Astha Foundation, New Delhi V. DIT (Exemptions), New Delhi

ITA 4164/DEL/2011

• Counselvise Citation: [2011] 119 COUNSELVISE.COM (IT) 7041 (ITAT-DELHI)
• Duration Of Justice: 2 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-11-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 21-11-2011
• Assessment Year: misc
• Appeal Filed On: 16-09-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MRS ANUSHA KHURANA
• Assessee Lawyers: KAMAL ARORA
• Keywords: Charitable institution
• Section: 80G; 12A; 27; 6; 12

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : A : NEW DELHI BEFORE SHRI I.P. BANSAL, JUDICIAL MEMBER AND SHRI A.N. PAHUJA, ACCOUNTANT MEMBER ITA NO.4164/DEL/2011 ASSESSMENT YEAR : NA ASTHA FOUNDATION, SOVEREIGN BUILDING, KEVENTERS LANE, S.P. MARG, CHANAKYAPURI, NEW DELHI. PAN : AAATA9970F VS. DIT (EXEMPTIONS) AAYAKAR BHAWAN, DISTT. CENTRE, LAXMI NAGAR, NEW DELHI. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI KAMAL ARORA, CA REVENUE BY : MRS. ANUSHA KHURANA, SR.DR ORDER PER I.P. BANSAL, JUDICIAL MEMBER THIS IS AN APPEAL FILED BY THE ASSESSEE. IT IS DIRECTED AGAINST THE ORDER DATED 13 TH JULY, 2011 PASSED BY THE DIRECTOR OF INCOME-TAX (EXEMPTIONS) [DIT (E)] U/S 80G(5)(VI) OF INCOME-TAX A CT, 1961 (THE ACT) READ WITH RULE 11AA OF INCOME-TAX RULES, 1962 (THE R ULES). THE GROUNDS OF APPEAL READ AS UNDER:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. DIRECTOR OF INCOME TAX (EXEMPTION) HAS ERRED I N REJECTING THE APPLICATION OF THE ASSESSEE FOR RENEWAL O F APPROVAL U/S 80G (5) (VI) OF THE INCOME TAX ACT, 1961. 2. THAT DIT (EXEMPTIONS) OUGHT TO HAVE APPRECIATED THAT THE APPELLANT HAD NOT VIOLATED ANY OF THE CONDITIONS LAID DO WN IN SECTION 80G (5)(I) TO (V) OF THE INCOME TAX ACT, 1961 A ND OUGHT TO HAVE RENEWED THE RECOGNITION AS PRAYED FOR. 3. THE LD. DIRECTOR OF INCOME TAX (EXEMPTIONS) HAS ER RED IN LAW AND ON FACTS FOR NOT ACCORDING PROPER OPPORTUNITY TO THE ITA NO.4164/DEL/2011 2 APPELLANT FOR SUBMITTING VOUCHERS ETC. WHICH ARE OTHERWI SE AVAILABLE WITH THE APPELLANT. 4. THE LD. DIRECTOR OF INCOME TAX (EXEMPTIONS) HAS ERRED IN LAW FOR NOT CONSIDERING THE CBDT CIRCULAR NO. DIT (E) 201 1-2012/A- 1485/768 DATED 13.07.2011 CONFERRING TO HAVE DEEMED TO HAVE GRANTED EXTENSION IN PERPETUITY TO ALL SUCH APPROVALS U/ S 80G EXPIRING ON OR AFTER 1 ST OCTOBER, 2009. 