HEAL A CHILD Foundation, Hyderabad V. DIT (Exemptions), Hyderabad

ITA 1343/HYD/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 59184 (ITAT-HYDERABAD)
• Duration Of Justice: 6 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-02-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: misc
• Appeal Filed On: 20-07-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: T DIWAKAR PRASAD
• Keywords: Charitable institution
• Section: 80G; 12A; 12AA; 12; 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD A BENCH, HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER ITA NO.1343/HYD/2011 HEAL A - CHILD FOUNDATION, HYDERABAD. PAN:AAATH 8781 P VS DIT (EXEMPTIONS) HYDERABAD. APPELLANT RESPONDENT APPELLANT BY : SRI Y. RATNAKAR RESPONDENT BY : SRI T. DIWAKAR PRASAD DATE OF HEARING : 30-01-2012. DATE OF PRONOUNCEMENT : -02-2012. ORDER PER CHANDRA POOJARI, A.M. THIS APPEAL PREFERRED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER PASSED BY THE DIT (EXEMPTIONS), HYDERABAD DATED 25-05-2011. 2. THE GRIEVANCE OF THE ASSESSEE IN THIS APPEAL I S WITH REFERENCE TO DENIAL OF GRANTING OF APPROVAL UNDER S ECTION 80G OF THE ACT. THE ASSESSEES REQUEST FOR APPROVAL UNDER SECTION 80G OF THE ACT WAS REJECTED BY THE DIT (E) ON THE REASON THAT THE TRUST DEED CONTAINS OBJECT CLAUSE T HAT HIS OBJECTS ARE NOT CONFINED TO INDIA ALONE AND CAN BE CONDUCTED OUTSIDE INDIAN TERRITORY. THE LEARNED AUTHORISED REPRESENTATIVE SUBMITTED THAT THE ASSESS EE IS NOT CONTRAVENED ANY OF THE TERMS AND CONDITIONS SET OUT IN SECTION 80G OF THE ACT AND ALL THE REQUIREMENTS HAD BEEN COMPLIED WITH. IT WAS SUBMITTED THAT THE OBJEC T ITA NO.1343/H/2011 HEAL A CHILD FOUNDATION, HYD. =============================== 2 CLAUSE TO THE EFFECT THE ACTIVITIES OF THE TRUST AND ITS OBJECTS WILL NOT BE CONFINED TO INDIA DOES NOT IN ANY WAY MILITATE AGAINST THE PROVISIONS OF SECTION 80G(5) O F THE I T ACT. THE SAID SECTION DOES NOT STATE THAT IF THE A CTIVITIES ARE NOT CONFINED TO INDIA, IT IS NOT ENTITLED TO AP PROVAL UNDER SECTION 80G OF INCOME-TAX ACT. IT IS CONTENDE D THAT IN ANY EVENT, THE ASSESSEE HAS NOT TAKEN UP ANY ACT IVITIES OUTSIDE INDIA AND THE SAID CLAUSE R MERELY REMAIN ED ON PAPER AND WAS NEVER IMPLEMENTED. THE TRUST HAS ALS O NO INTENTION TO TAKE UP ACTIVITIES OUTSIDE INDIA. IT I S FURTHER CONTENDED THAT THE REQUIREMENT IS THAT THE TRUST SH OULD BE ESTABLISHED IN INDIA. THIS REQUIREMENT HAS BEEN COM PLIED WITH, AND THERE IS NO PROHIBITION THAT IF THE ACTIV ITIES AS PER THE TRUST