Just Be Foundation Trust , New Delhi V. CIT(E) , New Delhi

ITA 3678/DEL/2018

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 0574 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 4 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-09-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: misc
• Appeal Filed On: 16-05-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: K S KRISHNAN AD V PRESENT
• Keywords: Charitable institution; Set aside
• Section: 80G; 12A; 12AA; 12; 11

Judgement Text

ITA NO. 3678/DEL/2018 PAGE 1 OF 21 IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI BENCH C, NEW DELHI BEFORE SHRI AMIT SHUKLA, JUDICIAL MEMBER AND SHRI ANADEE NATH MISSHRA, ACCOUNTANT MEMBER ITA NO. 3678/DEL/2018 M/S JUST BE FOUNDATION TRUST FLAT NO. 01, YAMUNA APARTMENTS, ALAKNANDA, NEW DELHI-110019 (PAN:AACTJ7339K) VS COMMISSIONER OF INCOME TAX (EXEMPTIONS), E-2, CIVIC CENTRE, NEW DELHI (APPELLANT) (RESPONDENT) PRESENT FOR APPELLANT : SH. K.S. KRISHNAN, AD V PRESENT FOR RESPONDENT : SH. KUMAR HRISHIKESH, CI T DR : SH. JANARDAN DAS, SR. DR O R D E R PER ANADEE NATH MISSHRA, AM (A) THIS IS AN APPEAL FILED BY M/S JUST BE FOUNDATION ( REFERRED AS APPLICANT IN THIS ORDER) AGAINST THE ORDER DAT ED 27 TH APRIL, 2018 OF THE LEARNED COMMISSIONER OF INCOME TAX (EXE MPTIONS), DELHI [LD. CIT (E), FOR SHORT] WHEREIN THE LD. CI T (E) REJECTED THE APPLICANTS APPLICATION FOR GRANT OF APPROVAL UNDER SECTION 80G OF ITA NO. 3678/DEL/2018 PAGE 2 OF 21 THE INCOME TAX ACT, 1961 (I.T. ACT FOR SHORT). GR OUND OF APPEAL IS AS UNDER:- I. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(E) ERRED IN REJECTING T HE APPLICATION SEEKING APPROVAL FOR EXEMPTION U/S 80G OF THE INCOME TAX ACT, 1961. THE ORDER BEING ARBITRARY, MISCONCEIVED, ERRONEOUS AND UNJUST MUST BE QUASHED WITH DIRECTIONS TO GRANT APPROVAL AS SOUGHT. (B). THE APPLICANT CAME INTO EXISTENCE THROUGH TRUS T DEED WHICH IS REPRODUCED BELOW: ITA NO. 3678/DEL/2018 PAGE 3 OF 21 1. 2. PRIMARY OBJECTS A) ITA NO. 3678/DEL/2018 PAGE 4 OF 21 B) CHILD WELFARE C) D) COUNSELLING E) EDUCATION G) ITA NO. 3678/DEL/2018 PAGE 5 OF 21 H) I) OTHER OBJECTS ITA NO. 3678/DEL/2018 PAGE 6 OF 21 5) A. B. C. D. ITA NO. 3678/DEL/2018 PAGE 7 OF 21 E. F. G. H. I. J. ITA NO. 3678/DEL/2018 PAGE 8 OF 21 K. 6) 7) ITA NO. 3678/DEL/2018 PAGE 9 OF 21 3. THE APPLICANT FILED SEPARATE APPLICATIONS IN FOR M NOS. 10A & 10G, EACH DATED 11.10.2017; THE FORMER APPLICATIO N SEEKING REGISTRATION UNDER SECTION 12AA OF I.T. ACT; AND TH E LATTER SEEKING APPROVAL UNDER SECTION 80G OF THE INCOME TAX ACT RE SPECTIVELY; IN THE OFFICE OF THE LD. CIT(EXEMPTION). THE APPLICANT ALSO FILED COPY OF FINANCIAL STATEMENT (INCLUDING RECEIPT AND PAYME NT ACCOUNT & STATEMENT OF AFFAIRS). FURTHER, THE APPLICANT FILED COPIES OF BANKERS CHEQUES AMOUNTING TO RS. 3,500/- AND RS. 2 ,500/- IN FAVOUR OF