Ved Charity Trust, Kolkata V. DIT (Exemption), Kolkata, Kolkata

ITA 1663/KOL/2010

• Counselvise Citation: [2010] 135 COUNSELVISE.COM (IT) 5507 (ITAT-KOLKATA)
• Duration Of Justice: 2 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-11-2010
• Appeal Filed By: Assessee
• Bench Allotted: C
• Assessment Year: misc
• Appeal Filed On: 23-08-2010
• Court: TRIBUNAL
• Department Lawyers: SANJAY BARA
• Assessee Lawyers: N K PODDA R
• Section: 80G

Judgement Text

1 , C , , IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH- C , KO LKATA [ . . . . . . . . , , , , . . . . . . . . !' !' !' !', , , , #$ ] [BEFORE SHRI G.D.AGRAWAL, V.P. & D.K. TYAGI, JUDICIAL MEMBER] % % % % / ITA NO. 1663 (KOL) OF 2010 &'( )*/ ASSESSMENT YEAR 2011-12 ONWARDS VED CHARITY TRUST, KOLKATA. (PAN-AAATV2095G) DIRECTOR OF INCOME-TAX (EXEMP) KOLKATA. (-. / APPELLANT ) ' - VERSUS (1!-./ RESPONDENT ) -. 2 3 / FOR THE APPELLANT: SRI N.K. PODDAR 1!-. 2 3 / FOR THE RESPONDENT: SRI SANJAY BARA # 4 / ORDER ( . . . . . . . . ) , , , , (G.D.AGRAWAL) , VICE-PRESIDENT : THE APPEAL OF THE ASSESSEE IS DIRECTED AGAINST TH E ORDER DATED 20.07.2010 OF DIRECTOR OF INCOME-TAX (EXEMPTION), KOLKATA. THE ASSESSEE H AS RAISED SEVERAL GROUNDS WHICH ARE ALL DIRECTED AGAINST THE REJECTION OF THE APPLICATION F OR RENEWAL OF EXEMPTION U/S. 80G(5)(VI) OF THE INCOME-TAX ACT, 1961. THE GROUNDS RAISED IN TH IS APPEAL BY THE ASSESSEE READ AS UNDER :- 1. THAT THE LEARNED DIRECTOR OF INCO ME TAX (EXEMPTION), KOLKATA ERRED IN ARBITRARILY AND WRONGLY REJECTING THE APPLICATION DATED 22 FEB RUARY, 2010 MADE BY THE APPELLANT TRUST IN FORM NO.10G PRESCRIBED UNDER RUL E 11AA OF THE INCOME TAX RULES, 1962 SEEKING RENEWAL OF EXEMPTION UNDER SECT ION 80G(5) OF THE INCOME-TAX ACT, 1961 IN RESPECT OF THE ASSESSMENT YEAR 2011-12 & ONWARDS. 2. THAT THE LEARNED DIRECTOR OF INC OME TAX (EXEMPTION), KOLKATA ERRED IN WRONGLY ALLEGING AND/OR HOLDING THAT THE APPELLANT TRUST WA S HABITUAL IN SHORT APPLICATION OF ITS FUNDS. 3. THAT WITHOUT PREJUDICE TO GROUND NO.2 HEREINABOVE, THE LEARNED DIRECTOR OF INCOME TAX (EXEMPTION), KOLKATA FAILED TO APPRECIATE THAT IN VIEW OF THE OMISSION OF PROVISO TO CLAUSE (VI) OF SUB-SECTION (5) OF SECTIO N 80G OF THE SAID ACT BY THE FINANCE (NO.2) ACT, 2009, NO RENEWAL OF EXEMPTION W AS REQUIRED IN RESPECT OF THE ASSESSMENT YEAR 2011-12 AND ONWARDS, SINCE THE APPE LLANT TRUST WAS ALREADY APPROVED FOR THE ASSESSMENT YEARS 2008-09 TO 2010-1 1 UNDER CLAUSE (VI) OF SECTION 80G(5) OF THE SAID ACT BY THE ORDER DATED 2 ND JULY, 2007 PASSED BY THE DIRECTOR OF INCOME TAX (EXEMPTION). 