DEED ARE NOT CONFINED ONLY TO INDIA, THE APPROVAL SHOULD NOT BE GRANTED. IT IS CONTENDED T HAT THE CIT HAS READ INTO SECTION 80G OF THE ACT AND REQUIREMENTS WHICH ARE NOT PRESCRIBED AT ALL AND TH E ASSESSEE CONTENDS THAT IT IS ENTITLED TO THE APPROV AL UNDER SECTION 80G(5) OF THE ACT. 3. THE AUTHORISED REPRESENTATIVE OF THE ASSESSEE H AS FURTHER SUBMITTED THAT IT IS CHARITABLE INSTITUTION REGISTERED UNDER SECTION 12AA OF THE ACT. THIS APPEAL IS FILED AGAINST THE ORDER DECLINING TO GRANT APPROVAL UNDER SECTION 80G (5) OF THE ACT. THE IMPUGNED ORDER IS PASSED ON THE GROUND THAT SL. NO. R OF THE OBJECTS CLAUSE-3 OF THE TRUST DEED PERMITS THE TRUST TO CARRY ON ITS ACTIVITIES N OT ONLY IN INDIA ALONE BUT ALSO OUTSIDE INDIAN TERRITORIES. AS A FACT NO ACTIVITIES ARE TAKEN UP OUTSIDE INDIA AND ALL TH E ACTIVITIES ARE CONFINED TO INDIA ALONE. AS A PRECA UTIONARY MEASURE, THE TRUST PASSED A RESOLUTION DATED 9-7-20 11 ITA NO.1343/H/2011 HEAL A CHILD FOUNDATION, HYD. =============================== 3 AMENDING THE CLAUSE R AND ALSO MADE AN APPLICATIO N ADDRESSED TO THE DIT (E) ON 14-10-2011 REQUESTING F OR PERMISSION TO AMEND CLAUSE R OF THE OBJECTS CLAUS E NO.3.2. THIS MATTER IS STILL PENDING BEFORE THE DIT (E). IT IS FURTHER CONTENDED THAT IN ANY EVENT THE ASSESSE E TRUST IS ENTITLED TO APPROVAL UNDER SECTION 80G AND THE G ROUNDS ON WHICH IT IS DENIED IS ERRONEOUS AND ILLEGAL AND IN SUPPORT, HE MADE THE FOLLOWING SUBMISSIONS:- THE TRUST HAS COME INTO EXISTENCE ON THE 7 TH DAY OF JUNE, 2010 AND THE MAIN ACTIVITIES OF THE TRUST ARE TO PROVIDE MEDICAL RELIEF TO NEW BORN CHILDREN AND INFANTS WHOSE PARENTS CANNOT AFFORD MEDICAL AID. THE ASSESSEE HAS REGISTERED ITSELF WITH CHILDRENS HOSPITAL. WHENEVER A CHILD IS ADMITTED INTO SUCH HOSPITALS IN A CRITICAL CONDITION AND THE PARENTS A RE UNABLE TO AFFORD THE COST OF THE MEDICAL TREATMENT FOR WANT OF FUNDS FOR TREATMENT THE HOSPITAL REFERS THE SAID CASE TO THE TRUST. ONE OF THE TRUSTEES THEREUPON VISITS THE HOSPITAL, SATISFIES THAT THE PARENTS CANNOT AFFORD MEDICAL TREATMENT AND UPON BEING SATISFIED OF THE GENUINENESS OF THE CASE, TAK ES UP THE MATTER WITH THE HOSPITAL AND UNDERTAKES ON BEHALF OF THE TRUST TO BEAR THE ENTIRE COST OF THE TREATMENT FOR THE CHILD. IN SUCH CASES SOMETIMES EVEN THE HOSPITAL AGREES TO REDUCE PARTIALLY THE CO ST OF THE TREATMENT. THEREAFTER THE TRUST RELEASES TH E FUNDS AND PAYS THE SAME TO THE HOSPITAL FOR THE TREATMENT OF THE CHILD. II) THE CHILDREN WHO ARE ECONOMICALLY POORER SECTIONS