2. THE ASSESSEE BEING A CHARITABLE INSTITUTION FILED AN APPLICATION FOR RENEWAL OF APPROVAL U/S 80G(5) ON 27 TH DECEMBER, 2010. THE ASSESSEE WAS ENJOYING APPROVAL U/S 80G VIDE ORDER DATED 9 TH JULY, 2008 PASSED U/S 80G(5)(VI) OF THE ACT FOR THE PERIOD FROM 1 .4.2007 TO 31 ST MARCH, 2010. SUCH APPLICATION FILED BY THE ASSESSEE FO R RENEWAL OF APPROVAL U/S 80G HAS BEEN REJECTED BY LD. DIT (E). C OPY OF THE APPLICATION HAS BEEN FILED IN THE PAPER BOOK AT PAGE S 1 TO 6 OF PAPER BOOK. ON THE COVERING LETTER, WHICH IS FILED ON 3 RD JANUARY, 2011 TO SEEK RENEWAL OF EXEMPTION U/S 80G, SUBJECT HAS BEEN MENTION ED AS BELOW:- SUB: APPLICATION IN FORM 10G FOR RENEWAL OF DEDUCTIO N U/S 80G. 3. ALONG WITH THE AFOREMENTIONED COVERING LETTER, V ARIOUS DOCUMENTS WERE ALSO FILED. LD. DIT (E) REQUIRED THE ASSESSEE TO FILE CERTAIN OTHER DOCUMENTS WHICH ARE LISTED AT PAGE 1 OF THE IMPUGNED ORDER. CERTAIN DETAILS WERE FILED, HOWEVER, LD. DIT (E) FOUND THAT THERE WERE ABSENCE OF CERTAIN DETAILS AND HE, THUS, HELD THA T THE ASSESSEE COULD NOT ESTABLISH THE CONDITIONS LAID DOWN IN SECTIO N 80G (V), THEREFORE, GRANT OF RENEWAL OF EXEMPTION U/S 80G IS D ENIED AND, IN THIS MANNER, LD. DIT (E) HAS REJECTED THE CLAIM OF THE ASSE SSEE VIDE ORDER DATED 13 TH JULY, 2011. 4. AT THE OUTSET, IT WAS SUBMITTED BY THE LEARNED AR THAT BY OMISSION OF THE PROVISO TO SECTION 80G(5) (VI), THE ASSE SSEES OBLIGATION TO SEEK SUCH RENEWAL HAS BEEN DONE AWAY WIT H AND THIS POSITION OF LAW HAS BEEN MADE CLEAR BY THE CBDT VIDE ITS CIRCULAR ITA NO.4164/DEL/2011 3 NO.7/2010 (F.NO.197/21/2010-ITA-I DATED 27 TH OCTOBER, 2010). HE HAS PLACED ON OUR RECORD A COPY THEREOF WHEREIN THE BOA RD HAS ISSUED CERTAIN CLARIFICATION WITH REGARD TO PERIOD OF VALI DITY OF APPROVALS INTER ALIA INCLUDING U/S 80G (5). IN PARA 5OF THE SAID CIRC ULAR IT HAS BEEN STATED AS UNDER:- 5. AS REGARDS APPROVALS GRANTED UPTO 1-10-2009 UNDER SECTION 80G BY THE COMMISSIONERS OF INCOME-TAX/DIRECTORS OF IN COME- TAX, PROVISO TO SECTION 80G(5)(VI) CLARIFIED THAT ANY AP PROVAL SHALL HAVE EFFECT FOR SUCH ASSESSMENT YEAR OR YEARS N OT EXCEEDING FIVE ASSESSMENT YEARS AS MAY BE SPECIFIED IN THE APPROVAL. THE ABOVE PROVISO WAS DELETED BY THE FINANC E (NO. 2) ACT, 2009. THE INTENT BEHIND THE DELETION OF ABOVE PROVI SO AS EXPLAINED IN THE EXPLANATORY MEMORANDUM TO FINANCE (NO . 2) BILL, 2009 WAS AS UNDER : 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 DONATIONS ARE MADE HAVE TO BE APPROVED BY THE COMMISSIONER OF INCOME-TAX IN ACCORDANCE WITH THE RULES PRESCRIBED IN RULE 11AA OF THE INCOME-TAX RULES, 1962. THE PROVISO TO THIS CLAUSE PROVIDES THAT ANY APPROVAL GRANTED UNDER THIS CLAUSE SHALL HAVE EFFECT 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 INSTITUTIONS OR FUNDS AND ALSO LEADS TO WASTAGE OF TIME AND RESOURCES OF THE TAX ADMINISTRATION IN RENEWING SUCH APPROVALS IN A ROUTINE MANNER. THEREFORE, IT IS PROPOSED TO OMIT THE PROVISO TO CLAUSE (VI) OF SUB-SECTION (5) OF SECTION 80G TO PROVIDE THAT THE APPROVAL ONCE GRANTED SHALL CONTINUE TO BE VALID IN PERPETUITY. FURTHER, THE COMMISSIONER WILL ALSO HAVE THE POWER OF WITHDRAW THE APPROVAL IF THE COMMISSIONER 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 OCTOBER, 2009. ACCORDINGLY, EXISTING APPROVALS EXPIRING ON OR AFTER 1ST OCTOBER, 2009 SHALL BE ITA NO.4164/DEL/2011 4 DEEMED TO HAVE BEEN EXTENDED IN PERPETUITY UNLESS SPECIFICALLY WITHDRAWN. IT APPEARS THAT SOME DOUBTS STILL PREVAIL ABOUT THE PERIOD OF VALIDITY OF APPROVAL UNDER SECTION 80G SUBSEQUENT TO 1- 10-2009, ESPECIALLY IN VIEW OF THE FACT THAT NO CORRESPONDING CH ANGE HAS BEEN MADE IN RULE 11A(4). TO REMOVE ANY DOUBTS IN THI S REGARD, IT IS REITERATED THAT ANY APPROVAL UNDER SECTION 80G(5) O N OR AFTER 1-10-2009 WOULD BE A ONE TIME APPROVAL WHICH WO ULD BE VALID TILL IT IS WITHDRAWN. 5. HE FURTHER SUBMITTED THAT INTERPRETING THE STATUTO RY PROVISIONS IN THE LIGHT OF THE OMISSION OF PROVISO TO SECTION 80G (5 )(VI), HONBLE ALLAHABAD HIGH COURT IN THE CASE OF BABU HARGOVIND D AYAL TRUST VS. ITAT (2011) 199 TAXMAN 138 (ALL) HAS RULED THAT 80G EXEMPTION SHALL BE DEEMED TO BE CONTINUED IN PERPETUITY AND IT WIL L CONTINUE SO LONG AS IT IS NOT WITHDRAWN AS PER THE PROVISIONS OF IT ACT. IN THAT CASE THE APPLICATION FOR RENEWAL WAS MADE ON 31 ST MARCH, 2010 AS SAID EXEMPTION WAS EXPIRING AFTER 1 ST OCTOBER, 2009. IT WAS HELD THAT THE DIRECTIONS OF CIT (A) FOR REJECTION OF RENEWAL APPLI CATION WAS NOT REQUIRED TO BE MAINTAINED AS BY VIRTUE OF OPERATION OF LAW THE EXEMPTION SHALL BE DEEMED TO BE CONTINUED IN PERPETU ITY AND IT WILL CONTINUE SO LONG AS IT IS NOT WITHDRAWN AS PER THE PROV ISIONS OF THE ACT. HE HAS ALSO PLACED A COPY OF THE SAID DECISION ON OUR R ECORD AND A COPY WAS ALSO GIVEN TO THE LEARNED DR. THEREFORE, IT IS THE CASE OF THE LEARNED AR THAT DIRECTIONS OF DIT (E) REGARDING REJE CTION OF RENEWAL APPLICATION FILED BY THE ASSESSEE ARE NOT MAINTAINABLE AND SHOULD BE VACATED AS THE ASSESSEE BY VIRTUE OF PROVISIONS OF LAW WIL L ENJOY THE APPROVAL U/S 80G IN PERPETUITY AS IT HAS BEEN ALREADY GRANTED WITH APPROVAL WHICH FALL BEYOND 1 ST OCTOBER, 2009 AND IS UPTO 31 ST MARCH, 2010. 6. ON THE OTHER HAND, RELYING UPON THE ORDER PASSED B Y THE DIT (E), IT IS THE CASE OF THE LEARNED DR THAT THE ASSESSEES APPLI CATION HAS ITA NO.4164/DEL/2011 5 RIGHTLY BEEN REJECTED AS THE ASSESSEE DID NOT APPEAR TO SUBSTANTIATE ITS APPLICATION FOR RENEWAL OF THE APPROVAL. 7. WE HAVE HEARD BOTH THE PARTIES. WE HAVE ALSO CARE FULLY GONE THROUGH THE PROVISIONS OF SECTION 80G(5). CLAUSE (VI) OF SUB-SECTION (5) OF SECTION 80G STIPULATES FOR THE NON-TAXABILITY OF D ONATIONS RECEIVED BY AN INSTITUTION WHICH INTER ALIA INCLUDES CHARITABL E INSTITUTION REGISTERED U/S 12 OF THE ACT. THE FUNDAMENTALS OF SUB- SECTION (5) OF SECTION 80G IS THAT 80G APPROVAL WILL BE GRANTED TO THE CHARITABLE INSTITUTIONS ON THE SAME LINE AS THE REGISTRATION TO A C HARITABLE INSTITUTION IS GRANTED U/S 12A. THE ASSESSEE IS ALREADY EN JOYING BENEFIT OF REGISTRATION AS CHARITABLE INSTITUTION WHICH IS NOT SHOWN TO BE WITHDRAWN. IT APPLIED FOR RENEWAL U/S 80G(5)(VI) AS THE VALIDITY PERIOD OF ALREADY GRANTED APPROVAL HAD EXPIRED. BEFORE OMI SSION OF THE PROVISO TO SECTION 80G(5) (VI) BY THE FINANCE (NO.2) ACT, 2009, W.E.F. 1.10.2009, IT WAS THE REQUIREMENT OF LAW THAT APPROV AL GRANTED U/S 80G SHALL HAVE EFFECT FOR SUCH ASSESSMENT YEAR OR YEARS, NOT E XCEEDING FIVE ASSESSMENT YEARS WHICH WAS TO BE SPECIFIED IN THE APPROVAL ITSELF. 8. AS PER PROVISIONS APPLICABLE AT THE TIME OF GRANT O F APPROVAL, LD. DIT (E) VIDE ORDER DATED 9 TH JULY, 2008 HAD GRANTED APPROVAL FOR THE PERIOD FROM 1.4.2007 TO 31 ST MARCH, 2010. IT IS ALREADY MENTIONED THAT THE ASSESSEE IS ENJOYING REGISTRATION U/S 12A (A) OF THE I T ACT, 1961. THE SAID REGISTRATION HAS NOT BEEN SHOWN TO BE WITHDRAW N AND, THUS, THE ASSESSEE HAS ALWAYS BEEN TREATED AS CHARITABLE INSTITUT ION REGISTERED U/S 12A(A) OF THE ACT. THE ASSESSEE, AS ITS APP ROVAL WAS EXPIRED ON 31 ST MARCH, 2010, HAD FILED AN APPLICATION SEEKING THE RENEWAL ON 3 RD JANUARY, 2011. FIRSTLY, IT HAS TO BE SEEN THAT WHETH ER OR NOT THE ASSESSEE WAS UNDER ANY OBLIGATION TO SEEK SUCH REN EWAL. THE AFOREMENTIONED PROVISO HAS BEEN OMITTED FROM 1.10.200 9 AND SUCH OMISSION OF PROVISO HAS BEEN INTERPRETED BY THE CBDT IN AFOREMENTIONED CIRCULAR NO.7/2010 AND IT HAS BEEN ME NTIONED IN THE ITA NO.4164/DEL/2011 6 CIRCULAR THAT VARIOUS REFERENCES HAVE BEEN RECEIVED B Y THE BOARD FROM THE FIELD FORMATIONS AS WELL AS FROM THE MEMBERS OF PUB LIC ABOUT THE PERIOD OF VALIDITY OF APPROVALS GRANTED U/S 80G (5) O F THE ACT AND IN VIEW TO RESOLVE SUCH REFERENCES THE BOARD HAS CLARIFIED THE OMISSION OF AFOREMENTIONED PROVISO IS INTERPRETED TO MEAN THAT TH E APPROVAL ONCE GRANTED SHALL CONTINUE TO BE VALID IN PERPETUITY. A T THE SAME TIME IT HAS BEEN MENTIONED THAT THE COMMISSIONER WILL ALSO HAVE THE POWER TO WITHDRAW THE APPROVAL IF THE COMMISSIONER IS SATISFIED T HAT THE ACTIVITIES OF SUCH INSTITUTION OR FUND ARE NON-GENUINE OR ARE NOT BEING CARRIED OUT IN ACCORDANCE WITH THE OBJECTS OF THE IN STITUTION OR FUND. NO MATERIAL WHATSOEVER HAS BEEN BROUGHT ON