SHAKUN STATIONARY MART (TOTALLING RS. 600 0/-) AS EVIDENCES IN SUPPORT OF THE CONTENTION THAT THE APP LICANT WAS ENGAGED IN CHARITABLE ACTIVITIES [BY WAY OF DISTRIB UTION OF STATIONARY FOR THE NEW TERMS FOR ORPHANED GIRLS IN A CHILD CARE INSTITUTION FOR GIRLS (NGO), AND BY WAY OF GIVING O F BOTTLES AND TIFFIN BOXES FOR ORPHANED BOYS IN A CHILD CARE INST ITUTION FOR BOYS (NGO)]. THE LD. CIT(E), WHILE GRANTING REGISTRATION TO THE ASSESSEE UNDER SECTION 12AA OF THE INCOME TAX ACT; VIDE ORDER DATED 27.04.2018 HOWEVER, DENIED THE APPROVAL UNDER SECTION ITA NO. 3678/DEL/2018 PAGE 10 OF 21 80G OF THE I.T. ACT VIDE A SEPARATE ORDER ALSO DATE D 27.04.2018. RELEVANT PORTIONS OF THE AFORESAID ORDERS OF THE LD . CIT(E) EACH DATED 27.04.2018 ARE REPRODUCED AS UNDER:- SUB- ORDER OF REGISTRATION U/S 12AA READ WITH SECT ION 12A OF THE INCOME TAX ACT. 1. AN APPLICATION IN FORM NO. 10A SEEKING REGISTRAT ION U/S 12AA WAS FILED ON 11.10.2017. 2. THE TRUST/SOCIETY/NON PROFIT COMPANY WAS CONSTIT UTED BY DEED OF TRUST, MEMORANDUM OF ASSOCIATION/INSTRUMENT DATED 2 7.06.2017 INDICATING ITS OBJECT. 3. AFTER CONSIDERING THE MATERIAL AVAILABLE ON RECO RD, THE APPLICANT TRUST/SOCIETY/COMPANY IS GRANTED REGISTRATION AS GE NERAL PUBLIC UTILITY TRUST/SOCIETY/COMPANY AND THE PROVISIONS OF SECTIONS 11 AND 12 SHALL APPLY IN THE CASE FROM A.Y. 2018-19. T HE TRUST/SOCIETY/NPO IS REGISTERED AT S. NO..... DEL-J R 27065- 27042018 OF THE REGISTER MAINTAINED IN THIS OFFICE. THE REGISTRATION IS GRANTED SUBJECT TO THE FOLLOWING CONDITIONS: CONDITIONS: I. ORDER U/S 12A(1)(B) READ WITH SECTION 12A DOES N OT CONFORM ANY OF EXEMPTION UPON THE APPLICANT U/S 11, 12 AND 13 OF THE INCOME TAX ACT, 1961. SUCH EXEMPTION FROM TAXATION WILL BE AVAILABLE ONLY AFTER THE ASSESSING OFFICER IS SATIS FIED ABOUT THE GENUINENESS OF THE ACTIVITIES PROMISED OR CLAIMED T O BE CARRIED ON IN EACH FINANCIAL YEAR RELEVANT TO THE ASSESSMEN T YEAR AND ALL THE PROVISION OF LAW ACTED UPON. THIS WILL BE F URTHER SUBJECT TO PROVISIONS OF SECTION 2(15) OF THE INCOME TAX AC T, 1961. II. THE TRUST/SOCIETY/NON PROFIT COMPANY SHALL MAIN TAIN ACCOUNTS REGULARLY AND SHALL GET THESE A AUDITED IN ACCORDAN CE WITH THE PROVISION OF SECTION 12(1)(B) OF THE INCOME TAX ACT , 1961. SEPARATE ACCOUNTS IN RESPECT OF EACH ACTIVITY AS SP ECIFIED IN MEMORANDUM SHALL BE MAINTAINED. A COPY OF SUCH ACCO UNT SHALL BE SUBMITTED TO THE ASSESSING OFFICER. A PUBL IC NOTICE OF REGISTERED / DESIGNATED OFFICE OF THE ORGANIZATION. III. SEPARATE ACCOUNTS IN RESPECT OF PROFITS AND GA INS OF BUSINESS INCIDENTAL TO ATTAINMENT OF OBJECTS SHALL BE MAINTA INED IN COMPLIANCE TO SECTION 11(4A) OF THE INCOME TAX ACT, 1961. ITA NO. 3678/DEL/2018 PAGE 11 OF 21 IV. THE TRUST/INSTITUTION SHALL FURNISH A RETURN OF INCOME EVERY YEAR WITHIN THE TIME LIMIT PRESCRIBED UNDER THE ACT. V. THE TRUST/INSTITUTION