I) N. N. DESAI CHARITABLE TRUST V. CIT 246 ITR 452 (G UJ), II) SHIKSHAN PRASAAK MANDALI V. CIT 117 TTJ 337 (PUNE) 4. ON THE OTHER HAND, THE LEARNED DEPARTMENTAL REPR ESENTATIVE, APPEARING FOR THE REVENUE, HAS POINTED OUT THAT THE COMMISSIONE R MADE NO MISTAKE IN OBSERVING THAT THE ASSESSMENT PROCEEDINGS FOR ASSESSMENT YEA R 2007-08 HAD SHOWN THAT ASSESSEE VIOLATED SECTION 13(1)(C) AND WAS, THE REFORE, NOT ELIGIBLE FOR DEDUCTION UNDER SECTIONS 11 &12 OF THE ACT AND UNDER THE SE CIRCUMSTANCES THE APPROVAL UNDER SECTION 80G WAS RIGHTLY DENIED. THE LE ANED DEPARTMENTAL REPRESENTATIVE HAS ALSO SUBMITTED THAT THE APPEAL OF TH E ASSESSEE AGAINST ASSESSMENT ORDER WAS PENDING BEFORE THE COMMISSIONER OF IN COME-TAX (APPEALS), BUT IT IS EVIDENT THAT WHEN THE COMMISSIONER OF INCOME-TAX WAS EXAMINING THE APPLICATION FOR APPROVAL UNDER SECTION 8 0G, THE ASSESSEE HAS 4 BEEN DENIED THE EXEMPTION UNDER SECTION 11 & 12 OF TH E ACT BY THE ASSESSING OFFICER FOR THE RELEVANT PERIOD. 5. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS, PE RUSED THE ORDERS OF THE AUTHORITIES BELOW AND OTHER MATERIAL ON RECORD. IN THIS CASE, THE ASSESSEE IS A SOCIETY REGISTERED AND INCORPORATED IN APRIL 1969 WHICH IS ENGAGED IN CARRYING ON EDUCATIONAL ACTIVITIES. THE ASSESSEE IS REGISTERED AS A CHAR ITABLE INSTITUTION IN TERMS OF SECTION 12A OF THE ACT WITH THE COMMISSIONER OF INCOME-TAX W.E.F. 5.7.2001. THE ASSESSEE WAS ALSO GRANTED RECOGNITION UND ER SECTION 80G OF THE ACT BY THE COMMISSIONER OF INCOME-TAX DATED 21.1.2003 WHICH WAS VALID FROM 5.7.2001 UPTO MARCH 31, 2004. VIDE APPLICATION DATED 19.6.2009, THE ASSESSEE APPLIED TO THE COMMISSIONER OF INCOME-TAX FOR RENEWA L OF THE RECOGNITION UNDER SECTION 80G OF THE ACT. THAT APPLICATION HAS BEEN REJE CTED BY THE COMMISSIONER OF INCOME-TAX BY THE IMPUGNED ORDER DATED 30.12.2009 . BEFORE MAKING THE ORDER, IT APPEARS THAT CERTAIN QUERIES WERE RAISED ON CERTAIN ASPECTS AS CONTAINED IN PARA 2 OF THE IMPUGNED ORDER AND THE EXPLANATION OF THE ASSESSEE THEREON HAS BEEN NOTED IN PARA 3 OF THE IMPUGNED ORDER. ULTIMAT ELY, THE ONLY REASON THAT PREVAILED WITH THE COMMISSIONER OF INCOME-TAX TO DENY THE RENEWAL OF RECOGNITION UNDER SECTION 80G IS CONTAINED IN PARA 5 O F THE IMPUGNED ORDER, WHICH HAS BEEN EXTRACTED BY US ELSEWHERE IN THIS ORDER. FROM THE PERUSAL OF PARA 5, IT IS CLEAR THAT AS PER THE COMMISSIONER OF INCOME-TAX THE ASSESSEE HAS VIOLATED SECTION 13(1)(C) OF