Lions Club of Calcutta Hastings, Kolkata V. DIT, Exemption, Kolkata, Kolkata

ITA 2019/KOL/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 54714 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 1 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-12-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2011-2012
• Appeal Filed On: 09-11-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M BHATTACHARYA D R
• Assessee Lawyers: J M THARD
• Keywords: Charitable institution; Set aside
• Section: 80G; 12AA; 10

Judgement Text

, ' , , IN THE INCOME TAX APPELLATE TRIBUNAL, B BENCH: KOLKATA ( ) , , , . . , , ) [BEFORE SRI MAHAVIR SINGH, J.M. & SRI C.D. RAO, A. M.] / I.T.A NO. 2019/KOL/2010 !' !' !' !' #$ #$ #$ #$ / ASSESSMENT YEAR : 2011-2012 LIONS CLUB OF CALCUTTA HASTINGS, KOLKATA -VS.- DIRECTOR OF INCOME TAX (EXEMPTION), (PAN : AAATL 4316 J) KOLKATA ( &' &' &' &' /APPELLANT ) ( ()&' ()&' ()&' ()&' / RESPONDENT ) FOR THE APPELLANT ( &' ) : SHRI J.M. THARD, A.R. FOR THE RESPONDENT ( ()&' ) : SHRI M. BHATTACHARYA, D.R. *! + , *! + , *! + , *! + , /DATE OF HEARING : 12.12.2011 -# , -# , -# , -# , /DATE OF PRONOUNCEMENT : 12.12.2011 . / ORDER PER SHRI MAHAVIR SINGH, JUDICIAL MEMBER/ , :- THIS APPEAL BY ASSESSEE IS ARISING OUT OF THE ORDE R OF LD. DIRECTOR OF INCOME-TAX (EXEMPTION), KOLKATA VIDE ORDER NO.DIT(E)/8E/247/03 -04/2621-23 DATED 24.09.2010, VIDE WHICH HE REJECTED THE RENEWAL APPLICATION FILED IN FORM NO. 10G FOR CLAIMING DEDUCTION UNDER SECTION 80G(5)(VI) OF THE INCOME TAX ACT, 1961 (HER EINAFTER TO BE REFERRED TO AS THE ACT). 2. WE HAVE HEARD THE RIVAL CONTENTIONS AND GONE THR OUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. THE BRIEF FACTS ARE THAT THE ASSESSEE IS A CHARITABLE INSTITUTION REGISTERED UNDER SECTION 12AA OF THE ACT BY DIT(EXEMPTION), KOLKATA VIDE ORD ER DATED 30.06.2004. ACCORDING TO ASSESSEE, THE INSTITUTION HAS BEEN CARRYING ON CHAR ITABLE ACTIVITIES LIKE ORGANIZING EYE OPERATION CAMPS AND PROVIDING EYE GLASSES AND OTHER CONNECTED SERVICES WITH THE TREATMENT OF EYES IN RURAL AREAS. ACCORDING TO ASSESSEE, THE INSTITUTION HAS ALSO BEEN CONDUCTING MASS COMMUNITY MARRIAGES IN RURAL AREAS AND ALSO GIVING FINANCIAL HELP TO POOR FOR MARRIAGES. THE ASSESSEE STATED THE FACT THAT CERTIFICATE OF EXEMPT DEDUCTIO N UNDER SECTION 80G(5)(VI) DATED 30.06.2004 WAS ISSUED BY DIT(EXEMPTION), KOLKATA FOR A PERIOD FROM 03.12.2003 TO 31.03.2005. THE ITA NO.2019/KOL./2010 2 CERTIFICATE OF EXEMPTION WAS RENEWED FURTHER BY ORD ER DATED 19.10.2005 OF DIT(EXEMPTION), KOLKATA FOR A FURTHER PERIOD FROM 01.04.2006 TO 31. 03.2010. THE ASSESSEE FILED APPLICATION DATED 15.03.2010 FOR FURTHER RENEWAL IN FORM NO. 10 G UNDER SECTION 80G(5)(VI) OF THE ACT AND DIT (EXEMPTION) WITHOUT A SPEAKING ORDER AND EVEN T HOUGH THERE WAS CHANGE IN RENEWAL PROVISION THAT THE EXEMPTION IS TO BE GRANTED IN PE RPETUITY, REJECTED THE APPLICATION. WE FIND THAT SECTION 80G(5)(VI) OF THE ACT CONTAINED A PROV ISO WHICH READS AS PROVIDED THAT ANY APPROVAL SHALL HAVE EFFECT FOR SUCH ASSESSMENT YEAR OR YEARS, NOT EXCEEDING FIVE ASSESSMENT YEARS, AS MAY BE SPECIFIED IN THE APPROVAL. FURTHE R, CONSIDERING THE HARDSHIP OF THE SAID PROVISO, LEGISLATURE OMITTED THIS PROVISO BY THE FI NANCE (NO.2) ACT, 2009 W.E.F. 01.10.2009, BUT IN THIS CASE, APPROVAL WAS GRANTED UPTO 31.03.2010. THEREFORE, IN VIEW OF THE AFORESAID OMISSION OF THE SAID PROVISO, THE EXEMPTION GRANTED TO ASSESSEE UPTO 31.03.2010 CONTINUED TO BE VALID THEREAFTER. THIS POSITION HAS BEEN EXPLAIN ED BY THE CBDT CIRCULAR NO. 5 EXPLAINING THE PROVISIONS OF FINANCE (NO. 2) ACT, 2009 IN PARA 29.7 OF THE CIRCULAR, WHICH READS AS UNDER :- THIS AMENDMENT HAS BEEN MADE APPLICABLE WITH EFFEC T FROM 1 ST OCTOBER, 2009. ACCORDINGLY, EXISTING APPROVALS EXPI RING ON OR AFTER 1 ST OCTOBER, 2009 WILL BE DEEMED TO HAVE BEEN EXTENDED IN PERPETUITY UNLESS SPECIFICALLY WITHDRAWN. HOWEVER, IN CASE OF APPROVA LS EXPIRING BEFORE 1 ST OCTOBER, 2009, THESE WILL HAVE TO BE RENEWED AND O NCE RENEWED THESE SHALL CONTINUE TO BE VALID IN PERPETUITY, UNLESS SP ECIFICALLY WITHDRAWN. 3. WE FIND THAT A SIMILAR ISSUE WAS DECIDED ON 28.0 2.2011 BY LUCKNOW BENCH A OF ITAT IN ITA NO. 674/LUC./2010 IN THE CASE OF M/S. A SSOCIATION FOR ADVOCACY AND LEGAL INITIATIVES, LUCKNOW VS.- CIT-I, LUCKNOW, WHEREIN IN PARAS 10, 11, 12 & 13 TRIBUNAL HAS OBSERVED AS UNDER : 10. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH TH E PARTIES AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. IN T HE INSTANT CASE, IT IS NOT IN DISPUTE THAT THE ASSESSEE-TRUST IS REGISTERED WITH THE SUB-REGISTRAR, LUCKNOW, HAVING REGISTRATION U/S. I2AA OF THE ACT ALSO WHICH HAS BEEN GRANTED BY THE LD. COMMISSIONER OF INCOME TAX, LUCKNOW VIDE ORDER DATE D 10.2.2010. THE ASSESSEE WAS ALSO GRANTED APPROVAL U/S. 80G(5)(VI) OF THE AC T W.E.F. 10.3.2000 WHICH WAS VALID TILL 31.3.2003 AND LATER ON RENEWAL OF THE AP PROVAL UNDER THE SAID SECTION WAS GRANTED VIDE ORDER DATED 9.9.2003 FROM 1.4.2003 TO 31.3.2006, AGAIN VIDE ORDER DATED 7.12.2006 FROM 1.4.2006 TO 31.3.2008 AN D FINALLY VIDE ORDER DATED 16.9.2008 FROM 1.4.2008 TO 31 .3.2010 BY THE ID. CO MMISSIONER OF INCOME TAX-I, LUCKNOW. THE COPIES OF THE SAID ORDERS ARE PLACED A T PAGES 41, 40 AND 39 RESPECTIVELY OF THE ASSESSEES PAPER BOOK. EARLIER AS PER PROVISIONS CONTAINED IN CLAUSE (VI) TO SUB-SECTION (5) OF SECTION 80G, THE APPROVAL WAS TO BE GRANTED BY THE LD. COMMISSIONER OF INCOME TAX IN ACCORDANCE WI TH RULES PRESCRIBED IN RULE I2AA OF THE INCOME-TAX RULE, 1962 AND AS PER THE PR OVISO TO SECTION 80G(5)(VI) ITA NO.2019/KOL./2010 3 OF THE ACT, THE APPROVAL WAS TO BE RENEWED FROM TIM E TO TIME. HOWEVER, CONSIDERING THE HARDSHIP, THE LEGISLATURE IN ALL IT S WISDOM HAS SOUGHT TO OMIT THIS PROVISO ON 1.10.2009 VIDE ITS FINANCE (NO.2) ACT, 2 009. THEREFORE NOW APPROVAL ONCE GRANTED SHALL CONTINUE TO BE VALID IN PERPETUI TY. IN THE INSTANT CASE, THE APPROVAL WAS GRANTED TO THE ASSESSEE UPTO 31.3.2010 , THEREFORE, IN VIEW OF THE AFORESAID OMISSION OF THE PROVISO TO SECTION 80G(5) (VI) OF THE ACT VIDE FINANCE (NO.2) ACT, 2009, THE APPROVAL ONCE GRANTED SHALL C ONTINUE TO BE VALID IN PERPETUITY. THE MEMO EXPLAINING THE PROVISIONS IN F INANCE (NO.2) BILL, 2009 AS REPORTED IN 314 ITR 193 (ST.) AT PAGE 194 READS AS UNDER: THIS AMENDMENT WILL TAKE EFFECT FROM 1ST DAY OF AP RIL, 2009 AND SHALL ACCORDINGLY, APPLY IN RELATION TO ASSESSMENT YEAR 2009-70 ONLY. FURTHER AS PER CLAUSE (VI) OF SUB-SECTION (5) OF SE CTION 80G OF THE INCOME-TAX ACT, 1961, THE INSTITUTIONS OR FUNDS TO WHICH THE DONATIONS ARE MADE HAVE TO BE APPROVED BY THE COMMISSIONER OF INCOME-TAX IN ACCORDANCE WITH THE RULES PRESCRIBED IN RULE 11AA O F THE INCOME-TAX RULES, 1962 THE PROVISO TO THIS CLAUSE PROVIDES THA T ANY APPROVAL GRANTED UNDER THIS CLAUSE SHALL HAVE EFFECT FOR SUC H 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 S UCH APPROVALS, THE APPROVED INSTITUTIONS OR FUNDS HAVE TO BEAR THE HAR DSHIP OF GETTING THEIR APPROVALS RENEWED FROM TIME TO TIME. THIS IS UNDULY BURDENSOME FOR THE BONA FIDE INSTITUTIONS OR FUNDS AND ALSO LEADS TO W ASTAGE OF TIME AND RESOURCES OF THE TAX ADMINISTRATION IN RENEWING SUC H APPROVALS IN A ROUTINE MANNER. THEREFORE, IT IS PROPOSED TO OMIT THE PROVISO TO CL AUSE (VI) OF SUB-SECTION (5) OF SECTION 80G TO PROVIDE THAT THE APPROVAL ONC E GRANTED SHALL CONTINUE TO BE VALID IN PERPETUITY. FURTHER, THE CO MMISSIONER WILL ALSO HAVE THE POWER OF WITHDRAW THE APPROVAL IF THE COMM ISSIONER IS SATISFIED THAT THE ACTIVITIES OF SUCH INSTITUTION OR FUND ARE NOT GENUINE OR ARE NOT BEING CARRIED OUT IN ACCORDANCE WITH THE OBJECTS OF THE INSTITUTION OR FUND. THIS AMENDMENT WILL TAKE EFFECT FROM 1ST DAY OF OCT OBER, 2009. ACCORDINGLY, EXISTING APPROVALS EXPIRING ON OR AFTE R 1ST OCTOBER, 2009 SHALL BE DEEMED TO HAVE BEEN EXTENDED IN PERPETUIT Y UNLESS SPECIFICALLY WITHDRAWN. HOWEVER, IN CASE OF APPROVALS EXPIRING B EFORE 1ST OCTOBER, 2009, THESE WILL HAVE TO BE RENEWED AND ONCE RENEWE D THESE SHALL CONTINUE TO BE VALID IN PERPETUITY, UNLESS SPECIFIC ALLY WITHDRAWN. 11. FROM THE ABOVE IT IS CRYSTAL CLEAR THAT THE AP PROVAL ONCE GRANTED U/S. 80G(5)(VI) OF THE ACT SHALL CONTINUE IN PERPETUITY. IT IS ALSO NOTICED THAT THE CBDT ISSUED ITS CIRCULAR NO.5 BEING EXPLANATORY CIRCULA R FOR FINANCE (NO.2) ACT, 2009 AND PARA 29.7 OF THE SAID CIRCULAR READS AS UNDER: ITA NO.2019/KOL./2010 4 29.7. APPLICABILITY - THIS AMENDMENT HAS BEEN MAD E APPLICABLE W.E.F. 1ST OCTOBER 2009. ACCORDINGLY, EXISTING APPROVALS E XPIRING ON OR AFTER 1ST OCTOBER 2009 WILL BE DEEMED TO HAVE BEEN EXTEND ED IN PERPETUITY UNLESS SPECIALLY WITHDRAWN. HOWEVER, IN. CASE OF AP PROVALS EXPIRING BEFORE 1ST OCTOBER 2009, THESE WILL HAVE TO BE RENE WED AND ONCE RENEWED THESE SHALL CONTINUE TO BE VALID IN PERPETU ITY, UNLESS SPECIFICALLY WITHDRAWN. 12. THE AFORESAID CIRCULAR IS IN FAVOUR OF THE ASS ESSEE AND EVEN IF THE ASSESSEE BY IGNORANCE OR INADVERTENTLY FILED AN APPLICATION FOR RENEWAL, THE CIT WAS REQUIRED TO DECIDE THE SAME IN ACCORDANCE WITH THE AMENDED PROVISIONS. AS REGARDS TO THE CONTENTION OF THE ID. D.R. THAT THE PROVISIONS CONTAINED IN 293C OF THE ACT ENABLES THE CIT TO WITHDRAW APPROVAL IS CON CERNED, IT IS NOTICED THAT THE SAID SECTION HAS BEEN INSERTED BY THE FINANCE (NO.2 ) ACT, 2009 W.E.F. 1.10.2009 I.E. FROM THE DATE ON WHICH PROVISIONS OF SECTION 80G(5) (LVI) HAS BEEN WITHDRAWN, THE PROVISIONS CONTAINED IN 293C READ AS UNDER: 293C. WHERE THE CENTRAL GOVERNMENT OR THE BOARD OR AN INCOME-TAX AUTHORITY, WHO HAS BEEN CONFERRED UPON THE POWER UN DER ANY PROVISION OF THIS ACT TO GRANT ANY APPROVAL TO ANY ASSESSEE, THE CENTRAL GOVERNMENT OR THE BOARD OR SUCH AUTHORITY MAY, NOTW ITHSTANDING THAT A PROVISION TO WITHDRAW SUCH APPROVAL HAS NOT BEEN SP ECIFICALLY PROVIDED FOR IN SUCH PROVISION, WITHDRAW SUCH APPROVAL AT AN Y TIME. PROVIDED THAT THE CENTRAL GOVERNMENT OR BOARD OR IN COME-TAX AUTHORITY SHALL, AFTER GIVING A REASONABLE OPPORTUNITY OF SHO WING CAUSE AGAINST THE PROPOSED WITHDRAWAL TO THE ASSESSEE CONCERNED, AT A NYTIME, WITHDRAW THE APPROVAL AFTER RECORDING THE REASONS FOR DOING SO.] 13. FROM THE PROVISO ATTACHED TO THE SECTION 293C OF THE ACT, IT IS CRYSTAL CLEAR THAT EVEN IF ANY INCOME-TAX AUTHORITY WANTS TO WITH DRAW APPROVAL, HE SHALL ISSUE A SHOW CAUSE NOTICE AGAINST THE PROPOSED WITHDRAWAL T O THE ASSESSEE CONCERNED AND AFTER GIVING A REASONABLE OPPORTUNITY OF BEING HEAR D SHALL WITHDRAW APPROVAL AFTER RECORDING REASONS FOR DOING SO. THE USE OF THE WORD SHALL IN THE AFORESAID PROVISO MAKES IT MANDATORY FOR COMMISSIONER OF INCO ME-TAX TO ISSUE A SHOW CAUSE NOTICE TO THE ASSESSEE AGAINST THE PROPOSED WITHDRA WAL OF APPROVAL GRANTED U/S. 80G(5) OF THE ACT. HOWEVER, IN THE PRESENT CASE NO SUCH SHOW CAUSE NOTICE HAS BEEN ISSUED TO THE ASSESSEE. THEREFORE, WE DO NOT S EE ANY MERIT IN THIS CONTENTION OF THE LAD THAT THE PROVISIONS CONTAINED IN SECTION 29 3C OF THE ACT ENABLES THE LD. COMMISSIONER OF INCOME TAX TO WITHDRAW APPROVAL. WE , THEREFORE, CONSIDERING THE TOTALITY OF THE FACTS AS DISCUSSED HEREINABOVE ARE OF THE VIEW THAT THE LD. COMMISSIONER OF INCOME TAX WAS NOT JUSTIFIED IN WIT HDRAWING APPROVAL ONCE GRANTED BECAUSE THE LEGISLATURE IN ALL ITS WISDOM H AS SOUGHT TO OMIT THIS PROVISO TO SECTION 80G(5)(VI) OF THE ACT AND AFTER OMISSION OF THE SAID PROVISO, THE APPROVAL ONCE GRANTED SHALL CONTINUE TO BE VALID IN PERPETUI TY UNLESS AND UNTIL A SHOW CAUSE NOTICE IS ISSUED BY THE CONCERNED CIT SHOWING HIS I NTENTION TO WITHDRAW ALREADY GRANTED SUCH APPROVAL. HOWEVER, IN THE INSTANCE CAS E, THE CIT WITHOUT ISSUING ANY SUCH NOTICE HAS WITHDRAWN APPROVAL. WE, THEREFORE, SET ASIDE THE IMPUGNED ORDER OF THE LD. COMMISSIONER OF INCOME TAX AND ACCORDING LY APPROVAL U/S. 80G(5) OF THE ACT ALREADY GRANTED TO THE ASSESSEE SHALL CONTINUE UNLESS AND UNTIL THE CONCERNED AUTHORITY TAKES APPROPRIATE_ACTION_IN_ACCORDANCE_WI TH_LAW. ITA NO.2019/KOL./2010 5 4. IN VIEW OF THE ABOVE AND THE DECISION OF ITAT, L UCKNOW BENCH IN THE CASE OF M/S. ASSOCIATION FOR ADVOCACY AND LEGAL INITIATES (SUPRA ), SINCE THE ASSESSEE WAS HAVING VALID EXEMPTION UPTO 31.03.2010, BECAUSE OF IGNORANCE OF THE A/R OF ASSESSEE, A MISTAKEN APPLICATION FOR RENEWAL OF EXEMPTION WAS FILED, THE SAME SHOULD NOT HAVE BEEN REJECTED FOR VIOLATION OF THE PROVISIONS OF SECTION 11(1)(A). IN CASE, THERE IS A VIOLATION OF THE PROVISIONS OF SECTION 11(1)(A), THE RELEVANT ADDITIONS COULD HAVE BEEN MADE BY THE ASSESSING OFFICER IN THE HANDS OF THE TRUST DISALLOWING THE EXEMPTION TO THE ASSESSEE ACCORDINGLY. BUT IN ANY CASE, RENEWAL OF EXEMPTION UNDER SECTION 80G(5)(VI) CANNO T BE DENIED. ACCORDINGLY, WE DIRECT THE DIT(EXEMPTION), KOLKATA TO ALLOW THE EXEMPTION AND THIS ISSUE OF APPEAL OF THE ASSESSEE IS ALLOWED. 5. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. / 0 / 0 / 0 / 0 ! 1/ ! 1/ ! 1/ ! 1/ 23 23 23 23 4 4 4 4 2 2 2 2 56 5656 56 ORDER PRONOUNCED IN THE OPEN COURT ON 12 / 12 /2011 . * 7 8 . 12/12/2011. SD/- SD/- [C.D. RAO/ ( . . ] [MAHAVIR SINGH / ( )] ACCOUNTANT MEMBER/ JUDICIAL MEMBER/ DATED : 12/ 12/ 2011 COPY OF THE ORDER FORWARDED TO: 1. LIONS CLUB OF CALCUTTA HASTINGS, 14/1, SIR HARIRAM GOENKA STREET, KOLKATA- 7 2 DIT(EXEMPTION), KOLKATA 3. CIT- , KOLKATA 4. DR, KOLKATA BENCHES, KOLKATA (TRUE COPY) BY ORDER ASSISTANT REGISTRAR, I.T.A.T., KOLKATA LAHA, SR. P.S.