SHOULD QUOTE THE PAN IN AL L ITS COMMUNICATIONS WITH THE DEPARTMENT. VI. THE REGISTRATION U/S 12AA OF THE I.T. ACT, 1961 DOES NOT AUTOMATICALLY CONFER ANY RIGHT ON THE DONERS TO CLA IM DEDUCTION UNDER SECTION 80G. VII. THE CERTIFICATE CANNOT BE USED AS A BASIS FOR CLAIMING NON DEDUCTION OF TAX AT SOURCE IN RESPECT OF INVESTMENT S ETC., RELATING TO THE TRUST/INSTITUTION. VIII. ALL THE PUBLIC MONEY SO RECEIVED INCLUDING FO R CORPUS OR ANY CONTRIBUTION SHALL BE ROUTED THROUGH A BANK ACCOUNT AND SUCH BANK ACCOUNT NUMBER SHALL BE COMMUNICATED TO THIS O FFICE. IX. NO CHANGE IN THE TERMS OF DEED OF THE TRUST SHA LL BE EFFECTED WITHOUT DUE PROCEDURE OF LAW I.E. BY ORDER OF THE J URISDICTIONAL HIGH COURT AND ITS INTIMATION SHALL BE GIVEN IMMEDI ATELY TO THIS OFFICE. THE REGISTERING AUTHORITY RESERVES THE RIGH T TO CONSIDER WHETHER ANY SUCH ALTERATION IN OBJECTS WOULD BE CON SISTENT WITH THE DEFINITION OF CHARITABLE PURPOSE UNDER THE AC T AND IN CONFORMITY WITH THE REQUIREMENT OF CONTINUITY OF RE GISTRATION. X. NO ASSET SHALL TRANSFERRED WITHOUT THE KNOWLEDGE OF THE UNDERSIGNED TO ANYONE, INCLUDING TO ANY TRUST/SOCIE TY/NON PROFIT COMPANY ETC. XI. THE REGISTERED OFFICE OR THE PRINCIPAL PLACE OF ACTIVITY OF THE APPLICANT SHOULD NOT BE TRANSFERRED OUTSIDE THE NAT IONAL CAPITAL TERRITORY DELHI EXCEPT WITH THE PRIOR APPROVAL OF T HE CIT(E), DELHI. XII. IF LATER ON IT IS FOUND THAT THE REGISTRATION HAS BEEN OBTAINED FRAUDULENTLY BY MISREPRESENTATION OR SUPPRESSION OF ANY FACT, THE REGISTRATION SO GRANTED IS LIABLE TO BE CANCELL ED AS PER PROVISIONS U/S 12AA(3) OF THE ACT. XIII. THE REGISTRATION SO GRANTED IN LIABLE TO BE C ANCELLED AT ANY POINT OF TIME, IF THE REGISTERING AUTHORITY IS SATISFIED THAT ACTIVITIES OF THE TRUST/INSTITUTION ARE NOT GENIUS OR ARE NOT BEI NG CARRIED OUT IN ACCORDANCE WITH THE OBJECTS OF THE TRUST/INSTITU TION. ORDER U/S 80G(5)(VI) OF THE INCOME TAX ACT, 1961 READ WITH RULE 11AA OF THE INCOME TAX RULES, 1962. 1. THAT APPLICANT FILED APPLICATION ON 11.10.2017 I N FORM NO 10G SEEKING APPROVAL FOR EXEMPTION U/S 80G OF THE INCOM E TAX ACT, 1961. THE APPLICANT WAS ISSUED LETTER DATED 11/10/2 017 REQUESTING IT TO SUBMIT CERTAIN DOCUMENTS IN SUPPORT OF ITS CL AIM OF EXEMPTION U/S 80G OF THE I. T. ACT. ITA NO. 3678/DEL/2018 PAGE 12 OF 21 2. THE APPLICANT HAS FILED CERTAIN DETAILS/ DOCUMEN TS WHICH HAVE BEEN PERUSED. 3. ON VERIFICATION OF DETAINS FILED BY THE TRUST IT IS OBSERVED THAT APPLICANT HAS NOT ESTABLISHED OF HAVING DONE ANY CH ARITABLE ACTIVITY TILL31.03.2018 AS NO EXPENDITURE SHOWN TO HAVE INCU RRED SUBSEQUENTLY AS PER THE DETAILS FURNISHED BY APPLIC ANT, ONLY RS. 6000/- WAS SPENT TOWARDS PURCHASE FOR DISTRIBUTION STATIONERY ITEMS AND BOTTLES AND TIFFIN BOXES FOR ORPHAN BOYS, FROM 01.04.2018 TO 12.04.2018. 