THE ACT AND IT IS NOTICED TH AT FOR SUCH REASON THE ASSESSING OFFICER HAS DENIED THE EXEMPTION UNDER SECTION 1 1 & 12 OF THE ACT FOR THE ASSESSMENT YEAR 2007-08. IMPLIEDLY, AS PER THE COM MISSIONER OF INCOME- TAX, THE ASSESSEE DOES NOT FULFILL CONDITION CONTAINED IN CLAUSE (I) OF SECTION 80G(5) WHICH READS AS UNDER: 80G5(I): THIS SECTION APPLIES TO DONATIONS TO ANY INSTITUTION OR FUND REFERRED TO IN SUB- CLAUSE (IV) OF CLAUSE (A) OF SUB-SECTION (2), ONLY IF IT IS ESTABLISHED IN INDIA FOR A CHARITABLE PURPOSE AND IF IT FULFILS THE FOLLOWING CONDITIONS, NAMELY:- (I) WHERE THE INSTITUTION OR FUND DERIVES ANY INCOM E, SUCH INCOME WOULD NOT BE LIABLE TO INCLUSION IN ITS TOTAL INCOME UNDER THE P ROVISIONS OF SECTIONS 11 AND 12 (OR CLAUSE (23AA) (OR CLAUSE (23C) OF SECTION 10: 5 PROVIDED THAT WHERE AN INSTITUTION OR FUND DERIVES ANY INCOME, BEING PROFITS AND GAINS OF BUSINESS, THE CONDITION THAT SUCH INCOME W OULD NOT BE LIABLE TO INCLUSION IN ITS TOTAL INCOME UNDER THE PROVISIONS OF S3ECTIO N 11 SHALL NOT APPLY IN RELATION TO SUCH INCOME, IF- (A) THE INSTITUTION OR FUND MAINTAINS SEPARATE BOOK S OF ACCOUNT IN RESPECT OF SUCH BUSINESS; (B) THE DONATIONS MADE TO THE INSTITUTION OR FUND A RE NOT USED BY IT, DIRECTLY OR INDIRECTLY, FOR THE PURPOSES OF SUCH BUSINESS; AND (C) THE INSTITUTION OR FUND ISSUES TO A PERSON MAKI NG THE DONATION A CERTIFICATE TO THE EFFECT THAT IT MAINTAINS SEPARATE BOOKS OF ACCO UNT IN RESPECT OF SUCH BUSINESS AND THAT THE DONATIONS RECEIVED BY IT WILL NOT BE USED, DIRECTLY OR INDIRECTLY, FOR THE PURPOSES OF SUCH BUSINESS. 6. FACTUALLY, IT EMERGES THAT IN THE COURSE OF ASSESSMENT PROCEEDINGS FOR AY 07-08, THE ASSESSING OFFICER NOTICED THAT THE SOCIETY WAS RUNNING EDUCATIONAL INSTITUTIONS. IN ITS CAMPUS AT AHMEDNAGAR, THE SOCIETY H AD PROVIDED ACCOMMODATION TO ONE DR R J BARNABAS, WHO IS THE PRINCIP AL AND ALSO A TRUSTEE. ACCORDING TO THE ASSESSING OFFICER, ASSESSEE HAD GRANTED A BE NEFIT TO A PERSON REFERRED TO IN SECTION 13(3) OF THE ACT AND THEREFORE HAVING REGARD TO 13(1)(C)(II), THE ASSESSEE WAS NOT ENTITLED TO THE EXEMPTION UNDER SECT ION 11 OR 12 OF THE ACT. THE ASSESSEE HAS SUBMITTED BEFORE US THAT THERE IS NO VI OLATION OF SECTION 13(1)(C) OF THE ACT. WE FIND THAT THE ACTION OF THE ASS ESSING OFFICER FOR ASSESSMENT YEAR 2007-08 IS A SUBJECT MATTER OF APPEAL WHI CH IS PENDING BEFORE THE COMMISSIONER OF INCOME-TAX (APPEALS), AND THUS IT WO ULD NOT BE APPROPRIATE TO DWELL FURTHER ON THE MERITS OF SUCH CONTROVERSY. T HE ONLY PROPOSITION THAT IS REQUIRED TO BE ADDRESSED BY US AT THE PRESENT STAGE IS TH E ELIGIBILITY OF THE ASSESSEE TO SEEK RENEWAL OF RECOGNITION UNDER SECTION 80G HAVING REGARD TO THE PRESCRIBED CONDITIONS. 