RECORD TO SUGG EST THAT THE APPROVAL GRANTED BY THE DEPARTMENT TO THE ASSESSEE U/S 8 0G HAS EVER BEEN WITHDRAWN. WHAT HAS BEEN CONSIDERED BY THE LD. DIT (E) IN HIS ORDER IS THE APPLICATION FILED BY THE ASSESSEE FOR RENEW AL OF APPROVAL WHICH CANNOT IN ANY MANNER BE INTERPRETED AS WITHDRA WAL OF APPROVAL U/S 80G. NOW, THE QUESTION WILL BE THAT WHETHER BY M ERE FILING THE APPLICATION FOR RENEWAL OF APPROVAL U/S 80G THE ASSESSEE CAN BE HELD TO BE NOT ENTITLED FOR THE BENEFIT OF APPROVAL U/S 80G. IN OUR OPINION, WHERE THERE IS NO STATUTORY OBLIGATION ON THE ASSESSEE TO SEEK RENEWAL OF THE APPROVAL, THEN, THE APPLICATION FILED BY TH E ASSESSEE HAS NO MEANING AS THE STATUTORY PROVISIONS WILL PREVAIL. THE I NTERPRETATION OF THE STATUTORY PROVISION AS WELL AS THE AFOREMENTIONED C IRCULAR ISSUED BY THE CBDT CLEARLY STATES THAT THE EXISTING APPROVALS EXPIRING ON OR AFTER 1ST OCTOBER, 2009 SHALL BE DEEMED TO HAVE BEEN EXTENDED IN PERPETUITY UNLESS SPECIFICALLY WITHDRAWN. ALL THE AUT HORITIES WORKING UNDER THE CONTROL OF CBDT ARE BOUND TO FOLLOW THE I NSTRUCTIONS ISSUED BY THE CBDT. THEREFORE, IT HAS TO BE HELD THAT AS ASSE SSEES EXISTING APPROVAL WAS EXPIRING ON OR AFTER THE 1 ST DAY OF OCTOBER, 2009, THE SAME SHALL BE DEEMED TO HAVE BEEN EXTENDED IN PERPETU ITY UNLESS SPECIFICALLY WITHDRAWN. WE HAVE ALREADY MENTIONED T HAT THERE IS NO MATERIAL ON RECORD ACCORDING TO WHICH IT CAN BE SAID THAT THE APPROVAL ITA NO.4164/DEL/2011 7 GRANTED TO THE ASSESSEE U/S 80G (5) WAS SPECIFICALLY WITHD RAWN AND WHAT IS REJECTED BY THE IMPUGNED ORDER IS THE RENEWAL APPLICATION OF THE ASSESSEE WHICH DOES NOT HAVE ANY MEANING IN LAW AS TH E ASSESSEE WAS NOT UNDER AN OBLIGATION TO SEEK RENEWAL AS APPROVA L GRANTED TO IT SHALL BE DEEMED TO HAVE BEEN EXTENDED IN PERPETUITY. THE AFOREMENTIONED DECISION OF HONBLE ALLAHABAD HIGH CO URT IN THE CASE OF BABU HARGOVIND DAYAL TRUST (SUPRA) ALSO SUPPORT THIS PRO POSITION. THEREFORE, WE VACATE THE ORDER OF LD. DIT (E) VIDE WHICH THE RENEWAL APPLICATION FILED BY THE ASSESSEE FOR APPROVAL U/S 80G H AS BEEN REJECTED. IT IS HELD THAT THE APPROVAL GRANTED TO T HE ASSESSEE U/S 80G WILL ACT IN PERPETUITY UNLESS IT IS SPECIFICALLY WITHDR AWN BY THE LD. DIT (E). THE APPEAL FILED BY THE ASSESSEE IS ALLOWED IN THE MANNER AFORESAID. 9. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS AL LOWED. THE ORDER PRONOUNCED IN THE OPEN COURT ON 25.11.20 11. SD/- SD/- [A.N. PAHUJA] [I.P. BANSAL] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED, 25.11.2011. DK COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT BY ORDER, DEPUTY REGISTRAR, ITAT, DELHI BENCHES