OF THE SOCIETY AND THE MEDICAL AID ARE GIV EN WITHOUT ANY DISCRIMINATION OF RELIGION, SEX, COMMUNITY, COLOUR, CREED, ETC. THE FIRST YEAR FOR THE TRUST ENDED ON 31 ST MARCH, 2011. DURING THIS PERIOD, THE TRUST COLLECTED DONATIONS AGGREGATING T O RS.26,02,123/- AND PROVIDED TREATMENT TO CHILDREN AT AN EXPENSE 10,79,251/-. IT ALSO INCURRED EXPENSES FOR ADMINISTRATION AND FUND RAISING ACTIVITIES AGGREGATING TO RS.3,69,493/-. A LIST SHOWING THE NAMES OF THE DONORS AND DETAILS OF THE CHILDREN TO WHOM TREATMENT IS PROVIDED IS ENCLOSED FOR READY REFERENCE. ITA NO.1343/H/2011 HEAL A CHILD FOUNDATION, HYD. =============================== 4 III) THE SECOND FINANCIAL YEAR OF THE TRUST WOULD BE ENDING ON 31 ST MARCH, 2012 AND THE PARTICULARS OF ACCOUNTS OF THE TRUST SHALL BE FURNISHED ALONG WITH THE RETURN OF INCOME FOR THE ASSESSMENT YEAR 2012- 13. THE TRUST HAS BECOME EXCEEDINGLY POPULAR AND HAS GAINED A REPUTATION FOR THE SERVICES RENDERED B Y IT IN PROVIDING EXCELLENT MEDICAL RELIEF TO INFANTS , AT THE BEST POSSIBLE HOSPITALS, WHERE PARENTS COULD NO T AFFORD THE TREATMENT. ALL THE CHILDREN TO WHOM THE MEDICAL RELIEF IS PROVIDED ARE AT HYDERABAD ONLY. BRIEFLY THE FOLLOWING ARE THE ACTIVITIES UNDERTAKEN BY THE TRUST. 4. FURTHER, HE SUBMITTED THAT THAT THE PROVISIONS O F SECTION 80G ARE APPLICABLE PROVIDED IT SATISFIES TH E CONDITIONS SPECIFIED UNDER CLAUSES (I) TO (V) OF SU B-SECTION (5) TO SECTION 80G OF THE INCOME-TAX ACT. IT IS NOT THE CASE OF THE DIT THAT ANY OF THE CONDITIONS SPECIFIE D IN CLAUSES (I) TO (V) ARE NOT SATISFIED. THE ONLY PRO VISION RELEVANT IS THE MAIN LIMB OF SUB-SECTION (5) WHICH REQUIRES THAT THE TRUST MUST BE ESTABLISHED IN INDI A FOR A CHARITABLE PURPOSE. THE SAID SUB-SECTION (5) DOES NOT STIPULATE THAT IT MUST BE ESTABLISHED IN INDIA FOR A CHARITABLE PURPOSE IN INDIA. IN THE PRESENT CASE NO T WITHSTANDING CLAUSE R ENABLING ACTIVITY OUTSIDE I NDIA, NO SUCH ACTIVITY WAS EVER CARRIED ON. IT WAS AT ALL T IMES INTENDED TO CARRY ON THE ACTIVITY WITHIN INDIA ONLY AND THE FACT THE TRUSTEES EVEN APPLIED FOR AMENDMENT DELETI NG THAT PART OF CLAUSE R ENABLING CARRYING OF ACTIVI TY OUTSIDE INDIA BEARS ELOQUENT TESTIMONY TO THE INTENTION OF THE TRUST. IT IS A FACT THAT THE TRUST IS ESTABLISHED IN INDIA. IN DECLINING TO GRANT APPROVAL UNDER SECTION 80G THE D IT (E) HAS GONE BEYOND THE REQUIREMENTS OF CLAUSES (I) TO (V) TO SUB-SECTION (5) TO SECTION 80G. HE RELIED ON THE F OLLOWING DECISIONS IN SUPPORT THAT THE BASIS ON WHICH THE AP PROVAL ITA