7. IN SO FAR AS THE APPROVAL REQUIRED UNDER SECTION 80G (5) IS CONCERNED, THE SAME IS GOVERNED BY THE FULFILMENT OF THE CONDITIONS P RESCRIBED IN CLAUSES (I) TO (V) OF SECTION 80G(5) OF THE ACT. FURTHER, RULE 11AA OF THE INCOME-TAX RULES 1962 PRESCRIBES THE REQUIREMENTS TO BE SEEN BY THE COMM ISSIONER OF INCOME-TAX FOR GRANT OF APPROVAL UNDER SECTION 80G(5) OF THE ACT. THE SCHEME OF THE ACT READ WITH THE RELEVANT RULES ENVISAGE THAT THE COMMISSI ONER IS REQUIRED TO BE SATISFIED THAT ALL THE CONDITIONS LAID DOWN IN CLAUSE ( I) TO (V) OF SECTION 80G(5) ARE FULFILLED. IT IS ALSO ENVISAGED THAT IN CASE THE COMMISSIO NER OF INCOME-TAX IS NOT 6 SO SATISFIED, HE SHALL RECORD HIS REASONS AND THEREAFTER REJECT THE APPLICATION IN WRITING. THE NATURE AND SCOPE OF THE ENQUIRY THAT THE COMMISSIONER OF INCOME- TAX IS REQUIRED TO CARRY OUT, WAS A SUBJECT MATTER OF C ONSIDERATION BY THE HONBLE GUJARAT HIGH COURT IN THE CASE OF N N DESAI CHARITABL E TRUST (SUPRA). IN FACT, THE ISSUE BEFORE THE HONBLE HIGH COURT RELATED TO THE DE NIAL OF APPROVAL UNDER SECTION 80G ON THE PLEA THAT THE ASSESSEE DID NOT FULFILL THE CONDITIONS AS PER CLAUSE (I) OF SECTION 80G(5) WHICH IS ALSO THE CASE BEFORE US. IN THE CASE BEFORE THE HONBLE HIGH COURT, THE CLAIM OF THE REVENUE WAS THAT THE ASSESSEE HAD NOT APPLIED TOWARDS ITS OBJECTS INCOME TO THE EXTENT OF 75% AND THEREFORE IT DID NOT FULFILL THE REQUIREMENTS OF SECTION 11 OR 12 AND THUS I T VIOLATED CLAUSE (I) OF SECTION 80G(5) OF THE ACT. SIMILAR IS THE SITUATION HERE INASM UCH AS THE CASE OF THE COMMISSIONER OF INCOME-TAX THAT THE ASSESSEE VIOLATED SECTI ON 13(1)(C) AS FOUND BY THE ASSESSING OFFICER FOR ASSESSMENT YEAR 2007-08 AND TH US IT WAS NOT ELIGIBLE FOR SECTION 11 OF 12 BENEFIT AND HENCE THE CONDITION LAID DOWN IN SECTION 80G(5)(I) IS NOT FULFILLED. IN THIS CONTEXT, THE HON BLE HIGH COURT NOTICED THAT THE PROCEEDINGS ENVISAGED UNDER SECTION 80G DOES NOT RELATE TO THE ASSESSMENT OF THE APPLICANT AND THAT WHETHER THE INCOME OF THE APP LICANT WOULD ULTIMATELY BE LIABLE FOR INCLUSION IN ITS TOTAL INCOME OR NOT IS NOT TO BE DETERMINED AT THE TIME OF MAKING OF DONATION BECAUSE AS