Andhra Bank Rural Development Trust, Hyderabad V. Director of Income Tax (Exemptions), Hyderabad

ITA 470/HYD/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 66142 (ITAT-HYDERABAD)
• Duration Of Justice: 4 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-08-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: misc
• Appeal Filed On: 29-03-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: GNANA PRAKASH
• Keywords: Charitable institution
• Section: 80G; 12A; 12AA; 12; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B, HYDERABAD BEFORE SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER AND SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER ITA NO.470/HYD/2012 ANDHRA BANK RURAL DEVELOPMENT TRUST, APPELLANT HYDERABAD (PAN AABTA4300J) VS. DIRECTOR OF INCOME TAX(EXEMPTION), RESPONDENT HYDERABAD APPELLANT BY : SHRI K.C. DEVDAS RESPONDENT BY : SHRI GNANA PRAKASH DATE OF HEARING : 03/07/2012 DATE OF PRONOUNCEMENT : 10/08/ 2012 ORDER PER ASHA VIJAYARAGHAVAN, J.M.: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER OF DIT(E), HYDERABAD, DATED 30/01/2012. 2. BRIEFLY THE FACTS OF THE CASE ARE THAT THE ASSES SEE TRUST HAS FILED AN APPLICATION IN FORM NO. 10G REQUESTING FOR RENEWAL OF REGISTRATION U/S 80G(5) OF THE IT ACT, 1961. THE DI T(E) NOTED IN HIS ORDER THAT IN THE SAID APPLICATION IN FORM NO. 10G, THE ASSESSEE TRUST HAD MENTIONED REGARDING LAST APPROVA L FOR THE PERIOD FROM 1989-1992. THE ASSESSEE HAD ALSO ENCLOS ED A PHOTO COPY OF THE ORDER IN F.NO.H.QRS.I/12A&80G/43/89-91, DATED 14/08/1990 ISSUED BY THE THEN CIT, A.P.-I, HYDERAB AD GRANTING APPROVAL FOR DEDUCTION U/S 80G OF THE IT ACT, 1961 FOR THE PERIOD ITA NO. 470/HYD/2012 ANDHRA BANK RURAL DEVELOPMENT TRUST 2 FROM 09/11/1989 TO 31/03/1992. AS PER THE NOTE IN P ARA 3 OF THE NOTE GIVEN BELOW THAT ORDER, IT IS MENTIONED THAT REQUEST FOR RENEWALS SHOULD BE MADE THROUGH THE AO, MENTIONED I N PARA 2 OF THAT NOTE, WITHIN ONE MONTH FROM THE END OF THE A CCOUNTING YEAR OF THE INSTITUTION WITH STATEMENT OF INCOME AND EXP ENDITURE ACCOUNT AND BALANCE SHEET AND AUDIT REPORT IN FORM NO.10B WHEREVER THE INCOME EXCEEDS RS. 25,000/- AND A CERT IFICATE SIGNED BY ALL THE TRUSTEES/OFFICE BEARERS. THUS, AS PER THE STIPULATION MADE IN THAT ORDER, THE ASSESSEE TRUST WAS REQUIRED TO FILE APPLICATION FOR RENEWAL WITHIN ONE MONTH FROM THE END OF THE RELEVANT ACCOUNTING YEAR IN THIS CASE. THE LAST DAT E OF EXPIRY OF SUCH PERIOD OF APPROVAL WAS 31/03/1992. SINCE THE A SSESSEE TRUST HAS NOT FILED ANY APPLICATION FOR RENEWAL WITHIN TH E STIPULATED TIME FROM SUCH DATE THE DIT(E) HELD THAT THE ASSESS EE TRUST IS NOT ENTITLED FOR FRESH REGISTRATION/APPROVAL U/S 80G(5) OF THE ACT. 3. THE DIT(E) FURTHER HELD AS UNDER:- 3.SINCE ON VERIFICATION OF THE STATEMEN T OF ACCOUNTS FOR DIFFERENT ASSESSMENT YEARS, IT WAS NOT ICED THAT THE ASSESSEE-TRUST HAS NOT RECEIVED ANY DONATION, T HERE IS NO NECESSITY OF REGISTRATION/APPROVAL U/S 80G(5) OF THE ACT. THE FIVE CONDITIONS WHICH ARE TO BE FULFILLED BY AN INSTITUTION OF GRANTING APPROVAL U/S 80G, ARE REFERRED TO IN CL AUSE (A) BELOW THE PROVISO TO SUB-SECTION (5) OF THAT SECTIO N. ONE OF SUCH CONDITIONS AS MENTIONED IN CLAUSE (B) IS THAT THE DONATIONS MADE TO THE INSTITUTION OR FUND ARE NOT U SED BY IT, DIRECTLY OR INDIRECTLY FOR THE PURPOSES OF SUCH BUS INESS. THUS, FOR GRANTING APPROVAL TO AN INSTITUTION OR TR UST, IT PRE- SUPPOSES RECEIPT OF DONATIONS BY THAT INSTITUTION/T RUST. IN THE CASE OF UPPER GRANGES SUGAR MILLS LTD. VS. CIT[ 1997], 93 TAXMAN 645, THE HONBLE SUPREME COURT OBSERVED THAT SECTION 80G APPLIES TO DONATIONS TO AN INSTITUTION OR FUND ESTABLISHED IN INDIA FOR A CHARITABLE PURPOSE. THUS , GRANTING APPROVAL U/S 80G OF THE ACT ARISES ONLY WHEN AN INS TITUTION ITA NO. 470/HYD/2012 ANDHRA BANK RURAL DEVELOPMENT TRUST 3 OR A TRUST RECEIVES DONATION AND FURTHER THE SAME I S SUBJECT TO VERIFICATION OF THOSE FIVE CONDITIONS AS MENTION ED BELOW THE PROVISO TO CLAUSE (I) TO SUBSECTION 5 OF SECTIO N 80G. SINCE, IN THIS CASE, THE ASSESSEE TRUST HAS NOT REC EIVED ANY DONATION, IN MY CONSIDERED VIEW, IT IS NOT ENTITLED FOR REGISTRATION/APPROVAL U/S 80G(5) OF THE ACT. IT MAY BE MENTIONED THAT THE LEARNED AR COULD NOT SUBMIT ANY REASON BEFORE ME FOR SEEKING REGISTRATION/APPROVAL U/S 80G OF THE ACT, UNDER SUCH CIRCUMSTANCES, AS MENTIONED ABOVE. 4. IN VIEW OF THE FOREGOING DISCUSSIONS, THUS, THE ASSESSEE TRUST IS NOT ENTITLED FOR REGISTRATION/APPROVAL U/S 80G(5) OF THE ACT. HENCE, THE SAID APPLICATION FILED IN FORM NO. 10G FILED BY THEM IS HEREBY REJECTED. AT THIS STAGE, IT IS FURTHER MENTIONED THAT THIS ORDER IS PASSED AFTER TAKING IN TO ACCOUNT THE PERIOD OF NON-COMPLIANCE ON THE PART OF THE ASS ESSEE TRUST TO THE DIRECTIONS CONTAINED IN THIS LETTER IS SUED ON 26/09/2011 AND KEEPING IN VIEW THE PROVISO BELOW SU B-RULE (6) TO RULE 11AA OF THE IT RULES, 1961. 4. AGGRIEVED BY THE ORDER OF THE DIT(E), THE ASSESS EE IS IN APPEAL BEFORE US RAISING THE FOLLOWING GROUNDS OF A PPEAL: 1. THE ORDER OF THE DIT(E), HYDERABAD IN HOLDING TH AT THE APPELLANT TRUST IS NOT ENTITLED FOR APPROVAL U/S 80 G(5) OF THE ACT, 1961 IS WHOLLY UNSUSTAINABLE BOTH IN LAW AND F ACTS. 2. THE LEARNED DIT(E) FAILED TO NOTE THAT THE WHOLE OBJECT OF SEEKING APPROVAL U/S 80G OF THE ACT WAS TO SEEK DON ATIONS TO FULFILL THE OBJECTS OF THE TRUST AND UNTIL THE A PPELLANT POSSESSED AN ORDER APPROVING DONATIONS U/S 80G(5) O F THE ACT, NO DONOR WOULD DONATE ANY FUNDS TO THE TRUST A ND THEREFORE THE ORDER PASSED REJECTING THE APPROVAL O F SEC. 80G(5) OF THE ACT IS TOTALLY ERRONEOUS AND THEREFOR E UNSUSTAINABLE. 3. THE DIT(E) FAILED TO NOTE THE FACT THAT THE APPE LLANT HAD NOT MADE THE APPLICATION FOR APPROVAL U/S 80G(5) OF THE ACT WITHIN 2 MONTHS FROM THE DATE OF EXPIRY OF ITS EARL IER APPROVAL WAS NOT FATAL TO ACCORD APPROVAL PRESENTLY U/S 80G. 5. WE HAVE HEARD THE ARGUMENTS OF BOTH THE PARTIES AND PERUSED THE RECORD. IN THE CASE OF HON'BLE PUNJAB & HARYANA HIGH COURT WHICH IS THE JURISDICTION IN THIS CASE I N THE CASE OF ITA NO. 470/HYD/2012 ANDHRA BANK RURAL DEVELOPMENT TRUST 4 SONEPAT HINDU EDUCATIONAL & CHARITABLE SOCIETY V. C IT [2005] 278 ITR 262 /147 TAXMAN 1 HELD AS UNDER:- 'IN CONSTRUING THE PURPOSE OF A TRUST, FOR THE PURP OSES OF APPROVAL UNDER SECTION 80G OF THE INCOME-TAX ACT, 1 961, IT IS IMPORTANT TO FIND OUT THE REAL PURPOSE OF ESTABL ISHING THE TRUST RATHER THAN JUST RELYING ON THE OBJECTS, MEMO RANDUM AND ARTICLES OR THE TRUST DEED OF THE TRUST. IF THE COMMISSIONER IS SATISFIED THAT THE OBJECTS OF THE T RUST ARE CHARITABLE, APPROVAL SHOULD NOT BE DENIED ON MERE TECHNICALITIES. REGISTRATION OF AN INSTITUTION UNDER SECTION 12A OF THE ACT IS SUFFICIENT PROOF OF IT BEING ESTABLISHED FOR CHARIT ABLE PURPOSES. IT IS NOT POSSIBLE TO DETERMINE, ON THE DATE ON WHI CH THE DONATION IS MADE UNDER SECTION 80G, IF THE TRUST, W HICH HAS SOUGHT APPROVAL UNDER THE SAID SECTION, HAS FULFILL ED ITS CONDITIONS AT THE CLOSE OF THE RELEVANT PREVIOUS YE AR. RES JUDICATA CAN BE APPLIED IN INCOME-TAX PROCEEDIN GS WHEN A FUNDAMENTAL ASPECT HAS PREVAILED THROUGH DIFFEREN T ASSESSMENT YEARS WITHOUT BEING CHALLENGED ONE WAY O R THE OTHER. IN SUCH CASES IT IS NOT APPROPRIATE TO CHANG E THE POSITION IN A SUBSEQUENT YEAR.' 6. IN THE PRESENT CASE BEFORE US, THE DIT(E) HAS DE NIED 80G APPROVAL ON THE GROUND THAT THE ASSESSEE HAS NOT MA DE THE APPLICATION FOR APPROVAL WITHIN ONE MONTH FROM THE DATE OF EXPIRY OF ITS EARLIER APPROVAL. FOLLOWING THE DECISION IN THE CASE OF SONIPET (SUPRA), IT HAS BEEN CLEARLY HELD THAT IT I S NOT APPROPRIATE TO CHANGE THE POSITION IN A SUBSEQUENT YEAR I.E. WH EN THE APPROVAL UNDER 80G HAS BEEN GIVEN FOR THE EARLIER P ERIOD. HENCE, THE DELAY IN FILING THE APPLICATION IS NOT FATAL TO THE GRANT OF APPROVAL U/S 80G OF THE ACT AND THE DELAY CAN BE CO NDONED. 7. FURTHER, THERE IS NO DENIAL OF FACT THAT THE ASS ESSEE INSTITUTION, IN THE PRESENT CASE, IS REGISTERED UND ER SECTION 12AA OF THE INCOME-TAX ACT, AS SEEN FROM PAGE 60 OF THE PAPER BOOK ITA NO. 470/HYD/2012 ANDHRA BANK RURAL DEVELOPMENT TRUST 5 FILED BY THE ASSESSEE. THE HON'BLE GUJARAT HIGH COU RT IN THE CASE OF N.N. DESAI CHARITABLE TRUST V. CIT [2000] 246 IT R 452 / 123 TAXMAN 866 HELD THAT IN RESPECT OF REGISTRATION UND ER SECTION 80G, THE SCOPE OF ENQUIRY WILL BE CONFINED TO FINDI NG OUT IF THE INSTITUTION SATISFIES PRESCRIBED CONDITION STATED I N SUB-CLAUSES (I) TO (V) OF SECTION 80G. IT DOES NOT EXTEND TO ACTUAL ASSESSMENT OF INSTITUTION. THE PHRASE USED IN SUB-CLAUSE (I) OF S UB-SECTION (5) OF SECTION 80G IS THAT 'WHERE THE INSTITUTION OR FUND DERIVES ANY INCOME, SUCH INCOME WOULD NOT BE LIABLE TO INCLUSIO N IN ITS TOTAL INCOME'. THUS WHAT IS TO BE SEEN IS WHETHER ANY INC OME WOULD NOT BE LIABLE TO INCLUSION IN ITS TOTAL INCOME AND NOT WHETHER BECAUSE OF CERTAIN DEFAULTS PRESCRIBED IN SECTION 1 1 OR 13, THE TRUST IS NOT ACTUALLY HELD ELIGIBLE FOR EXEMPTION U NDER SECTIONS 11 & 12 OF THE ACT. ONCE THE CONDITION LAID DOWN IN RU LE 11AA AS ALSO IN SUB-CLAUSES (I) TO (V) OF SUB-SECTION (5) O F SECTION 80G ARE COMPLIED WITH, THE TRUST IS, ELIGIBLE FOR REGISTRAT ION UNDER SECTION 80G(5)(VI) OF THE ACT. HENCE, WE SET ASIDE THE ISSU E TO THE FILE OF THE DIT(E) TO VERIFY WHETHER THE ASSESSEE HAS SATIS FIED THE CONDITIONS LAID DOWN IN RULE 11AA AS ALSO IN SUB-CL AUSES (I) TO (V) OF SUB-SECTION (5) OF SECTION 80G AND THEREAFTER GR ANT APPROVAL IN ACCORDANCE WITH LAW. 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON SD/- SD/- (D. KARNUKARA RAO) (ASHA VIJAYARAGHAVAN) ACCOUNTANT MEMBER JUDICIAL MEMBE R HYDERABAD, DATED:10 TH AUGUST, 2012. KV ITA NO. 470/HYD/2012 ANDHRA BANK RURAL DEVELOPMENT TRUST 6 COPY TO:- 1) ANDHRA BANK RURAL DEVELOPMENT TRUST, 5-9-11, DR. PATTABHI BHAVAN, SAIFABAD, HYDERABAD. 2) DIT(E), 3 RD FLOOR, AAYAKAR BHAVAN, HYDERABAD 3) THE DDIT(E)-II, HYDERABAD 5) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDE RABAD.