4. BASED ON THE ABOVE FACTS, IT IS INFERRED THAT TH E APPLICANT HAS NOT VARIED OUT SUFFICIENT CHARITABLE ACTIVITIES AS NO P ROOF AS SUCH WAS PRESENTED. HENCE, THE APPLICATION FILED BY THE APP LICANT FOR GRANT OF APPROVAL FOR EXEMPTION U/S 80G OF I. T. ACT IS H EREBY REJECTED, AS THE TRUST COULD NOT SUBSTANTIATE CONDUCT OF SUFF ICIENT CHARITABLE ACTIVITIES. (B-2) AGGRIEVED AGAINST THE AFORESAID ORDER DATED 27.4.2018 OF THE LD. CIT(E) DENYING APPROVAL UNDER SECTION 80G O F THE INCOME TAX ACT TO THE APPLICANT, THIS PRESENT APPEAL HAS B EEN FILED BY THE APPLICANT IN INCOME TAX APPELLATE TRIBUNAL (ITAT FOR SHORT). (C) AT THE TIME OF HEARING BEFORE US, THE LEARNED C OUNSEL FOR THE APPLICANT SUBMITTED THAT THE ONLY REASON GIVEN BY T HE LD. CIT(E) FOR DENYING APPROVAL UNDER SECTION 80G OF THE I.T. ACT TO THE APPLICANT WAS THAT THE ASSESSEE HAD INCURRED ONLY R S. 6,000/- FOR CHARITABLE ACTIVITIES SUCH AS DISTRIBUTION OF STATI ONARY ITEMS BOTTLES AND TIFFIN BOXES FOR ORPHAN BOYS. THE LEARNED COUNS EL SUBMITTED THAT THE APPLICANT HAD LIMITED FINANCIAL RESOURCES AT ITS DISPOSAL BECAUSE OF WHICH IT WAS NOT POSSIBLE FOR THE ASSESS EE TO SPEND MORE AMOUNT FOR CHARITABLE WORK. DRAWING THE ATTENT ION TO THE ITA NO. 3678/DEL/2018 PAGE 13 OF 21 FINANCIAL STATEMENT, THE LEARNED COUNSEL SUBMITTED THAT AT THE RELEVANT TIME WHEN THE LD. CIT(E) REJECTED THE APPL ICANTS APPLICATION FOR APPROVAL UNDER SECTION 80G OF THE I .T. ACT, THE TOTAL FUNDS AVAILABLE WITH THE APPLICANT (INCLUDING DONAT IONS AMOUNTING TO RS. 18,000/-) WAS ONLY RS. 19,000/- OUT OF WHICH RS. 6,000/- (EXCLUDING BANK CHARGES OF RS. 68/-) HAD ALREADY BE EN SPENT, AND THAT THE APPLICANT WAS LEFT WITH ONLY RS. 12,832/-. THE LEARNED COUNSEL FURTHER SUBMITTED THAT THE APPLICANT IS FAC ING ENORMOUS DIFFICULTY IN OBTAINING DONATIONS BECAUSE OF DENIAL OF APPROVAL UNDER SECTION 80G OF THE INCOME TAX ACT. THE LD. CO UNSEL MADE FURTHER RELIANCE ON PAPER BOOK FILED IN THE COURSE OF APPELLATE PROCEEDINGS IN ITAT, WHICH CONTAINED THE FOLLOWING DOCUMENTS: S. NO. PARTICULARS 1. WRITTEN SUBMISSIONS FILED BEFORE CIT(A) DATED 07.04.2018 2. WRITTEN SUBMISSIONS FILED BEFORE CIT(A) DATED 13.04.2018 3. COPY OF CERTIFICATE OF REGISTRATION U/S 12A DATE D 27.04.2018 4. COPY OF FINANCIAL STATEMENT FOR THE PERIOD FROM 01.04.2018 TO 12.04.2018 5. COPY OF BANK STATEMENT AND DETAILS OF CHEQUES 6. COPY OF TRUST DEED (C-1) IN PARTICULAR LEARNED COUNSEL FOR THE APPLICANT DRE W OUR ATTENTION TO TWO SEPARATE WRITTEN SUBMISSIONS MADE BEFORE THE LD. ITA NO. 3678/DEL/2018 PAGE 14 OF 21 CIT(E), DATED 7THE APRIL 2018 AND 7 TH APRIL, 2018 AND 13 TH APRIL, 2018 RELEVANT PORTIONS OF WHICH ARE REPRODUCED BELO W FOR EASE OF REFERENCE: PLEASE REFER TO YOUR LETTER DATED 11.10.2017. WITH REGARD TO EXEMPTION APPLICATION FOR EXEMPTION U/S 80G OF THE INCOME TAX, 1961, FOLLOWING SUBMISSIONS MADE: 1. THE TRUST WAS FORMED ON 27.06.2017. IT IS AWAITI NG