PER THE HONBLE HIGH COUR T, SECTION 80G PRIMARILY RELATES TO GIVING DEDUCTIONS IN RESPECT OF DONATIONS MADE BY A PERSON WHO, BUT FOR THIS PROVISION WOULD NOT BE ELIGIBLE FOR SUCH DEDU CTION. IN THIS BACKGROUND, THE HONBLE HIGH COURT HAS NOTED AS UNDER: BEFORE EMBARKING ON ANALYZING THE PROVISIONS OF SU B-SECTION (5) OF SECTION 80G, ONE MUST NOTICE THAT SECTION 80G DOES NOT RELATE TO ASS ESSMENT OF THE TRUST OR THE INSTITUTION WHOSE INCOMES ARE NOT LIABLE TO BE INCLUDE IN THE C OMPUTATION OF TAXABLE INCOME UNDER VARIOUS PROVISIONS OF THE ACT REFERRED THEREIN. PRIMARILY, SECTION 80G IS RELATED TO GIVING DEDUCTION IN RESPECT OF THE DONATIONS MADE BY A PER SON WHO, BUT FOR THIS PROVISION WOULD NOT BE ELIGIBLE FOR SUCH DEDUCTION BECAUSE THE DONA TIONS ARE NOT ORDINARILY CONSIDERED TO BE EXPENSES INCURRED FOR THE PURPOSE OF EARNING IN COME AND LIABLE TO BE DEDUCTED THEREFROM. IT IS ALSO TO BE NOTICED THAT WHETHER THE INCOME O F AN INSTITUTION OR FIND WOULD ULTIMATELY BE LIABLE TO INCLUSION IN ITS TOTAL INCOME AT THE C LOSE OF THE ASSESSMENT YEAR OR NOT CANNOT BE DETERMINED AT THE TIME OF MAKING OF THE DONATION . THE ELIGIBILITY OF THE DONATION FOR DEDUCTION HAS TO BE CONSIDERED WITH REFERENCE TO TH E POINT OF TIME AT WHICH DONATION IS MADE AND NOT WITH RESPECT TO THE POINT OF TIME AT W HICH DONATION IS MADE AND NOT WITH 7 RESPECT TO THE TIME IN FUTURE DEPENDING ON ASSESSME NTS OF THE DONE. THAT IS WHERE THE USE OF THE VERB IN FUTURE TENSE WOULD HAS BEEN US ED AND NOT IN PRESENT OR PAST PERFECT TENSE SO AS TO TAKE INTO CONSIDERATION THE ACTUAL I NCLUSION OR EXCLUSION OR THE EXTENT OF INCLUSION OR EXCLUSION. THE DIRECT NEXUS OF CLAUSE (I) OF SUB-SECTION (5) OF SECTION 80G, AS APPEARS TO US, IS TO THE ELIGIBILITY OF THE INSTITU TION OR THE FUND TO CLAIM THAT ITS INCOME IS NOT LIABLE TO BE INCLUDED IN THE COMPUTATION OF THE TOTAL INCOME. THE TWO ARE DIFFERENT CONCEPTS. FIRST, WHETHER AN INSTITUTION OR FUND IS SUCH WHOSE INCOME IS NOT LIABLE TO BE INCLUDED IN THE COMPUTATION OF THE TOTAL INCOME DEP ENDS ON ITS STATUS OR CHARACTER. THE SECOND IS THE ACTUAL ASSESSMENT OF INCOME, WHICH NE CESSARILY TAKES PLACE IN FUTURE AFTER DONATION IS RECEIVED BY THE DONE ON FULFILLMENT OF OTHER CONDITIONS ABOUT APPLICATION OF INCOME BY THE ELIGIBLE TRUSTS, WHICH IN THE VERY NA TURE OF THINGS CAN OPERATE ONLY AFTER RECEIPT OF INCOME. THE ACTUAL EXTENT OF EXCLUSION F ROM OR INCLUSION IN THE COMPUTATION