Prayatn, New Delhi V. DIT (Exemptions), New Delhi

ITA 4319/DEL/2011

• Counselvise Citation: 431920114 RSA 2011
• Duration Of Justice: 5 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-03-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Next Hearing Date: 05-03-2012
• Assessment Year: misc
• Appeal Filed On: 29-09-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MAMTA KOCHAR SENIOR
• Assessee Lawyers: S K SARKAR
• Keywords: Charitable institution; Competent authority
• Section: 80G; 12A; 12AA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH F NEW DELHI) BEFORE SHRI RAJPAL YADAV AND SHRI T.S. KAPOOR ITA NO. 4319/DEL/2011 ASSESSMENT YEAR: - PRAYATN , VS. DIRECTOR OF INCOME-TAX (EXEMPTIO N), E-103, KALKAJI, DELHI- 1100 02 NEW DELHI. (PAN: AAATP0325R) (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI SK SARKAR , CA RESPONDENT BY: SMT. MAMTA KOCHAR , SENIOR DR DATE OF HEARING : 05.03.2012 DATE OF PRONOUNCEMENT : 16 .03.2012 ORDER PER RAJPAL YADAV: JUDICIAL MEMBER THE ASSESSEE IS IN APPEAL BEFORE US AGAINST THE OR DER OF LEARNED DIRECTOR OF INCOME-TAX (EXEMPTION) DATED 09.09.2011 , VIDE WHICH HE HAS REJECTED THE APPLICATION OF THE ASSESSEE FOR GRANT OF APPROVAL UNDER SECTION 80G(5)(VI) OF THE INCOME-TAX ACT, 1961. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESS EE PRAYATN TRUST WAS ESTABLISHED IN 1991, IN ORDER TO DEVELOP THE DISADV ANTAGE SECTIONS OF THE SOCIETY. IT WAS REGISTERED AS A PUBLIC CHARITABLE T RUST IN 1992. THE MAIN OBJECTIVES OF THE TRUST WERE TO EMPOWER THE MARGINA LIZED SECTIONS OF THE SOCIETY BY BUILDING UP THEIR CAPABILITIES FOR A DEC ENT, DIGNIFIED AND 2 INDEPENDENT LIFE. IN OTHER WORDS, IT WAS HELPING IN REHABILITATING THE PHYSICALLY HANDICAPPED PERSONS. THE TRUST HAS BEEN GRANTED REGISTRATION UNDER SEC. 12AA READ WITH SECTION 12A VIDE NO.FN-73 /93-94 DATED 18.8.1993. THE REGISTRATION HAS NOT TO BE WITHDRAWN OR CANCELLED. IT IS AVAILING BENEFIT UNDER SECTION 10(23C) OF THE INCOM E-TAX ACT, 1961. THE TRUST HAD APPLIED FOR GRANT OF APPROVAL UNDER SECTI ON 80G OF THE ACT. IN THE PAST, SUCH APPROVAL WAS GRANTED TO THE TRUST VIDE O RDER DATED 13.8.2007. THIS APPROVAL WAS VALID FOR THE PERIOD STARTING FROM 1.4 .2007 AND ENDING ON 31.3.2010. COPY OF THIS ORDER HAS BEEN PLACED ON PA GE 17 OF THE PAPER BOOK. THE ASSESSEE HAS APPLIED FOR GRANT OF APPROVAL UNDE R SEC. 80G W.E.F. IST APRIL 2011. THIS APPLICATION WAS MOVED ON 4.3.2011 IN FOR M NO. 10G. LEARNED DIRECTOR OF INCOME-TAX (EXEMPTION) HAS REJECTED THE APPLICATION OF ASSESSEE ON THE GROUND THAT ASSESSEE IS MANAGING A SCHOOL AN D IS CHARGING FEE OF RS.50 PER CHILD IN THAT SCHOOL. LEARNED DIRECTOR OF INCOME-TAX (EXEMPTION) CONFRONTED THE ASSESSEE ABOUT TRANSMISSION OF INFOR MATION WHETHER SCHOOL IS RECOGNIZED BY ANY COMPETENT AUTHORITY OR NOT, ACCOR DING TO THE LEARNED DIRECTOR OF INCOME-TAX (EXEMPTION), ASSESSEE HAS NO T GIVEN ANY REPLY ON THIS ISSUE. HE OBSERVED THAT ASSESSEE HAD DECLARED INCOME FROM SALE OF PICKLES, BAGS, BEAUTY-PORLOUR ETC., THEREFORE, IT I S NOT A CHARITABLE INSTITUTION IN THE LIGHT OF SECTION 2(15) OF THE INCOME-TAX ACT , 1961. HE REJECTED THE 3 REQUEST FOR GRANT OF APPROVAL UNDER SECTION 80G(5) OF THE ACT ON THE GROUND THAT CONDITIONS ENUMERATED IN SECTION 80G(5)(1) OF THE ACT ARE NOT SATISFIED BY THE ASSESSEE. 3. THE LEARNED COUNSEL FOR THE ASSESSEE WHILE IMPUG NING THE ORDER OF LEARNED DIRECTOR OF INCOME-TAX (EXEMPTION) SUBMITTE D THAT THE ASSESSEE HAS INADVERTENTLY FILED THE PRESENT APPLICATION FOR REN EWAL OF APPROVAL UNDER SECTION 80G(5) OF THE ACT. HE POINTED OUT THAT SECT ION 80G(5)(VI) SPECIFYING THE TIME LIMIT FOR GRANT OF APPROVAL HAS BEEN AMEND ED BY FINANCE ACT, 2009 AND AFTER THE AMENDMENT ONCE APPROVAL GRANTED, IT W ILL BE PERPETUAL UNLESS CANCELLED OR WITHDRAWN BY THE COMPETENT AUTHORITY. HE FURTHER SUBMITTED THAT THE BOARD HAS ISSUED A CIRCULAR BEARING NO. 5 OF 2010 WHICH EXPLAINED FINANCE ACT, 2009. ACCORDING TO THIS CIRCULAR, ALL APPROVALS ALREADY GRANTED TO THE ASSESSEE UNDER SEC. 80G, IF EXPIRING ON OR A FTER IST OF OCTOBER 2009 THEN IT WOULD BE DEEMED TO HAVE BEEN EXTENDED IN PE RPETUITY. THE APPROVAL IN THE CASE OF ASSESSEE WAS AVAILABLE UP TO 31.3.20 10, MEANING THEREBY, ITS APPROVAL IS DEEMED TO HAVE BEEN EXTENDED FOR PERPET UITY AND THE APPLICATION MOVED BY THE ASSESSEE OUGHT TO HAVE BEEN DISMISSED AS INFRUCTUOUS BY THE LEARNED DIRECTOR OF INCOME-TAX (EXEMPTION) INSTEAD OF REJECTING IT ON MERIT. HE FURTHER SUBMITTED THAT AN IDENTICAL ISSUE COME U P BEFORE THE ITAT IN THE 4 CASE OF RAJA MEMORIAL EDUCATION TRUST VS. D.I.T. IN ITA NO.4640/DEL/2011, THE ITAT HAS TAKEN NOTE OF THIS AMENDED PROVISION A ND OBSERVED THAT SECTION 80GS APPROVAL WOULD BE AUTOMATICALLY ADMISSIBLE TO THE ASSESSEE AFTER ELIMINATION OF THE PROVISO APPENDED WITH SECTION 80 G(5)(VI) OF THE ACT BY THE FINANCE ACT, 2009. THE ITAT HAS REMITTED THE MA TTER BACK TO THE FILE OF THE LEARNED D.I.T. FOR RE-EXAMINATION AS PER LAW. T HE LEARNED COUNSEL FOR THE ASSESSEE PLACED ON RECORD COPY OF THE ITATS ORDER. HE ALSO RELIED UPON THE ORDER OF THE ITAT, CALCUTTA IN THE CASE OF LIONS CL UB OF CALCUTTA HOSTING VS. D.I.T. WHERE A SIMILAR VIEW HAS BEEN TAKEN. HE PLACED ON RECORD THE COPY OF THE ITATS ORDER. 4. ON THE OTHER HAND, LEARNED DR RELIED UPON THE OR DER OF THE D.I.T. SHE POINTED OUT THAT LEARNED DIRECTOR OF INCOME-TAX (EX EMPTION) HAS DENIED THE APPROVAL UNDER SEC. 80G(5) ON MERIT, THEREFORE, IT AMOUNTS TO WITHDRAWAL OF APPROVAL IN A WAY. THE ASSESSEE HAS DECLARED INCOME FROM SALE OF PICKLES, BAGS, BEAUTY PORLOUR ETC. WHICH IS AKIN TO CARRY ING OUT ANY BUSINESS ACTIVITIES, HENCE, ITS ACTIVITIES ARE NOT OF A CHAR ITABLE NATURE AND IT IS NOT ENTITLED FOR APPROVAL UNDER SECTION 80G(5) OF THE A CT. 5 5. WE HAVE DULY CONSIDERED THE RIVAL CONTENTIONS AN D GONE THROUGH THE RECORD CAREFULLY. THE ASSESSEE IS AN OLD TRUST ESTA BLISHED IN 1991. IT IS RUNNING VARIOUS ACTIVITIES FOR DEVELOPMENT OF DOWNT RODDEN SECTIONS OF THE SOCIETY. REGISTRATION UNDER SECTION 12AA FOR TREATI NG THE ASSESSEE AS A CHARITABLE INSTITUTION, WAS GRANTED ON 18.8.1993, I S STILL INTACT. THUS, IT WOULD SUGGEST THAT ACTIVITIES OF THE ASSESSEE ARE OF CHAR ITABLE NATURE. LEARNED DIRECTOR OF INCOME-TAX (EXEMPTION) HAS MADE REFEREN CE TOWARDS THE INCOME RESULTED ON ACCOUNT OF SALE OF PICKLES, BAGS AND BE AUTY-PORLOUR ETC. BUT ACCORDING TO THE ASSESSEE THESE WERE THE ACTIVITIES IN ACCORDANCE WITH ITS AIMS AND OBJECTS. IT HAS BEEN RUNNING DAYS CENTRES FOR EMPOWERING THE WOMEN. IT IS NOT A NEW THING IN THIS YEAR. LEARNED DIRECTOR OF INCOME-TAX (EXEMPTION) HAS NOT NARRATED ANY CIRCUMSTANCE WHICH HAVE BEEN CHANGED AFTER 31.3.2010 UP TO THIS DATE, APPROVAL UNDER SEC TION 80G IS ADMISSIBLE TO THE ASSESSEE. LEAVING APART ALL THESE ASPECTS, WE F IND THAT PRIOR TO AMENDMENT TO SECTION 80G(5)(VI) OF THE ACT, THERE W AS A PROVISO WHICH PROVIDE TIME LIMIT FOR THE APPROVAL. THE PROVISO RE ADS AS UNDER: PROVIDED THAT ANY APPROVAL SHALL HAVE EFFECT FOR S UCH ASSESSMENT YEAR OR YEARS, NOT EXCEEDING FIVE ASSESSMENT YEARS, AS M AY BE SPECIFIED IN THE APPROVAL. 6 6. THIS TIME LIMIT HAS BEEN ELIMINATED BY DELETING THE PROVISO TO THIS SUB- SECTION. THE BOARD HAS ISSUED A CIRCULAR I.E. CIRCU LAR NO. 5 OF 2010 WHICH EXPLAINED THE FINANCIAL (NO.2) ACT, 2009. PARA 29.7 OF THE CIRCULAR, WHICH IS RELEVANT FOR SECTION 80G, THE BOARD HAS OPINIONED A S UNDER: 29.7. APPLICABILITY THIS AMENDMENT HAS BEEN MA DE APPLICABLE W.E.F. IST OCTOBER 2009. ACCORDINGLY, EXISTING APPR OVALS EXPIRING ON OR AFTER IST OCTOBER 2009 WILL BE DEEMED TO HAVE BE EN EXTENDED IN PERPETUITY UNLESS SPECIALLY WITHDRAWN. HOWEVER, IN CASE OF APPROVAL EXPIRING BEFORE IST OCTOBER, 2009, THESE WILL HAVE TO BE RENEWED AND ONCE RENEWED THESE SHALL CONTINUE TO BE VALID IN PE RPETUITY, UNLESS SPECIFICALLY WITHDRAWN. 7. THE APPROVAL GRANTED ON 13.8.2007 UNDER SECTION 80G(5)(VI) OF THE ACT TO THE ASSESSEE WAS VALID UP TO 31.3.2010 MEANI NG THEREBY, THE MOMENT, THE AMENDMENT TO SECTION 80G(5)(VI) BY VIRTUE OF FI NANCE ACT, 2009 HAS BEEN EFFECTED, THE APPROVAL AVAILABLE TO THE ASSESS EE UNDER SEC. 80G(5)(VI) OF THE ACT WOULD BE DEEMED TO HAVE BEEN INTACT IN PERP ETUITY AND THE ASSESSEE WAS NOT SUPPOSED TO FILE THE APPLICATION FOR RENEWA L. THE MOMENT THIS APPLICATION CAME TO THE LEARNED DIRECTOR OF INCOME- TAX (EXEMPTION), HE OUGHT TO HAVE DISMISSED IT AS INFRUCTUOUS ON THE GR OUND THAT ASSESSEE ALREADY ENJOYING THE APPROVAL. IF THE LEARNED DIRECTOR OF I NCOME-TAX (EXEMPTION) HAD ANY RESERVATION THEN HE OUGHT TO HAVE ISSUED A NOTICE FOR CANCELLATION OF 7 THE APPROVAL IF THE LAW PERMITS TO DO SO. THE LEARN ED DIRECTOR OF INCOME-TAX (EXEMPTION) INDIRECTLY BY REJECTING THE APPLICATION OF THE ASSESSEE ON MERIT CANNOT WITHDRAW THE APPROVAL WHICH IS AUTOMATICALLY RENEWED BY VIRTUE OF FINANCE ACT, 2009. THEREFORE, WE ALLOW THE APPEAL O F ASSESSEE. THE APPLICATION UNDER SECTION 80G(5)(VI) FILED BY THE A SSESSEE FOR GRANT OF APPROVAL BE TREATED AS REJECTED FOR STATISTICAL PUR POSES BUT WE MAKE IT CLEAR THAT ASSESSEE WOULD BE ENJOYING THE APPROVAL BY VIR TUE OF THE ORDER DATED 13.8.2007 PASSED BY THE LEARNED DIRECTOR OF INCOME- TAX (EXEMPTION). 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED FOR STATISTICAL PURPOSES. DECISION PRONOUNCED IN THE OPEN COURT ON 16.03.201 2 SD/- SD/- ( T.S. KAPOOR ) ( RAJPAL YADAV ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 16/03/2012 MOHAN LAL COPY FORWARDED TO: 1) APPELLANT 2) RESPONDENT 3) CIT 4) CIT(APPEALS) 5) DR:ITAT ASSISTANT REGISTRAR