REGISTRATION CERTIFICATE U/S 12A OF THE INCOME TAX ACT, 1961 AND ALSO EXEMPTION U/S 80G CERTIFICATE TO START ITS ACTIVITI ES FOR ACHIEVING OBJECTS FOR WHICH IT WAS ESTABLISHED; 2. THIS IS THE FIRST YEAR OF THE TRUST; 3. THIS IS THE FIRST YEAR OF THE TRUST. THERE IS NO CHANGE IN THE OBJECTS OF THE TRUST SINCE ITS INCEPTION; 4. AN AFFIDAVIT FROM THE MANAGING TRUSTEE THAT THER E IS NO INFRINGEMENT OF SECTION 13 OF THE INCOME TAX ACT, 1 961 SINCE INCEPTION IS BEING FILED; 5. TRUST HAS NOT INCURRED ANY EXPENDITURE; 6. THIS IS THE FIRST YEAR OF THE TRUST AND THERE IS NO ACTIVITY; 7. THE TRUST HAS NOT RECEIVED ANY DONATION SINCE IN CEPTION IN THE ABSENCE OF 80G CERTIFICATE; 8. THIS IS THE FIRST YEAR OF THE TRUST AND NO INCOM E TAX RETURN HAS BEEN FILED; 9. THIS THE FIRST APPLICATION FOR REGISTRATION SO N O QUESTION OF ANY REJECTION; 10. CONTACT NUMBERS, E-MAIL ADDRESS OF THE TRUSTEES ARE ENCLOSED. 11. THE TRUST REQUIRES REGISTRATION U/S 12A AND 80G EXEMPTION FOR RECEIVING DONATIONS TO FULFIL ITS OBJECTS. THE 80G CERTIFICATE SHALL BE ENABLE THE TRUST TO CARRY OUT ITS CHARITABLE ACTIVI TIES; 12. THE TRUST HAS NOT INCURRED ANY EXPENDITURE; 13. CERTIFICATE AS REQUIRED REGARDING INFRINGEMENT OF PROVISO TO S.2(15) OF THE INCOME TAX ACT, 1961 IS ENCLOSED; 14. THE TRUST IS EXISTING FOR RELIEF TO THE POOR, E DUCATION, MEDICAL RELIEF AND ALSO ADVANCEMENT OF OTHER GENERAL PUBLIC WELFAR E. 15. COPY OF PAN CARD OF THE TRUST IS ENCLOSED. 16. ID PROOF OF THE MAIN TRUSTEE OF THE TRUST IS EN CLOSED. PLEASE REFER TO THE DISCUSSIONS HELD ON THE LAST D ATE OF HEARING ON THE ABOVE SUBJECT. FOLLOWING FURTHER SUBMISSIONS ARE MADE: ITA NO. 3678/DEL/2018 PAGE 15 OF 21 1. UNDERTAKING FROM THE FOUNDER TRUSTEE WITH REGARD TO DISTRIBUTION OF FUNDS ON DISSOLUTION OF THE TRUST; AMENDMENT IN THE TRUST DEED AND ALSO INVESTMENT AS PRESCRIBED IN S. 11(5) OF TH E INCOME TAX ACT, 1961 IS BEING FILED. 2. THE TRUST HAS SINCE OPENED A BANK ACCOUNT IN THE STATE BANK OF INDIA, LOTUS TOWER FRIENDS COLONY, COMMUNITY CENTRE , NEW DELHI 110025 BRANCH. THE ACCOUNT NUMBER OF THE TRUST IS 3 7642992387. COPY OF BANK STATEMENT IS ENCLOSED. 3. PROFILE OF THE TRUSTEES OF THE TRUST IN THE PRES CRIBED FORMAT IS BEING FILED. 4. THE TRUST HAS CARRIED ON VARIOUS CHARITABLE ACTI VITIES DURING THE MONTH OF APRIL TO ATTAIN ITS OBJECTS. THE EVIDENCE IN SUPPORT THEREOF ALONG WITH PHOTOS OF THE EVENTS ARE ENCLOSED. STATIONARY FOR THE NEW TERM FOR ORPHANED GIRLS IN A CHILD CARE INSTITUTION FOR GIRLS (NGO)-PHOTOGRAPH ENCLOSE D GIVING OF BOTTLES AND TIFFIN BOXES FOR ORPHANED BOY S IN A CHILD CARE INSTITUTION FOR BOYS (NGO)-PHOTOGRAPH EN CLOSED 5. THE OBJECT OF THE TRUST IS TO WORK FOR THE UPLIF T AND WELFARE OF UNDERPRIVILEGED CHILDREN, ORPHANS AND ABANDONED CHI LDREN. IT IS REGISTERED TO PROVIDE RELIEF TO THE NEEDY PERSONS. IT SHALL WORK WITH SPECIAL