OF THE TOTAL INCOME, THE RECEIPTS OF SUCH INSTITUTION OR FUND, DEPENDS ON FULFILLMENT OF FURTHER CONDITIONS WHICH MAY OR MAY NOT EXIST AT THE CLOSE OF THE YEAR AND HAS NO DIRECT RELATION TO THE PURPOSE WITH WHICH THE PROVISION IS MADE. TH E LATTER FALLS IN THE REALM OF THE ASSESSMENT OF THE TRUST, INSTITUTION OR FUND WHICH DERIVES INCOME WHICH IS NOT ORDINARILY INCLUDIBLE IN ITS TOTAL INCOME. THE LIABILITY TO AS SESSMENT IS NOT AFFECTED BY ISSUANCE OF RECOGNITION CERTIFICATE OR APPROVAL CERTIFICATE ISS UED UNDER CLAUSE (VI) OF SUB-SECTION (5) OF SECTION 80G NOR IT DEPENDS UPON THE FACT WHETHER TH E DONOR ULTIMATELY GETS DEDUCTION IN RESPECT OF SUCH DONATION. IT MAY BE RELEVANT TO TAKE COGNIZANCE THAT ALL DON ATIONS ARE NOT IN THEIR ENTIRETY ELIGIBLE FOR DEDUCTION. THERE EXI STS A MAXIMUM LIMIT ALSO FOR SUCH ELIGIBILITY AND DONATIONS BEYOND SUCH LIMIT Y A PERSON MAY ALSO FOR SUCH ELIGIBILITY AND DONATIONS BEYOND SUCH LIMIT BY A PERSON MAY NOT GET DEDUCTION , EVEN IF IT IS TO AN APPROVED INSTITUTION UNDER SECTION 80G. LIKEWISE, ACTUAL INC LUSION OF ANY INCOME IN THE ASSESSMENT OF THE DONE AS TAXABLE INCOME, DOES NOT AFFECT THE ENTITLEMENT OF THE DONOR TO CLAIM DEDUCTION UNDER SECTION 80G, IF ON THE DATE WHEN HE MADE THE DONATION THE CONDITIONS WERE FULFILLED. THAT WAS THE LAW BEFORE THE INSERTI ON OF CLAUSE (VI) AND APART FROM THE FACT THAT BY INTRODUCING CLAUSE (VI) WITH RULE 11AA, A M ETHOD OF PROVIDING THE ELIGIBILITY TO CLAIM DEDUCTION HAS BEEN PROVIDED BY THE STATUTE, THERE H AS BEEN NO ALTERATION IN THE SUBSTANTIVE PROVISION, THAT IS TO SAY, ENTITLEMENT OF THE DONOR TO CLAIM DEDUCTION DEPENDS ON THE ELIGIBILITY OF THE DONE TO CLAIM EXEMPTION O F ITS INCOME ON THE DATE WHEN DONATION IS MADE. EXAMINING FROM THIS ANGLE, WE FIND THAT FO R APPLICABILITY OF SECTIONS 11 AND 12, WHAT IS REQUIRED IS THAT SUCH TRUST MUST HAVE MOVED AN APPLICATION FOR REGISTRATION UNDER SECTION 12A AND REGISTERED FOR THAT PURPOSE. ONCE A TRUST IS REGISTERED UNDER SECTION 12A, ITS INCOME FROM PROPERTY, WHICH INCLUDES DONATIONS WHETHER COVERED UNDER SECTION 11(1)(D) OR UNDER SECTION 12 SUCH DONATIONS ARE DEE MED TO BE INCOME FROM PROPERTY, IS NOT TO BE INCLUDED IN ITS TOTAL INCOME UNDER SECTIO N 11 OR SECTION 12. THE ENQUIRY UNDER SECTION 80G(5) CANNOT GO BEYOND THAT. THE ACTUAL ASSESSMENT OF THE TRUST AND ITS ACTUAL LIABILITY TO TAX IN ACCORDANCE WITH THE PROVISIONS OF SECTIONS 11 AND 12 AND 