4. THAT THE LEARNED DIRECTOR OF INC OME TAX (EXEMPTION), KOLKATA FAILED TO NOTE THAT IN VIEW OF PARAGRAPHS 29.4, 29.5 & 29.7 OF THE CIRCULA R NO.5 OF 2010 DATED 3RD JUNE, 2 2010 (2010) 324 ITR(ST.) 293, 325, ISSUED BY THE CE NTRAL BOARD OF DIRECT TAXES, EXISTING APPROVALS EXPIRING ON AFTER 1ST OCTOBER, 2 009 WOULD BE DEEMED TO HAVE BEEN EXTENDED IN PERPETUITY, UNLESS SPECIFICALLY WI THDRAWN; AND THAT THE POWER TO WITHDRAW THE APPROVAL COULD BE EXERCISED ONLY WHEN HE WAS SATISFIED THAT THE ACTIVITIES OF THE FUND OR INSTITUTION WERE NOT GENU INE OR WERE NOT BEING CARRIED OUT IN ACCORDANCE WITH ITS OBJECTS AS CLEARLY SET OUT IN P ARAGRAPH 29.6 OF THE SAID CIRCULAR, WHICH WAS ADMITTEDLY NOT THE CASE HEREIN. 5. THAT THE IMPUGNED ORDER DATED 20 TH JULY, 2010 PASSED BY THE LEARNED DIRECTOR OF INCOME TAX (EXEMPTION), KOLKATA IS ILLEGAL, INVALID , AGAINST THE FACTS AND EVIDENCES ON RECORD, WHOLLY UNREASONABLE AND/OR OTHERWISE PER VERSE. 2. THE FACTS OF THE CASE ARE THAT THE ASSESSEE FIL ED AN APPLICATION DATED 22/2/2010 IN FORM-10G ON 26/2/2010 SEEKING RENEWAL OF EXEMPTION U/S. 80G(5)(VI) OF I.T. ACT, 1961 BEFORE THE D.I.T. (EXEMPTION) FOR ASSESSMENT YEAR 2 011-12 ONWARDS. THE D.I.T. (EXEMPTION) VIDE HIS ORDER DATED 20-7-2010 REJECTED THE SAID AP PLICATION ON THE GROUND THAT THE TRUST- APPLICANT IS HABITUAL OF SHORT APPLICATION OF FUND. BEING AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE US. 3. IT WAS CONTENDED BY THE ASSESSEES LEARNED COUN SEL THAT BY VIRTUE OF OMISSION OF PROVISO TO CLAUSE (VI) OF SEC. 80G(5) BY THE FINANC E (NO.2) ACT, 2009, NO RENEWAL OF EXEMPTION IS REQUIRED IN RESPECT OF THE ASSESSMENT YEAR 2011-12 AND ONWARDS. REFERRING TO C.B.D.T. CIRCULAR NO. 5 OF 2010 DATED 03/6/2010, RE PORTED IN 324 ITR (ST.) 293, 325, HE SUBMITTED THAT SINCE THE ASSESSEE-TRUST WAS ALREADY APPROVED FOR THE ASSESSMENT YEARS 2008- 09 TO 2010-11 U/S. 80G(5)(VI) VIDE ORDER DATED 2 ND JULY, 2007 OF THE D.I.T. (EXEMPTION), THEREFORE, EXISTING APPROVAL EXPIRING ON OR AFTER 1 ST OCTOBER, 2009 WOULD BE DEEMED TO HAVE BEEN EXTENDED IN PERPETUITY, UNLESS SPECIFICALLY WI THDRAWN AND THAT THE POWER TO WITHDRAW THE APPROVAL COULD BE EXERCISED ONLY WHEN THE D.I.T . (EXEMPTION) WAS SATISFIED THAT THE ACTIVITIES OF THE INSTITUTION WERE NOT GENUINE OR W ERE NOT BEING CARRIED OUT IN ACCORDANCE WITH ITS OBJECTS. THESE EXCEPTIONS, ACCORDING TO THE LEA RNED COUNSEL, WERE NOT APPLICABLE TO THE CASE OF THE ASSESSEE-TRUST. HE, THEREFORE, SUBMITTE D THAT THE D.I.T. (EXEMPTION) ERRED IN REJECTING THE APPLICATION FOR RENEWAL OF EXEMPTION U/S. 80G(5)(VI) IN RESPECT OF ASSESSMENT YEAR 2011-12 AND ONWARDS AND HE BE DIRECTED TO ALLO W THE SAME. 4. WE HAVE HEARD THE PARTIES AND PERUSED THE MATER IAL PLACED ON RECORD. THOUGH THE ASSESSEE HAS RAISED SEVERAL GROUNDS BUT THE ISSUE I S ONE, I.E. WHETHER THE ASSESSEE IS ENTITLED TO RENEWAL OF EXEMPTION CERTIFICATE