CONSIDERATION OF CHILDRENS WELFARE. FURTHE R OBJECTIVE TO ESTABLISH, BUILD CHILD CARE INSTITUTIONS, LIAISON W ITH GOVERNMENT BODIES AND ALSO ORGANIZE AND TAKE UP HEALTH, EDUCAT IONAL AND WELFARE PROGRAMMES BESIDES OTHER ACTIVITIES. TO ATT AIN THESE OBJECTS THE TRUST NEEDS WIDER PUBLIC PARTICIPATION BOTH PROVIDING FUNDS AND PHYSICAL VOLUNTARY PARTICIPATION FOR OPTI MALLY CARRYING OUT THE ACTIVITIES. SECTION 12A REGISTRATION AND ALSO C ERTIFICATE U/S 80G OF THE ACT WOULD BE OF GREAT HELP. IT IS FOR THIS P URPOSE THE TRUSTEES HAVE FORMED THE TRUST. (C-2) THE DEPARTMENTAL REPRESENTATIVE DID NOT DISP UTE THE FACTS CLAIMED FROM THE APPLICANTS SIDE. HE ALSO DID NOT DISPUTE THE FACTS CONTENDED AT THE TIME OF HEARING BEFORE US BY THE LEARNED COUNSEL FOR THE APPLICANT. HOWEVER, HE RELIED ON TH E ORDER OF THE LD. CIT(E). ITA NO. 3678/DEL/2018 PAGE 16 OF 21 (D) WE HAVE HEARD BOTH THE SIDES. WE HAVE PERUSED T HE MATERIALS ON RECORD CAREFULLY. THE REQUIREMENTS FOR APPROVAL UNDER SECTION 80G OF THE I.T. ACT ARE CONTAINED IN RULE 11AA OF INCOME TAX RULES, 1962 (I.T. RULES, 1962 FOR SHORT) WHICH IS REPRODUCED BELOW FOR EASE OF REFERENCE: 11AA. (1) THE APPLICATION FOR APPROVAL OF ANY INSTITUTIO N OR FUND UNDER CLAUSE (VI) OF SUB-SECTION (5) OF SECTION 80G SHALL BE IN FORM NO. 10G AND SHALL BE MADE IN TRIPLICATE. (2) THE APPLICATION SHALL BE ACCOMPANIED BY THE FOL LOWING DOCUMENTS, NAMELY: I. COPY OF REGISTRATION GRANTED UNDER SECTION 12A OR COPY OF NOTIFICATION ISSUED UNDER SECTION 10(23) OR 10(23C); II. NOTES ON ACTIVITIES OF INSTITUTION OR FUND SINCE IT S INCEPTION OR DURING THE LAST THREE YEARS, WHICHEVER IS LESS ; III. COPIES OF ACCOUNTS OF THE INSTITUTION OR FUND SINCE ITS INCEPTION OR DURING THE LAST THREE YEARS, WHICHEVER IS LESS. (3) THE COMMISSIONER MAY CALL FOR SUCH FURTHER DOCU MENTS OR INFORMATION FROM THE INSTITUTION OR FUND OR CAUSE S UCH INQUIRIES TO BE MADE AS HE MAY DEEM NECESSARY IN ORDER TO SATISFY H IMSELF ABOUT THE GENUINENESS OF THE ACTIVITIES OF SUCH INSTITUTI ON OR FUND. (4) WHERE THE COMMISSIONER IS SATISFIED THAT ALL TH E CONDITIONS LAID DOWN IN CLAUSES (I) TO (V) OF SUB-SECTION (5) OF SE CTION 80G ARE FULFILLED BY THE INSTITUTION OR FUND, HE SHALL RECO RD SUCH SATISFACTION IN WRITING AND GRANT APPROVAL TO THE INSTITUTION OR FU ND SPECIFYING THE ASSESSMENT YEAR OR YEARS FOR WHICH THE APPROVAL IS VALID. (5) WHERE THE COMMISSIONER IS SATISFIED THAT ONE OR MORE OF THE CONDITIONS LAID DOWN IN CLAUSES (I) TO (V) OF SUB-S ECTION (5) OF SECTION 80G ARE NOT FULFILLED, HE SHALL REJECT THE APPLICAT ION FOR APPROVAL, AFTER RECORDING THE REASONS FOR SUCH REJECTION IN WRITING : PROVIDED THAT NO ORDER OF REJECTION OF AN APPLICATI ON SHALL BE PASSED WITHOUT GIVING THE INSTITUTION OR FUND AN OPPORTUNI TY OF BEING HEARD. (6) THE TIME LIMIT WITHIN WHICH THE COMMISSIONER SH ALL PASS AN ORDER EITHER