12A HAS NO BEA RING ON THE CLAIM OF THE DONORS FOR WHOSE BENEFIT APPROVAL IS ACCORDED. EXPLANATION 2 T O SECTION 80G(5) WHICH TELLS IN NO UNCERTAIN TERMS THAT A DEDUCTION TO WHICH THE ASSES SEE IS ENTITLED IN RESPECT OF THE DONATION MADE TO AN INSTITUTION OR FUND TO WHICH SU B-SECTION (5) APPLIES SHALL NOT BE DENIED MERELY ON EITHER OR BOTH OF THE FOLLOWING GR OUNDS, NAMELY, THAT ANY PART OF THE INCOME OF THE INSTITUTION OR FUND HAS BECOME CHARGE ABLE TO TAX DUE TO NON-COMPLIANCE WITH ANY OF THE PROVISIONS UNDER SECTION 11, SECTIO N 12 AND/OR SECTION 12A AND UNDER CLAUSE (C) OF SUB-SECTION (1) OF SECTION 13, THE EX EMPTION UNDER SECTION 11 OR 12 CAN BE DENIED TO AN INSTITUTION OR FUND IN RESPECT OF THE INCOME ACCRUING OR ARISING TO IT FROM ANY INVESTMENT REFERRED TO IN CLAUSE (H) OF SUB-SECTION (2) OF SECTION 13. (UNDERLINED FOR EMPHASIS BY US) 7. FROM THE AFORESAID, IT IS CLEAR THAT IN SO FAR AS TH E RELEVANCE OF 80G(5)(I) IS CONCERNED, IT IS TO EXAMINE THE ELIGIBILITY OF THE ASSESSE E APPLICANT TO CLAIM THAT ITS INCOME IS NOT LIABLE TO BE INCLUDED IN THE COMPUTATI ON OF TOTAL INCOME. AS PER THE HONBLE HIGH COURT, THE FIRST ASPECT OF THE MATTE R IS WHETHER THE APPLICANT IS 8 SUCH, WHOSE INCOME IS NOT LIABLE TO BE INCLUDED IN ITS TO TAL INCOME DEPENDING ON ITS STATUS AND CHARACTER. THE SECOND ASPECT IS THE ACTUAL A SSESSMENT OF INCOME, WHICH TAKES PLACE ONLY IN FUTURE AFTER THE DONATION IS RECEIVED BY THE DONEE ON FULFILLMENT OF OTHER CONDITIONS. EXPLAINING FURTHER, AS PER THE HONBLE HIGH COURT THE LATTER ASPECT FALLS IN THE RELAM OF THE ASSESSMENT O F THE APPLICANT WHICH DERIVES INCOME AND IT DOES NOT AFFECT THE ENTITLEMENT O F THE DONOR TO CLAIM DEDUCTION UNDER SECTION 80G OF THE ACT. THE HONBLE HI GH COURT EMPHASIZED THAT FOR THE PURPOSES OF ENQUIRY UNDER SECTION 80G(5) IT IS TO BE SEEN WHETHER THE TRUST IS REGISTERED U/S 12 OR NOT. IT HAS BEEN SPECIFICALL Y OBSERVED THAT , ONCE A TRUST IS REGISTERED UNDER SECTION 12A, ITS INCOME FROM PR OPERTY, WHICH INCLUDES DONATIONS WHETHER COVERED UNDER SECTION 11(1)(D) OR UNDE R SECTION 12 SUCH DONATIONS ARE DEEMED TO BE INCOME FROM PROPERTY, IS NO T TO BE INCLUDED IN ITS TOTAL INCOME UNDER SECTION 11 OR SECTION 12. THE ENQUIR Y UNDER SECTION 80G(5) CANNOT GO BEYOND THAT.. 8. IN SUM AND SUBSTANCE AS PER THE HONBLE HIGH COURT WH EN THE COMMISSIONER IS TO EXAMINE THE APPLICATION OF THE ASSESSEE SEEKING RECOGNITION UNDER SECTION 80G HE IS NOT REQUIRED TO ACT AS AN ASSESSING OFFICER AND DECIDE UPON THE CLAIM OF THE ASSESSEE IN RESPECT OF ITS ASSESSMENT O F INCOME. THE ACTUAL ASSESSMENT OF THE ASSESSEE AND ITS ACTUAL LIABILITY T O TAX ARE MATTERS TO BE DECIDED ONLY IN THE ASSESSMENT PROCEEDINGS. 9. TO THE SIMILAR EFFECT IS ALSO THE DECISION OF OUR CO-OR DINATE BENCH IN THE CASE OF SHIKASHAN PRASARAK MANDALI (SUPRA). IN THIS CASE AL SO, THE COMMISSIONER OF INCOME-TAX DENIED RECOGNITION UNDER SE CTION 80G FOR THE REASON THAT THE EXEMPTION UNDER SECTIONS 11 & 12 HAD BE EN DENIED TO THE ASSESSEE IN THE ASSESSMENT PROCEEDINGS. AS PER THE BENCH, SUCH OBJECTION WOULD NOT IPSO FACTO MILITATE AGAINST DENIAL OF RECOGNITION UNDER SECTION 80G AS LONG AS IN PRINCIPLE AND ON A PRIMA FACIE BASIS ASSESSEE CO MPLIED WITH THE CONDITIONS SET OUT IN SECTION 80G(5)(I) TO (V) OF THE A CT. 9 10. HAVING REGARD TO THE AFORESAID OBSERVATIONS OF TH E HONBLE GUJARAT HIGH COURT, IN OUR VIEW, IN THE PRESENT CASE THE OBJECTION RAISED BY THE COMMISSIONER OF INCOME-TAX TO DENY THE RECOGNITION UNDER SECTION 80G IS FOUNDED ON IRRELEVANT CONSIDERATIONS BY EMBARKING UPON AN EXERCISE WHICH IS ONLY IN THE REALM OF ASSESSMENT PROCEEDINGS. IN THE PRESENT CASE, UNDENIABLY TH E ASSESSEE IS REGISTERED UNDER SECTION 12A OF THE ACT AND SUCH REGISTRAT ION CONTINUES. IN THIS VIEW OF THE MATTER, IN OUR VIEW, THE ASSESSEE FULFILS TH E CONDITION PRESCRIBED UNDER CLAUSE (I) OF SECTION 80G(5) OF THE ACT. THERE BEING NO OTHER OBJECTION RAISED BY THE COMMISSIONER OF INCOME-TAX, WE THEREFORE PROCEED ON THE BASIS THAT THE ASSESSEE HAS FULFILLED ALL THE CONDITIONS PRESCRIBED UNDE R CLAUSES (I) TO (V) AND IS THUS ELIGIBLE FOR RENEWAL OF RECOGNITION UNDER SECTION 80G(5) OF THE ACT IN TERMS OF ITS APPLICATION DATED 19.6.2009. 11. RESULTANTLY, THE IMPUGNED ORDER OF THE COMMISSIONE R OF INCOME-TAX IS SET ASIDE WITH DIRECTIONS TO GRANT RECOGNITION TO THE ASSESSEE UNDER SECTION 80G(5) OF THE ACT IN THE LIGHT OF ASSESSEES APPLICATION DATED 19.6 .2009. 12. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. DECISION PRONOUNCED IN THE OPEN COURT ON THIS 30 TH DAY OF AUGUST, 2011. SD/- SD/- (I C SUDHIR) JUDICIAL MEMBER (G.S. PANNU) ACCOUNTANT MEMBER PUNE: DATED: 30 TH AUGUST, 2011 B COPY OF THE ORDER IS FORWARDED TO : 1. APPELLANT 2. RESPONDENT 3. THE CIT-I, PUNE 4. THE D.R, B BENCH, PUNE 5. GUARD FILE TRUE COPY BY ORDER ASSTT. REGISTRAR, ITAT, PUNE BENCHES, PUN E 10