U/S. 80G(5)(VI) OF THE ACT. THE ONLY REASON ADOPTED BY THE D.I.T. (EXEMPTION) IN REJECTING THE APPLICATION MAD E BY THE ASSESSEE FOR RENEWAL OF 3 EXEMPTION CERTIFICATE U/S. 80G(5)(VI) IS THAT THE T RUST IS HABITUAL OF SHORT APPLICATION OF FUND. HIS ORDER READS AS UNDER :- THE APPLICANT HAS FILED AN APPLICATION ON 26.02.20 10 IN FORM NO. L0G SEEKING RENEWAL OF EXEMPTION U/S 80G(5)(VI) OF THE INCOME T AX ACT, 1961. IN THIS CASE IT WAS OBSERVED THAT JT. DIT(E), KOLKA TA IS NOT RECOMMEND THE CASE. SUBSEQUENTLY, IN ORDER TO GIVE THE APPLICANT ANOTHE R OPPORTUNITY THIS OFFICE HAD ISSUED LETTER DATED 06.07.2010 FOR HEARING. IN COMP LIANCE SRI R.P. VERMA, TRUSTEE APPEARED AND SUBMITTED SOME DOCUMENTS WHICH SHOWS T HAT THE APPLICANT IS HABITUAL OF SHORT APPLICATION OF FUND. IN VIEW OF THE ABOVE DISCUSSION, APPLICATION FOR RE NEWAL OF U/S 80G(5)(VI) OF THE INCOME TAX ACT,1961 IS HEREBY REJECTED. FROM THE ABOVE ORDER OF D.I.T. (EXEMPTION), WE FIND THAT HE HAS NOT DISCUSSED THE MATTER IN PURSUANCE TO C.B.D.T. CIRCULAR NO. 5 OF 2010 DATED 03/6/2010, WHICH IS PLACED AT PAGES 71 TO 103 OF THE ASSESSEES PAPER BOOK, WHILE REJECTIN G THE ASSESSEES APPLICATION FOR RENEWAL OF EXEMPTION CERTIFICATE U/S. 80G(5)(VI). PARAGRAPHS 29.4 TO 29.7 OF THE SAID CIRCULAR OF C.B.D.T., WHICH ARE RELEVANT FOR THIS CASE, READ AS UNDER :- 29.4 FURTHER, AS PER CLAUSE (VI) OF SUB-SECTION (5) OF SECTION 80G OF THE INCOME-TAX ACT 1961, THE INSTITUTIONS OR FUNDS TO WHICH THE DO NATIONS ARE MADE HAVE TO BE APPROVED BY THE COMMISSIONER OF INCOME-TAX IN ACCOR DANCE WITH THE RULES PRESCRIBED IN RULE 11AA OF THE INCOME-TAX RULE, 1962. THE PROV ISO TO THIS CLAUSE PROVIDES THAT ANY APPROVAL GRANTED UNDER THIS CLAUSE SHALL HAVE E FFECT FOR SUCH ASSESSMENT YEAR OR YEARS, NOT EXCEEDING FIVE ASSESSMENT YEARS, AS MAY BE SPECIFIED IN THE APPROVAL. DUE TO THIS LIMITATION IMPOSED ON THE VALIDITY OF SUCH APPROVALS, THE APPROVED INSTITUTIONS OR FUNDS HAVE TO BEAR THE HARDSHIP OF GETTING THEIR APPROVALS RENEWED FROM TIME TO TIME. THIS IS UNDULY BURDENSOME FOR THE BONA FIDE I NSTITUTIONS OR FUNDS AND ALSO LEADS TO WASTAGE OF TIME AND RESOURCES OF THE TAX ADMINIS TRATION IN RENEWING SUCH APPROVALS IN A ROUTINE MANNER. 29.5 THEREFORE, THE PROVISO TO CLAUSE (VI) OF SU B-SECTION (5) OF SECTION 80G HAS BEEN OMITTED TO PROVIDE THAT THE APPROVAL ONCE GRANTED S HALL CONTINUE TO BE VALID IN PERPETUITY. 29.6 FURTHER, THE COMMISSIONER WILL ALSO HAVE TH E POWER OF WITHDRAW THE APPROVAL IF THE COMMISSIONER IS SATISFIED THAT THE ACTIVITIE S OF SUCH INSTITUTION OR FUND ARE NOT GENUINE OR ARE NOT BEING CARRIED OUT IN ACCORDANCE WITH THE OBJECTS OF THE INSTITUTION OR FUND. 29.7 APPLICABILITY. THIS AMENDMENT HAS BEEN MAD E APPLICABLE WITH EFFECT FROM 1ST OCTOBER, 2009. ACCORDINGLY, EXISTING APPROVALS EXPIRING ON OR AFTER 1ST QCTOBER, 2009 WILL BE DEEMED TO HAVE BEEN EXTENDED IN PERPET UITY UNLESS SPECIFICALLY WITHDRAWN. HOWEVER, IN CASE OF APPROVALS EXPIRING B EFORE 1ST OCTOBER, 2009, THESE 4 WILL HAVE TO BE RENEWED AND ONCE RENEWED THESE SHAL L CONTINUE TO BE VALID IN PERPETUITY, UNLESS SPECIFICALLY WITHDRAWN . [EMPHASIS SUPPLIED] WE FIND THAT PROVISO TO CLAUSE (VI) OF SEC. 80G(5) HAS BEEN OMITTED BY THE FINANCE (NO.2) ACT, 2009 W.E.F. 1/10/2009 CONSIDERING THE HARDSHIP S OF THE APPROVED INSTITUTIONS OF GETTING THEIR APPROVALS RENEWED FROM TIME TO TIME, DUE TO L IMITATION IMPOSED ON THE VALIDITY OF SUCH APPROVALS. CONSEQUENT UPON SUCH OMISSION, C.B.D.T. HAS ISSUED CIRCULAR NO.5 OF 2010 AND AS PER PARA- 29.7, REPRODUCED ABOVE, ONCE A TRUST I S GRANTED APPROVAL U/S. 80G(5)(VI) OF THE ACT TILL 1 ST OCTOBER, 2009, THE RENEWAL FOR THE SUBSEQUENT YEAR S WOULD BE DEEMED TO HAVE BEEN EXTENDED IN PERPETUITY, UNLESS SPECIFICALLY WI THDRAWN FOR THE REASONS STATED IN PARA 29.6 OF THE SAID CIRCULAR, I.E. THE ACTIVITIES OF THE IN STITUTION ARE NOT BEING CARRIED OUT IN ACCORDANCE WITH ITS OBJECTS OR FUND. NO EVIDENCE HAS BEEN BROU GHT ON RECORD TO SHOW THAT THE APPROVAL GRANTED TO THE ASSESSEE-TRUST U/S. 80G(5)(VI) FOR A SSESSMENT YEARS 2008-09 TO 2010-11 VIDE ORDER DATED 2 ND JULY, 2007 OF THE D.I.T. (EXEMPTION) HAS BEEN WITH DRAWN. IN THE CASE OF THE ASSESSEE, RENEWAL OF EXEMPTION WAS GRANTED TILL ASS ESSMENT YEAR 2010-11, WHICH IS BEYOND THE PERIOD OF 1 ST OCTOBER, 2009 AND IN THESE CIRCUMSTANCES, RENEWAL OF EXEMPTION U/S. 80G(5) CLAIMED BY THE ASSESSEE IN RESPECT OF ASSESSMENT YE AR 2011-12 AND ONWARDS IS DEEMED TO BE EXTENDED. IN VIEW OF ABOVE, IN OUR OPINION, THE AS SESSEE WAS NOT REQUIRED TO FILE ANY APPLICATION FOR EXTENSION OF APPROVAL U/S. 80G(5). EVEN IF HE HAS FILED, THE LD. D.I.T. (EXEMPTION) SHOULD NOT HAVE ADJUDICATED THE SAME. THEREFORE, THE ORDER PASSED BY THE D.I.T. (EXEMPTION) DENYING THE APPROVAL U/S. 80G(5)(VI) IS QUASHED. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. 5 # 4 67 8 7' ' 59 ORDER PRONOUNCED IN THE COURT ON 16/11/10. SD/- SD/- ( (( ( . . . . . . . . !' !' !' !') )) ), , , , #$ ( . . . . . . . . ), (D.K.TYAGI), JUDICIAL MEMBER (G.D.AGRAWAL), VICE-PRESIDENT ( (( (6 6 6 6) )) ) DATE: 16 -11-2010 5 % % % % / ITA NO. 1663 (KOL) OF 2010 # 4 2 1&&: :);- COPY OF THE ORDER FORWARDED TO : 1. -. / THE APPELLANT : VED CHARITY TRUST, P-12, NEW CIT ROAD, KOLKATA-700 073. 2 1!-. / THE RESPONDENT : DIT (EXEMPTION), 10-B, MIDDLETON R OW, KOLKATA-700 071 3. &4'/ THE CIT, KOL- , KOLKATA. 4. ?&' 1&' / DR, ITAT, KOLKATA BENCHES, KOLKATA 5 . GUARD FILE . !: 1&/ TRUE COPY, # 4'7/ BY ORDER, (DKP) /DEPUTY REGISTRAR .