GRANTING THE APPROVAL OR REJECTING THE APPLI CATION SHALL NOT ITA NO. 3678/DEL/2018 PAGE 17 OF 21 EXCEED SIX MONTHS FROM THE [END OF THE MONTH IN] WH ICH SUCH APPLICATION WAS MADE : PROVIDED THAT IN COMPUTING THE PERIOD OF SIX MONTHS , ANY TIME TAKEN BY THE APPLICANT IN NOT COMPLYING WITH THE DIRECTIO NS OF THE COMMISSIONER UNDER SUB-RULE (3) SHALL BE EXCLUDED.] (D-1) FOR FURTHER CONVENIENCE OF REFERENCE, THE PRO VISIONS OF SECTION 80G(5) OF I.T. ACT ARE ALSO REPRODUCED AS U NDER:- (5) THIS SECTION APPLIES TO DONATIONS TO ANY INSTIT UTION 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 I F IT FULFILLS 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 INCOM E 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 S UCH INCOME WOULD NOT BE LIABLE TO INCLUSION IN ITS TOTAL INCOME UNDE R THE PROVISIONS OF SECTION 11 SHALL NOT APPLY IN RELATION TO SUCH INCOME, IF (A) THE INSTITUTION OR FUND MAINTAINS SEPARATE BO OKS 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 BU SINESS; AND (C) THE INSTITUTION OR FUND ISSUES TO A PERSON MA KING THE DONATION A CERTIFICATE TO THE EFFECT THAT IT MAINTAINS SEPARAT E BOOKS OF ACCOUNT IN RESPECT OF SUCH BUSINESS AND THAT THE DO NATIONS RECEIVED BY IT WILL NOT BE USED, DIRECTLY OR INDIRE CTLY, FOR THE PURPOSES OF SUCH BUSINESS; (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 TI ME 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 B E FOR THE BENEFIT OF ANY PARTICULAR RELIGIOUS COMMUNITY OR CASTE; (IV) THE INSTITUTION OR FUND MAINTAINS REGULAR ACCO UNTS 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 1 956), OR IS A ITA NO. 3678/DEL/2018 PAGE 18 OF 21 UNIVERSITY ESTABLISHED BY LAW, OR IS ANY OTHER EDUC ATIONAL INSTITUTION RECOGNIZED BY THE GOVERNMENT OR BY A UNIVERSITY EST ABLISHED BY LAW, OR AFFILIATED TO ANY UNIVERSITY ESTABLISHED BY LAW, OR IS AN INSTITUTION FINANCED WHOLLY OR IN PART BY THE GOVERNMENT OR A L OCAL AUTHORITY; (VI) IN RELATION TO DONATIONS MADE AFTER THE 31ST D AY OF MARCH, 1992, THE INSTITUTION OR FUND IS FOR THE TIME BEING APPROVED BY THE COMMISSIONER IN ACCORDANCE WITH THE RULES MADE IN THIS BEHALF; A ND (VII) WHERE ANY INSTITUTION OR FUND HAD BEEN APPROV ED 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 FU ND SHALL, FOR THE PURPOSES OF THIS SECTION AND NOTWITHSTANDING ANYTHI NG CONTAINED IN THE PROVISO TO CLAUSE (15) OF SECTION 2, BE DEEMED TO H AVE BEEN, (A) ESTABLISHED FOR CHARITABLE PURPOSES FOR THE P REVIOUS 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 P REVIOUS YEAR BEGINNING ON THE 1ST DAY OF APRIL, 2008 AND ENDING ON THE 31ST DAY OF MARCH, 2009. (D-2) ON PERUSAL OF THE AFORESAID STATUTORY PRO VISIONS IT IS FOUND THAT THE GROUNDS ON WHICH APPROVAL UNDER SECTION 80 G OF THE INCOME TAX ACT CAN BE DENIED TO AN APPLICANT ARE SP ECIFIED IN RULE 11AA (5) OF I.T. RULES WHICH REFERS TO THE