NO.1343/H/2011 HEAL A CHILD FOUNDATION, HYD. =============================== 5 IS DECLINED IS ARBITRARY, ILLEGAL AND CONTRARY TO T HE PLAIN MEANING OF THE PROVISION OF SECTION 80G(5) OF THE A CT. A) SHIKSHAN PRASARAK MANDALI VS. CIT,PUNE BENCH OF ITAT (117 TTJ 0337) B) MK NAMBYAR SAARC LAW CHARITABLE TRUST VS. UNION OF INDIA & OTHERS. DELHI HIGH COURT (269 ITR 556) 5. HE FURTHER SUBMITTED THAT THE TRUST SURVIVES ONL Y ON DONATIONS AND HAS NO OTHER MEANS OF INCOME. IF THE APPROVAL UNDER SECTION 80G IS NOT GIVEN AND WITHHEL D THE ACTIVITIES OF THE TRUST WILL BE SERIOUSLY IMPAIRED AND THE TRUST CANNOT CARRY ON ITS OBJECTS EFFECTIVELY. THE TRUST IS UNABLE TO GIVE ANY 80G EXEMPTION CERTIFICATES TO TH E DONORS WHO HAVE DONATED MONEYS IN THE FINANCIAL YEA R 2010-11. 5.1. FINALLY, HE DREW OUR ATTENTION TO THE CERTIFIC ATE OF GRANTING REGISTRATION UNDER SECTION 12AA OF THE ACT DATED 24-2-2011 AND THE REGISTRATION WAS GRANTED WITH EFF ECT FROM 07-06-2010. 6. ON THE OTHER HAND, THE LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT GRANTING OF APPROVAL UNDER SECTION 80G IS NOT AUTOMATIC AND GRANT OF REGISTRAT ION UNDER SECTION 12AA OF THE ACT DOES NOT AUTOMATICALL Y REACH TO THE CONCLUSION THAT THE ASSESSEE IS ENTITL ED FOR APPROVAL UNDER SECTION 80G OF THE ACT. HENCE, THE LD. DR HAS SUPPORTED THE ORDER OF THE DIT (E). 7. WE HAVE CAREFULLY CONSIDERED THE RELEVANT FACTS, ARGUMENTS ADVANCED AND THE CASE LAWS CITED. THE ITA NO.1343/H/2011 HEAL A CHILD FOUNDATION, HYD. =============================== 6 ASSESSEE IS SEEKING REGISTRATION UNDER SECTION 80G( 5) OF THE ACT. SECTION 80G(5) IS EXTRACTED HEREUNDER:- (5) 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 INCOME, SUCH INCOME WOULD NOT BE LIABLE TO INCLUSION IN ITS TOTAL INCOME UNDER THE PROVISIONS OF SECTIONS 11 AND 12 OR CLAUSE ( 23AA )] [OR CLAUSE ( 23C )] OF SECTION 10 : PROVIDED THAT WHERE AN INSTITUTION OR FUND DERIVES ANY INCOME, BEING PROFITS AND GAINS OF BUSINESS, THE CONDITION THAT SUCH INCOME WOULD NOT BE LIABLE TO INCLUSION IN ITS TOTAL INCOME UNDER THE PROVISIONS OF SECTION 11 SHALL NOT APPLY IN RELATION TO SUCH INCOME, IF ( A ) THE INSTITUTION OR FUND MAINTAINS SEPARATE BOOKS OF ACCOUNT IN RESPECT OF SUCH BUSINESS; ( B ) THE DONATIONS MADE TO THE INSTITUTION OR FUND ARE NOT USED BY IT, DIRECTLY OR INDIRECTLY, FOR THE PURPOSES OF SUCH BUSINESS; AND ( C ) THE INSTITUTION OR FUND ISSUES TO A PERSON MAKING THE DONATION A CERTIFICATE TO THE EFFECT THAT IT MAINTAINS SEPARATE BOOKS OF ACCOUNT 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; ITA NO.1343/H/2011 HEAL A CHILD FOUNDATION, HYD. =============================== 7 ( II ) THE INSTRUMENT UNDER WHICH THE INSTITUTION OR FUND IS CONSTITUTED DOES NOT, OR THE RULES GOVERNING THE INSTITUTION OR FUND DO NOT, CONTAIN ANY PROVISION FOR THE TRANSFER OR APPLICATION AT ANY TIME OF THE WHOLE OR ANY PART OF THE INCOME OR ASSETS OF THE INSTITUTION OR FUND FOR ANY PURPOSE OTHER THAN A CHARITABLE PURPOSE; ( III ) THE INSTITUTION OR FUND IS NOT EXPRESSED TO BE FOR THE BENEFIT OF ANY PARTICULAR RELIGIOUS COMMUNITY OR CASTE; ( IV ) THE INSTITUTION OR FUND MAINTAINS REGULAR ACCOUNTS OF ITS RECEIPTS AND EXPENDITURE; ( V ) THE INSTITUTION OR FUND IS EITHER CONSTITUTED AS A PUBLIC CHARITABLE TRUST OR IS REGISTERED UNDER THE SOCIETIES REGISTRATION ACT, 1860 (21 OF 1860), OR UNDER ANY LAW CORRESPONDING TO THAT ACT IN FORCE IN ANY PART OF INDIA OR UNDER SECTION 25 OF THE COMPANIES ACT, 1956 (1 OF 1956), OR IS A UNIVERSITY ESTABLISHED BY LAW, OR IS ANY OTHER EDUCATIONAL INSTITUTION RECOGNISED BY THE GOVERNMENT OR BY A UNIVERSITY ESTABLISHED BY LAW, OR AFFILIATED TO ANY UNIVERSITY ESTABLISHED BY LAW, OR IS AN INSTITUTION FINANCED WHOLLY OR IN PART BY THE GOVERNMENT OR A LOCAL AUTHORITY; [( VI ) IN RELATION TO DONATIONS MADE AFTER THE 31ST DAY OF MARCH, 1992, THE INSTITUTION OR FUND IS FOR THE TIME BEING APPROVED BY THE COMMISSIONER IN ACCORDANCE WITH THE RULES 15 MADE IN THIS BEHALF AND (VII) WHERE ANY INSTITUTION OR FUND HAD BEEN APPROVED UNDER CLAUSE (VI) FOR THE PREVIOUS YEAR BEGINNING ON THE 1ST DAY OF APRIL, 2007 AND ENDING ON THE 31ST DAY OF MARCH, 2008, SUCH INSTITUTION OR FUND SHALL, FOR THE PURPOSES OF THIS SECTION AND NOTWITHSTANDING ANYTHING CONTAINED IN THE ITA NO.1343/H/2011 HEAL A CHILD FOUNDATION, HYD. =============================== 8 PROVISO TO CLAUSE (15) OF SECTION 2, BE DEEMED TO HAVE BEEN, (A) ESTABLISHED FOR CHARITABLE PURPOSES FOR THE PREVIOUS YEAR BEGINNING ON THE 1ST DAY OF APRIL, 2008 AND ENDING ON THE 31ST DAY OF MARCH, 2009; AND (B) APPROVED UNDER THE SAID CLAUSE (VI) FOR THE PREVIOUS YEAR BEGINNING ON THE 1ST DAY OF APRIL, 2008 AND ENDING ON THE 31ST DAY OF MARCH, 2009. AS PER SUB-CLAUSE (VI) OF SUB-SECTION (5) OF SECTIO N 80G, FOR RECOGNITION, THE TRUST IS REQUIRED TO BE APPROV ED BY THE COMMISSIONER IN ACCORDANCE WITH THE RULES MADE IN THIS BEHALF. THE RULES ARE RULE 11AA PRESCRIBED IN THIS REGARD. AS PER RULE 11AA, THE ASSESSEE IS REQUIRED TO MAKE AN APPLICATION IN FORM NO.10G. THE APPLICATIO N SHALL BE ACCOMPANIED BY THE FOLLOWING DOCUMENTS:- (1) COPY OF REGISTRATION GRANTED UNDER SECTION 12A OR COPY OF NOTIFICATION ISSUED UNDER SECTION 10(23) OR 10(23C) OF THE ACT; (2) NOTES ON ACTIVITIES OF INSTITUTION SINCE ITS INCEPTION OR DURING THE LAST 3 YEARS WHICHEVER IS LESS. (3) COPIES OF ACCOUNTS OF THE INSTITUTION SINCE ITS INCEPTION OR DURING THE LAST 3 YEARS WHICHEVER IS LESS. 8. THE COMMISSIONER IS EMPOWERED TO CALL FOR SUCH FURTHER DOCUMENTS OR INFORMATION OR CALLS SUCH ENQUIRIES IN ORDER TO SATISFY HIMSELF ABOUT THE ITA NO.1343/H/2011 HEAL A CHILD FOUNDATION, HYD. =============================== 9 GENUINENESS OF THE ACTIVITIES OF THE INSTITUTION. IF THE COMMISSIONER IS SATISFIED THAT THE CONDITION LAID D OWN IN CLAUSES (I) TO (V) OF SUB-SECTION (5) OF SECTION 80 G ARE FULFILLED, HE SHALL RECORD SUCH SATISFACTION AND GR ANT APPROVAL. IF HE IS NOT SO SATISFIED, HE SHALL REJE CT THE APPLICATION AFTER RECORDING THE REASONS. THUS AS PER THE PROVISION OF SECTION 80G(5) READ WITH RULE 11AA FOR GRANTING REGISTRATION, THE COMMISSIONER NEEDS TO BE SATISFIED THAT THE CONDITION LAID DOWN IN CLAUSES ( I) TO (V) OF SUB-SECTION (5) OF SECTION 80G ARE FULFILLED. I N THE PRESENT CASE THERE IS NO DISPUTE THAT THE APPLICATI ON FOR APPROVAL HAS BEEN FILED IN FORM NO.10G ALONG WITH T HE DOCUMENTS REQUIRED TO BE ACCOMPANIED THERETO. SUB- CLAUSE (I) OF SUB-SECTION (5) OF SECTION 80G REQUIR ES THAT WHERE THE INSTITUTION OR FUND DERIVES ANY INCOME, S UCH INCOME WOULD NOT BE LIABLE TO INCLUSION IN ITS TOTA L INCOME UNDER THE PROVISIONS OF SECTIONS 11 AND 12 OF THE A CT. THE ASSESSEE IS REGISTERED UNDER SECTION 12AA OF TH E ACT. THUS SUB-CLAUSE (I) IS SATISFIED. 9. AS PER SUB-CLAUSE (II) OF SUB-SECTION (5) OF SECTION 80G, THE INSTRUMENT UNDER WHICH THE INSTITU TION OR FUND IS CONSTITUTED DOES NOT, OR THE RULES GOVERNIN G THE INSTITUTION OR FUND DO NOT, CONTAIN ANY PROVISION F OR THE TRANSFER OR APPLICATION AT ANY TIME OF THE WHOLE OR ANY PART OF ITS INCOME OR ASSETS FOR ANY PURPOSE OTHER THAN A CHARITABLE PURPOSE. ADMITTEDLY THERE IS NO CLAUSE OR RULE GOVERNING THE INSTITUTION WHICH CONTAINS ANY PROVIS ION FOR THE TRANSFER OR APPLICATION OF ITS INCOME OR ASSETS FOR ANY PURPOSE OTHER THAN A CHARITABLE PURPOSE. THE ONLY OBJECT OF THE ASSESSEE TRUST IS FOR CARRYING OUT SUCH OB JECT OF ITA NO.1343/H/2011 HEAL A CHILD FOUNDATION, HYD. =============================== 10 CHARITABLE NATURE WITHIN THE DEFINITION OF CHARIT ABLE PURPOSE AS SPECIFIED IN SECTION 2(15) OF THE ACT. 10. THE CONDITION PRESCRIBED IN SUB-CLAUSE (IV) OF SECTION (5) OF SECTION 80G IS THAT THE INSTITUTION OR FUND MAINTAINS REGULAR ACCOUNTS OF ITS EXPENDITURE IS AL SO COMPLIED WITH. 11. THE CONDITION IN SUB-CLAUSE (V) OF SUB-SECTION (5) OF SECTION 80G IS THAT THE INSTITUTION OR FUND IS EITH ER CONSTITUTED AS A PUBLIC CHARITABLE TRUST OR IS REGI STERED UNDER THE SOCIETIES REGISTRATION ACT, 1960. 12. FROM THE ABOVE IT IS CLEAR THAT ALL THE CONDITI ONS LAID DOWN IN RULE 11AA I.E. CONDITION LAID DOWN IN SUB-C LAUSES (I) TO (V) OF SUB-SECTION (5) OF SECTION 80G ARE FU LFILLED. WHEN THE ASSESSEE TRUST WAS GRANTED REGISTRATION UN DER SECTION 12AA, IT IS A TESTIMONY TO THE FACT THAT TH E TRUST IS ESTABLISHED FOR CHARITABLE PURPOSES. HONBLE PUNJA B & HIGH COURT WHICH IS THE JURISDICTION IN THIS CASE I N THE CASE OF SONEPAT HINDU EDUCATIONAL AND CHARITABLE SOCIETY VS. CIT, 278 ITR 262 HELD AS UNDER:- IN CONSTRUING THE PURPOSE OF A TRUST, FOR THE PURPOSES OF APPROVAL UNDER SECTION 80G OF THE INCOME-TAX ACT, 1961, IT IS IMPORTANT TO FIND OUT THE REAL PURPOSE OF ESTABLISHING THE TRUST RATHER THAN JUST RELYING ON THE OBJECTS, MEMORANDUM AND ARTICLES OR THE TRUST DEED OF THE TRUST. IF THE COMMISSIONER IS SATISFIED THAT THE OBJECTS OF THE TRUST ARE CHARITABLE, APPROVAL SHOULD NOT BE DENIED ON MERE TECHNICALITIES. REGISTRATION OF AN INSTITUTION UNDER SECTION 12A OF THE ACT IS SUFFICIENT PROOF OF IT BEING ESTABLISHED FOR CHARITABLE PURPOSES. ITA NO.1343/H/2011 HEAL A CHILD FOUNDATION, HYD. =============================== 11 IT IS NOT POSSIBLE TO DETERMINE, ON THE DATE ON WHICH THE DONATION IS MADE UNDER SECTION 80G, IF THE TRUST, WHICH HAS SOUGHT APPROVAL UNDER THE SAID SECTION, HAS FULFILLED ITS CONDITIONS AT THE CLOSE OF THE RELEVANT PREVIOUS YEAR. RES JUDICATA CAN BE APPLIED IN INCOME-TAX PROCEEDINGS WHEN A FUNDAMENTAL ASPECT HAS PREVAILED THROUGH DIFFERENT ASSESSMENT YEARS WITHOUT BEING CHALLENGED ONE WAY OR THE OTHER. IN SUCH CASES IT IS NOT APPROPRIATE TO CHANGE THE POSITION IN A SUBSEQUENT YEAR. (EMPHASIS BY UNDERLINING SUPPLIED) 13. THERE IS NO DENIAL OF FACT THAT THE ASSESSEE INSTITUTION, IN THE PRESENT CASE, IS REGISTERED UND ER SECTION 12AA OF THE INCOME-TAX ACT. HONBLE GUJARAT HIGH COURT IN THE CASE OF N. N. DESAI CHARITABLE TRUST VS. CIT , 246 ITR 452 HELD THAT IN RESPECT OF REGISTRATION UNDER SECTION 80G, THE SCOPE OF ENQUIRY WILL BE CONFINED TO FINDI NG OUT IF THE INSTITUTION SATISFIES PRESCRIBED CONDITION STAT ED IN SUB- CLAUSES (I) TO (V) OF SECTION 80G. IT DOES NOT EXTE ND TO ACTUAL ASSESSMENT OF INSTITUTION. THE PHRASE USED I N SUB- CLAUSE (I) OF SUB-SECTION (5) OF SECTION 80G IS THA T WHERE THE INSTITUTION OR FUND DERIVES ANY INCOME, SUCH IN COME WOULD NOT BE LIABLE TO INCLUSION IN ITS TOTAL INCOM E. THUS WHAT IS TO BE SEEN IS WHETHER ANY INCOME WOULD NOT BE LIABLE TO INCLUSION IN ITS TOTAL INCOME AND NOT WHE THER BECAUSE OF CERTAIN DEFAULTS PRESCRIBED IN SECTION 1 1 OR 13, THE TRUST IS NOT ACTUALLY HELD ELIGIBLE FOR EXEMPTI ON UNDER SECTIONS 11 & 12 OF THE ACT. ONCE THE CONDITION LA ID DOWN IN RULE 11AA AS ALSO IN SUB-CLAUSES (I) TO (V) OF S UB- SECTION (5) OF SECTION 80G ARE COMPLIED WITH, THE T RUST IS, ITA NO.1343/H/2011 HEAL A CHILD FOUNDATION, HYD. =============================== 12 ELIGIBLE FOR REGISTRATION UNDER SECTION 80G(5)(VI) OF THE ACT. 14. IN THIS CASE, THE APPROVAL UNDER SECTION 80G OF THE ACT WAS DENIED BY THE DIT (E) ONLY ON THE REASON TH AT THE OBJECT CLAUSE CONTAINS THE CLAUSE THAT THE ACTIVITI ES OF THE TRUST AND ITS OBJECTS WILL NOT BE CONFINED TO INDIA . TO GRANT APPROVAL UNDER SECTION 80G OF THE ACT, THE DIT (E) CAN EXAMINE WHETHER OR NOT THE CONDITIONS SET OUT IN SE CTION 80G(5) (I) TO (V) ARE SATISFIED. IF THE ASSESSEE H AS SATISFIED THE ABOVE CONDITIONS, THERE IS NO REASON TO DENY THE APPROVAL UNDER SECTION 80G OF THE ACT BY THE DI T (E). MORE SO, IN THE PRESENT CASE, THE ASSESSEE HAS ALRE ADY MADE AMENDMENT TO THE TRUST DEED WHEREBY THE CLAUSE 3.2 WAS AMENDED AS FOLLOWS:- THE ACTIVITIES OF THE TRUST AND ITS OBJECTS WILL BE CONFINED ONLY TO INDIA. BEING SO, AS ON DATE, THERE CANNOT BE ANY OBJECTION TO GRANT APPROVAL UNDER SECTION 80G OF THE ACT AS THE IMPUGNED CLAUSE IS AMENDED BY THE TRUST. IN THE CIRCUMSTANCES, WE DIRECT THE DIT (E) TO CONSIDER TH E AMENDMENT AND DECIDE THE ISSUE IN ACCORDANCE WITH L AW. 15. IN THE RESULT, THE APPEAL FILED BY THE ASSESS EE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 03 -02-2012. SD/- SD/- (ASHA VIJAYA RAGHAVAN) JUDICIAL MEMBER SD/- (CHANDRA POOJARI) ACCOUNTANT MEMBER DATED THE 3 RD FEBRUARY, 2012. ITA NO.1343/H/2011 HEAL A CHILD FOUNDATION, HYD. =============================== 13 COPY FORWARDED TO: 1. C/O Y-AXIS SOLUTIONS PRIVATE LIMITED, 6 TH FLOOR, DEGA TOWERS, RAJ BHAVAN ROAD, HYDERABAD. 2. DIRECTOR OF INCOME-TAX (EXEMPTIONS), HYDERABAD. 3. THE CIT CONCERNED, HYDERABAD 4. THE DR, ITAT, HYDERABAD JMR* ITA NO.1343/H/2011 HEAL A CHILD FOUNDATION, HYD. =============================== 14