CON DITIONS LAID DOWN IN CLAUSES (I) TO (V) OF SUB SECTION 5 OF SECT ION 80G OF I.T. ACT. WE FIND THAT NOWHERE IT IS THE CASE OF THE LD. CIT(E) THAT ANY OF THE CONDITIONS LAID DOWN IN CLAUSES (I) TO (V) O F SECTION 80G(5) OF THE I.T. ACT ARE NOT FULFILLED. IT IS ALSO NOWHE RE THE CASE OF THE LD. CIT(E) THAT OBJECTS OF THE APPLICANT TRUST ARE NOT CHARITABLE. ON PERUSAL OF THE TRUST DEED, ALREADY REPRODUCED IN FO REGOING PARAGRAPH (B) OF THIS ORDER, WE FIND THAT THE TRUST IS EXPRESSLY ITA NO. 3678/DEL/2018 PAGE 19 OF 21 DECLARED TO BE A PUBLIC CHARITABLE TRUST IN PARAGRA PH (6) OF THE TRUST DEED. WE FURTHER ALSO FIND THAT IT IS NOWHERE THE CASE OF THE LD. CIT(E) THAT THE APPLICANT DID NOT COMPLY WITH PROCEDURAL R EQUIREMENTS PRESCRIBED UNDER SUB-RULES (1), (2) AND (3) OF RULE 11AA OF I.T. RULES. MOREOVER, IN VIEW OF THE FOREGOING PARAGRAPH (C.1) OF THIS ORDER, WE FIND THAT FURTHER DOCUMENTS OR INFORMATIO N CALLED FOR BY THE LD. CIT(E) WERE PROVIDED BY THE APPLICANT TRUST . WHEN THE APPLICANT HAS LIMITED FINANCIAL RESOURCES (RS. 19,0 00/- IN THIS CASE), THE MERE FACT THAT THE APPLICANT HAS NOT SPE NT SUBSTANTIAL AMOUNT FOR CHARITABLE WORK CANNOT BE HELD AGAINST T HE ASSESSEE SO FAR AS THE APPROVAL UNDER SECTION 80G OF THE INC OME TAX ACT IS CONCERNED. UNLESS THE LEARNED CIT(E) EXPRESSES HIS SATISFACTION THAT ONE OR MORE CONDITIONS LAID DOWN IN CLAUSES (I ) TO (V) OF SECTION 80G(5) OF INCOME TAX ACT ARE NOT FULFILLED; THE LEARNED CIT(E) IS REQUIRED TO GRANT APPROVAL UNDER SECTION 80G OF I.T. ACT, WHEN THE APPLICANT HAS COMPLIED WITH PROCEDURAL REQ UIREMENTS PRESCRIBED UNDER SUB-RULES (1), (2) AND (3) OF RULE 11AA OF I.T. RULES. ITA NO. 3678/DEL/2018 PAGE 20 OF 21 (D.2.1) IN VIEW OF THE FOREGOING, WE ARE OF THE VIE W THAT THE LEARNED CIT(E) ERRED IN DENYING APPROVAL UNDER SECT ION 80G OF INCOME TAX ACT. THEREFORE, WE SET ASIDE THE IMPUGN ED ORDER DATED 27 TH APRIL, 2018 OF THE LEARNED CIT(E) DENYING APPROVAL TO THE APPLICANT UNDER SECTION 80G OF THE INCOME TAX A CT, AND DIRECT THE LEARNED CIT(E) TO GRANT APPROVAL TO THE ASSESSE E UNDER SECTION 80G(5) OF THE INCOME TAX ACT. (D.3) IN THE RESULT, THE APPEAL OF THE ASSESSEE I S ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 17 TH SEPTEMBER, 2019. SD/- SD/- (AMIT SHUKLA) (ANADEE N ATH MISSHRA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATE : 17/09/2019 SH COPY FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT ITA NO. 3678/DEL/2018 PAGE 21 OF 21 DATE OF DICTATION 12.9.2019 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. PS/PS DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. PS/PS DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WEBSITE OF ITAT 17.9.2019 DATE ON WHICH THE FILE GOES TO THE BENCH CLERK DATE ON WHICH THE FILE GOES TO THE HEAD CLERK THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER