Inder Sharma Foundation, New Delhi V. DIT(E), Delhi

ITA 4727/DEL/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 58484 (ITAT-DELHI)
• Duration Of Justice: 2 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-01-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 05-01-2012
• Assessment Year: 2012-2013
• Appeal Filed On: 31-10-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SALIL MISHRA
• Assessee Lawyers: HEMALI SETHI ARS
• Keywords: Charitable institution; Opportunity of being heard
• Section: 80G; 12A; 12AA; 12

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI C BENC H BEFORE SHRI R.P. TOLANI, JM & SHRI A.N. PAHUJA, AM ITA NO.4727/D/2011 ASSESSMENT YEAR:2012-13 INDER SHARMA FOUNDATION SUITE 101-103, FIRST FLOOR, KANCHANJUNGA BUILDING, 18,BARAKHAMBA ROAD, NEW DELHI-110001 V/S . DIRECTOR OF INCOME TAX (EXEMPTION),AAYAKAR BHAWAN,DELHI-110092 [PAN:AAATI 3536 R] (APPELLANT) (RESPONDENT) ASSESSEE BY S/SHRI GAURAV JAIN & SMT. HEMALI SETHI , ARS REVENUE BY SHRI SALIL MISHRA, DR DATE OF HEARING 05-01-2012 DATE OF PRONOUNCEMENT 13-01-2012 O R D E R A.N.PAHUJA:- THIS APPEAL FILED ON 31.10.2011 BY THE ASSESSEE AG AINST AN ORDER DATED 13 TH SEPTEMBER, 2011 OF THE DIRECTOR OF INCOME-TAX (EXE MPTIONS) [DIT (E) IN SHORT] U/S 80G(5)(VI) OF INCOME-TAX ACT, 1961 (H EREINAFTER REFERRED TO AS THE ACT) READ WITH RULE 11AA OF THE INCOME-TAX RULES , 1962 ,RAISES THE FOLLOWING GROUNDS :- 1. THE REJECTION ORDERS OF THE LEARNED DIT(E), NEW DELHI ARE BAD BOTH IN LAW AND ON FACTS. 2. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LEARNED DIT(E), NEW DELHI WAS NOT JUSTIFIED IN REJECTION OF FORM NO.10G FOR EXEMPTION U/S 80G OF THE INCOME-TAX ACT 1961. 3. THAT REJECTION ORDER OF THE LEARNED DIT(E), NEW DELHI ARE PASSED WITHOUT GIVEN ANY OPPORTUNITY TO THE ASSESSE E. AS PER RULE 11 AA OF THE INCOME TAX RULES, 1962, NO ORDER OF REJECTION OF AN APPLICATION SHALL BE PASSED WITHOUT GIVING TH E INSTITUTION OR FUND AN OPPORTUNITY OF BEING HEARD. 4. THAT REJECTION ORDER OF THE LEARNED DIT(E), NEW DELHI ARE RECEIVED ON 16 TH SEPTEMBER, 2011 WHICH IS BARRED BY TIME AS PRESCRIBED IN THE INCOME TAX RULES, 1962 AS THE ASS ESSEE FILED I.T.A. NO.4727/D/2011 2 APPLICATION ON 8 TH MARCH, 2011. THE TIME LIMIT WITH IN WHICH THE COMMISSIONER SHALL PASS AN ORDER EITHER GRANTING TH E APPROVAL OR REJECTION THE APPLICATION, SHALL NOT EXCEED SIX MONTHS FROM THE DATE ON WHICH SUCH APPLICATION WAS MADE. 2. FACTS, IN BRIEF, AS PER RELEVANT ORDER ARE THAT THE AFORESAID FOUNDATION SUBMITTED AN APPLICATION IN FORM NO.10G ON 8.3.2011, SEEKING APPROVAL U/S 80G(5)(VI) OF THE ACT. ON RECEIPT OF THE APPLICATION, DIT(E) VIDE LETTER DATED 6.4.2011 SOUGHT CERTAIN DETAILS AS MEN TIONED ON PAGE 1 OF THE IMPUGNED ORDER. IN RESPONSE, THE ASSESSEE AFTER SE EKING FEW ADJOURNMENTS FILED RELEVANT DETAILS AND DOCUMENTS. ON PERUSAL OF THES E DETAILS AND ACCOUNTS FOR PERIOD RELEVANT TO THE AYS 2009-10 AND 2010-11, THE DIT(E) NOTICED THAT THE FOUNDATION WAS INVOLVED IN CHARITABLE ACTIVITY BY G IVING SCHOLARSHIP, FINANCIAL ASSISTANCE AND SEMINAR FOR POOR AND NEEDY PEOPLE/ST UDENTS OR CHILDREN. TO A QUERY BY THE DIT(E), THE ASSESSEE TRUST SUBMITTED YEAR WISE DETAILS OF SCHOLARSHIP/FINANCIAL ASSISTANCE WITH NAME, ADDRESS , AMOUNT, FATHERS NAME, MONTHLY INCOME AND NAME OF FATHERS EMPLOYER. ON PERUSAL OF THE DETAILS FILED BY THE TRUST, THE DIT(E) NOTICED THAT SHRI INDER SH ARMA, MANAGING TRUSTEE WAS HOLDING THE POST OF MD IN M/S SELECTED HOLIDAY RESO RTS PVT. LTD. THE SAID COMPANY CONTRIBUTED ` ` 10 LACS EACH IN THE PERIOD RELEVANT TO ASSESSMENT Y EARS 2009-10 AND 2010-11 TO THE FOUNDATION BY WAY OF DON ATION. IT WAS FURTHER FOUND THAT ONLY THE SONS/DAUGHTERS OF THE EMPLOYEES OF TH E SAID COMPANY WERE BENEFICIARIES OF THE TRUST. AFTER CONSIDERING THE D ETAILS AND RELEVANT DOCUMENTS, THE DIT(E) DENIED THE APPROVAL U/S 80G(5)(VI) OF TH E ACT IN THE FOLLOWING TERMS:- 4.HOWEVER, AS PER LIST AND INFORMATION FILED FOR T HE NEEDY AND POOR CHILDREN WHO GOT THE SCHOLARSHIP AND FINANCIAL ASSI STANCE FROM THE TRUST, REVEALS THAT ALL THESE CHILDREN ARE SONS OR DAUGHTERS OF EMPLOYEES OF M/S SELECT HOLIDAY RESORTS PVT. LTD. W ORKING IN DIFFERENT DEPARTMENTS IN ABOVE NAMED COMPANY. A FU RTHER PERUSAL OF LIST FURNISHED FOR DIFFERENT YEARS OF THE BENEFI TED CHILDREN SHOWS THAT NOT A SINGLE CHILD APART FROM SON/DAUGHTER OF THE EMPLOYEES OF SELECT HOLIDAY RESORTS PVT. LTD. HAS BEEN AWARDED ANY SCHOLARSHIP OR FINANCIAL ASSISTANCE BY THE TRUST AS SCHOLARSHIP OR FINANCIAL ASSISTANCE. I.T.A. NO.4727/D/2011 3 5. IN VIEW OF ABOVE, IT IS FOUND THAT THE SAID TRUS T WAS CREATED BY M/S SELECT HOLIDAY RESORTS PVT. LTD. ONLY FOR THE B ENEFIT OF SONS AND DAUGHTERS OF ITS EMPLOYEES AND NOT FOR OUTSIDE CHIL DREN OR GENERAL PUBLIC. FURTHER, THE SAID SCHOLARSHIP/FINANCIAL AS SISTANCE WAS AWARDED TO THE CHILDREN OF EMPLOYEES UNDER AN EDUCA TION GRANT SCHEME OF THE COMPANY. SINCE, THE ABOVE COMPANY IS A COMMERCIAL ENTITY AND BY WAY OF PROVIDING FINANCIAL ASSISTANCE IN THE FORM OF SCHOLARSHIP, THE COMPANY IS PROTECTING THE INTEREST OF ITS EMPLOYEES ONLY AND NOT FOR GENERAL PUBLIC. BY AWARD ING SCHOLARSHIP TO THE CHILDREN OF ITS EMPLOYEES THROUGH THE CHARIT ABLE TRUST CREATED BY THE COMPANY IS ACTUALLY A MODE OF BENEFIT TO THE EMPLOYEES AND NO CHARITABLE ACTIVITY HAS BEEN DONE BY THE TRUST F OR GENERAL PEOPLE/PUBLIC. IT IS ACTUALLY A MECHANISM EVOLVED BY THE COMPANY FOR THE BENEFIT OF ITS EMPLOYEES, ON THE ONE HAND I T IS CLAIMING THE SAID DONATION/CONTRIBUTION AS COMPANYS EXPENDITURE ON THE OTHER HAND THE SAME AMOUNT IS BEING UTILIZED FOR ITS EMPL OYEES IN THE FORM OF SCHOLARSHIP/ASSISTANCE THROUGH THE ABOVE SA ID TRUST CREATED BY THE COMPANY WHICH ULTIMATELY RESULTED THE BENEFI T OF THE COMMERCIAL ENTITY AND NOT THE GENERAL PUBLIC AT LAR GE. 6.IN VIEW OF ABOVE FACTS AND CIRCUMSTANCES OF THE C ASE, THE CONTENTION OF THE APPLICANT THAT IT IS DOING CHARIT ABLE ACTIVITY BY HELPING POOR AND NEEDY CHILDREN IN THE FORM OF SCHO LARSHIP AND ASSISTANCE IS NOT TENABLE, AS ITS ACTIVITY IS ONLY FOR A PARTICULAR SECTION/GROUP OR EMPLOYEES OF A COMPANY WHO IS FOUN DER OF THE TRUST. 7.IN VIEW OF ABOVE FACT AND OF DOCUMENTARY EVIDENCE S OF CHARITY THAT APPLICANT IS NOT INVOLVED IN CHARITABLE ACTIVI TIES AND IT COULD NOT BE ESTABLISHED THAT APPLICANT SATISFIES THE CONDITI ONS LAID OUT U/S 80G(5) OF THE INCOME-TAX ACT, 1961. THEREFORE, THE APPELLANTS APPLICATION FURNISHED IN FORM NO.10G FOR EXEMPTION U/S 80G OF THE INCOME-TAX ACT, 1961 IS REJECTED. 3. THE ASSESSEE TRUST IS NOW IN APPEAL BEFORE US AGAINST THE AFORESAID FINDINGS OF DIT(E). THE LD. AR ON BEHALF OF THE FOU NDATION WHILE CARRYING US THROUGH THE EDUCATION GRANT POLICY FRAMED BY THE T RUST FOR EMPLOYEES OF M/S SELECT HOLIDAY RESORTS PVT. LTD. CONTENDED THAT THE DIT(E) WAS NOT JUSTIFIED IN REFUSING THE APPROVAL U/S 80G(5)(VI) OF THE ACT EVE N WHEN THE TRUST CONTINUED TO BE REGISTERED U/S 12A OF THE ACT. TO A QUERY BY TH E BENCH, THE LEARNED AR REPLIED THAT TRUST WAS REGISTERED U/S 12A OF THE AC T ON 20 TH SEPTEMBER, 1973 AND I.T.A. NO.4727/D/2011 4 THEREAFTER, APPROVAL U/S 80G(5)(VI) OF THE ACT WAS GRANTED UNTIL 31 ST MARCH, 2011. IT WAS ONLY ON THEIR APPLICATION SEEKING EXTENSION OF THE SAID APPROVAL FILED ON 8 TH MARCH, 2011 THAT THE DIT(E) REFUSED THE APPROVAL WI THOUT GRANTING SUFFICIENT OPPORTUNITY OF HEARING AND WITHOUT ISSUING ANY SHOW CAUSE NOTICE. THE LD. AR SUBMITTED THAT THE BENEFICIARIES WERE SONS AND DAUG HTERS OF THE EMPLOYEES OF THE AFORESAID COMPANY, DRAWING SALARY BELOW ` 10,000/-PM EACH AND ON THAT GROUND APPROVAL CANNOT BE DENIED. IN THIS CONNECTIO N, THE LD. AR RELIED UPON THE DECISIONS IN THE CASE OF CIT VS. WALCHAND DIAMOND J UBILEE TRUST,34 ITR 228 (BOM.); CIT VS. TATA STEEL CHARITABLE TRUST,203 ITR 764(PAT.);&HIRA LAL BHAGWATI VS. CIT,246 ITR 188 (GUJARAT) . THE LD. AR FURTHER POINTED OUT THAT THE LD. DIT(E) WAS NOT JUSTIFIED IN DECLINING APPROVAL U/S 80G DUR ING SUBSISTENCE OF REGISTRATION U/S 12A OF THE ACT. IN THIS CONNECTION, THE LD. AR RELIED UPON THE DECISIONS IN N.N. DESAI CHARITABLE TRUST VS. CIT: 246 ITR 452 (G UJ.);SONEPAT HINDU EDUCATIONAL TRUST VS. CIT: 278 ITR 262 (P&H);GAUR B RAHMAN VIDYA PRACHARNI SABHA VS. CIT (2010) 129 TTJ 627 (DEL.);MAYO COLLEG E OLD BOYS ASSOCIATION VS. DIT (E): (I.T.A. NO.2010/D/2010);MAHARISHI DAYA NAND EDUCATION SOCIETY VS. CIT: (I.T.A. NO.218/D/09);AGGARWAL SABHA VS. DIT(E) : (I.T.A. NO.4456/D/09) . THE LD. AR ADDED THAT AS HELD IN LIONS CLUB CALCUT TA HASTINGS VS. DIT(E) IN I.T.A. NO.2019/KOL/2010) DATED 12.12.2011 AND ASSO CIATION FOR ADVOCACY & LEGAL INITIATIVES VS. CIT, IN ITA NO.674/LUCK/2010 DATED 28.2.2011,NO APPLICATION OF RENEWAL IS REQUIRED TO BE FILED FOR APPROVALS EX ISTING ON OR AFTER 1.10.2009 IN TERMS OF CIRCULAR NO.7/2010 DATED 27.10.2010.ON THE OTHER HAND, LEARNED DR SUPPORTED THE FINDINGS OF THE LD. DIT(E). 4. WE HAVE HEARD BOTH THE PARTIES AND GONE THROU GH THE FACTS OF THE CASE AS ALSO THE DECISIONS RELIED UPON BY THE LD. AR. INDIS PUTABLY, THE APPLICANT TRUST ,CREATED VIDE INDENTURE DATED 17 TH DECEMBER,1970 FOR PROMOTION OF NATIONAL INTEGRATION, INTERNATIONAL GOODWILL & BROTHER HOOD, BUILDING AND MAINTAINING NATIONAL AND INTERNATIONAL WELFARE CENTRES FOR TOUR ISTS BESIDES AIDING AND ASSISTING STUDENTS BY SCHOLARSHIPS ETC. TO PROSECUTE HIGHER E DUCATION, STUDY AND RESEARCH I.T.A. NO.4727/D/2011 5 PARTICULARLY IN THE FIELD OF TRAVEL TOURISM ETC., IS REGISTERED U/S 12A OF THE ACT ON 20 TH SEPTEMBER, 1973 AND ALL ALONG APPROVAL U/S 80G(5)( VI) OF THE ACT WAS BEING GRANTED, LATEST BEING ON 16 TH JUNE, 2008 FOR THE PERIOD 01.04.2008 TO 31.03.2011. EVEN WHEN THE REGISTRATION U/S 12A OF THE ACT HAS NOT BEEN WITHDRAWN, THE LD. DIT(E) DECLINED TO RENEW THE AP PROVAL U/S 80G(5)(VI) OF THE ACT FOR THE PERIOD AFTER 31.3.2011 ON THE GROUND T HAT SCHOLARSHIP/FINANCIAL ASSISTANCE WAS AWARDED TO THE CHILDREN OF THE EMPL OYEES OF SELECT HOLIDAY RESORTS (P) LTD. AND THAT NOT ANY OTHER CHILD APART FROM SONS/DAUGHTERS OF EMPLOYEES OF SELECT HOLIDAY RESORTS (P) LTD., WAS T HE BENEFICIARY . AS POINTED OUT BY THE LD. AR , FINANCIAL ASSISTANCE HAS BEEN P ROVIDED TO ONLY THOSE EMPLOYEES IN THE WAGE CATEGORY BELOW ` 10,000/- PM. THERE IS NOTHING IN THE OBJECTS OF THE TRUST THAT ONLY THE EMPLOYEES OF SEL ECT HOLIDAY RESORTS (P) LTD. OR THEIR CHILDREN ALONE WOULD BE THE BENEFICIARIES. TH ERE IS NO OBLIGATION CAST ON THE TRUSTEES TO PREFER THE EMPLOYEES OF THE AFORESAID COMPANY AND I T IS FOR THE TRUSTEES TO EXERCISE THEIR DISCRETION. IF A MEMBER OF THE PUBLIC ALSO HAPPENS TO BE AN EMPLOYEE OF THE SELECT HOLIDAY RESORTS (P) LTD.. , IT IS OPEN TO THE TRUSTEES TO GIVE HIM PREFERENCE. AS HELD IN WALCHAND DIAMOND JU BILEE TRUST(SUPRA) THE TEST IS WHETHER THE EXERCISE OF THE DISCRETION OF THE TR USTEES IS SO FETTERED THAT THEY ARE BOUND TO SELECT PARTICULAR PERSONS IN PREFERENC E TO OTHERS. THAT IS CLEARLY NOT THE CASE HERE. THE PROVISIONS OF THE TRUST DEED DO NOT COMPEL THE TRUSTEES TO MAKE THE EMPLOYEES OF THE AFORESAID COMPANY, THE SO LE BENEFICIARIES OF THE BOUNTY OF THE SETTLER. THE LD. DR DID NOT EVEN WHIS PER BEFORE US THAT THE SONS/DAUGHTERS OF EMPLOYEES OF SELECT HOLIDAY RESOR TS (P) LTD. FALL WITHIN THE PROVISIONS OF SEC. 13(3) OF THE ACT. THE HONBLE AP EX COURT IN AHMEDABAD RANA CASTE ASSOCIATION V. CIT [1971] 82 ITR 704 AND CIT V. AHMEDABAD RANA CASTE ASSOCIATION [1983] 140 ITR 1 (SC) HELD THAT THE LAW RECOGNISES NO PURPOSE AS CHARITABLE UNLESS IT IS FOR A PUBLIC CHARITY. THAT IS TO SAY, A PURPOSE MUST, IN ORDER TO BE CHARITABLE, BE DIRECTED TO THE BENEFIT OF THE COMMUNITY OR A SECTION OF THE COMMUNITY. THE EXPRESSION 'OBJECT OF GENERAL PUBLIC UTILITY', HOWEVER, IS NOT RESTRICTED TO THE OBJECTS BENEFICIAL TO THE WHOLE O F MANKIND. AN OBJECT BENEFICIAL TO A SECTION OF THE PUBLIC IS AN OBJECT OF GENERAL PUBLIC UTILITY. MOREOVER. THE I.T.A. NO.4727/D/2011 6 REGISTRATION OF A CHARITABLE TRUST UNDER SECTION 12 A OF THE ACT IS NOT AN IDLE OR EMPTY FORMALITY. ONCE THE REGISTRATION UNDER S. 12A (A) OF THE ACT IS GRANTED, THE GRANT OF BENEFIT CANNOT BE DENIED. THE LD. DIT(E) W AS NOT JUSTIFIED IN REFUSING THE BENEFITS WHICH WOULD OTHERWISE ACCRUE UNDER THE REG ISTRATION AS HELD IN HIRALAL BHAGWATI(SUPRA). THE LD. DR DID NOT EVEN WHISPER BE FORE US THAT THE SONS/DAUGHTERS OF EMPLOYEES OF SELECT HOLIDAY RESOR TS (P) LTD. FALL WITHIN THE PROVISIONS OF SEC. 13(3) OF THE ACT. IT CANNOT BE DENIED THAT EVEN THE EMPLOYEES OF SELECT HOLIDAY RESORTS (P) LTD. AND THEIR SONS/DAUGHTERS FORM PART OF THE GENERAL PUBLIC AND MERELY BECAUSE THEY HAVE SOME R ELATIONSHIP WITH THE AUTHOR OF THE TRUST, THEY DO NOT LOSE THEIR PRIMARY IDENTI TY AS MEMBERS OF THE PUBLIC. IN ANY CASE,, THE FACTS AND CIRCUMSTANCES ARE THE SAME AS IN EARLIER YEARS SINCE 1973 AND GRANT TO THE CHILDREN OF THE EMPLOYEES OF THE AFORESAID COMPANY WAS BEING MADE AVAILABLE EVEN IN THE PRECEDING YEARS. I N THESE CIRCUMSTANCES, WE ARE OF THE OPINION THAT THE LD. DIT(E) WAS NOT JUST IFIED IN DENYING THE APPROVAL U/S 80G(5)(VI) OF THE ACT.. 5. EVEN OTHERWISE, REGISTRATION GRANTED TO THE ASSESSEE AS A CHARITABLE TRUST IS SUBSISTING AND NO MATERIAL HAS BEEN PLACED BEFORE U S THAT THE SAME HAS BEEN OR IS INTENDED TO BE WITHDRAWN. IN SUCH CIRCUMSTANCES, RENEWAL OF APPROVAL U/S 80G(5)(VI) OF THE ACT COULD NOT BE DENIED TO THE AS SESSEE AS HELD BY A CO- ORDINATE BENCH IN MAYO COLLEGE OLD BOYS ASSOCIATION (SUPRA).FOLLOWING THIS DECISION, SIMILAR VIEW WAS TAKEN IN ANOTHER DECISIO N DATED 20.4.2011 BY A CO- ORDINATE BENCH IN I.T.A. NO.218/D/09 IN THE CASE OF MAHARISHI DAYANAND EDUCATION SOCIETY AND DECISION DATED 25.2.2011 IN I.T.A. NO.4456/D/09 IN THE CASE OF AGGARWAL SABHA. 6. INDISPUTABLY, IN THE INSTANT CASE, APPROVAL U/S 80G(5)(VI) OF THE ACT WAS GRANTED UNTIL 31.3.2011. AND VIDE APPLICATION DATED 8.3.2011, THE ASSESSEE SOUGHT RENEWAL OF THE APPROVAL FOR FURTHER PERIOD. IN THIS CONNECTION IN THE CASE OF M/S ASSOCIATION FOR ADVOCACY AND LEGAL INITIATI VES, LUCKNOW VS. CIT, THE LUCKNOW BENCH OF ITAT VIDE THEIR ORDER DATED 28.2.2 011 IN I.T.A. I.T.A. NO.4727/D/2011 7 NO.674/LUC./2010 WHILE REFERRING TO OMISSION OF PR OVISO TO SECTION 80G(5)(VI) OF THE ACT W.E.F. 01.10.2009 BY THE FINANCE (NO.2) ACT OF 2009 CONCLUDED THAT THE APPROVAL ONCE GRANTED U/S 80G(5)(VI) SHALL CONTINUE IN PERPETUITY. THE RELEVANT FINDINGS OF THE ITAT READ AS UNDER:- 10. WE HAVE CONSIDERED THE SUBMISSIONS OF BO TH THE PARTIES AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABL E ON RECORD. IN THE INSTANT CASE, IT IS NOT IN DISPUTE THAT TH E ASSESSEE-TRUST IS REGISTERED WITH THE SUB-REGISTRAR, LUCKNOW, HA VING REGISTRATION U/S. 12AA OF THE ACT ALSO WHICH HAS BEEN GRANTED B Y THE LD. COMMISSIONER OF INCOME TAX, LUCKNOW VIDE ORDER DATED 10.2.2010. THE ASSESSEE WAS ALSO GRANTED AP PROVAL U/S. 80G(5)(VI) OF THE ACT W.E.F. 10.3.2000 WHICH WAS VA LID TILL 31.3.2003 AND LATER ON RENEWAL OF THE APPROVAL UNDER THE SAI D SECTION WAS GRANTED VIDE ORDER DATED 9.9.2003 FROM 1.4.200 3 TO 31.3.2006, AGAIN VIDE ORDER DATED 7.12.2006 FROM 1.4.2006 TO 31.3.2008 AND FINALLY VIDE ORDER DATED 16.9.2008 FROM 1.4.2008 TO 31.3.2010 BY THE LD. COMMISSIONER OF INCOME TAX-I, LUCKNOW. THE COPIES OF THE SAID ORDERS ARE PLACED AT PAGES 41, 40 AND 39 RESPE CTIVELY OF THE ASSESSEES PAPER BOOK. EARLIER AS PER PROVISIONS C ONTAINED IN CLAUSE (VI) TO SUB-SECTION (5) OF SECTION 80G , THE APPROVAL WAS TO BE GRANTED BY THE LD. COMMISSIONER OF INCO ME TAX IN ACCORDANCE WITH RULES PRESCRIBED IN RULE 12AA OF THE INCOME-TAX RULE, 1962 AND AS PER THE PROVISO TO SECTIO N 80G(5)(VI) OF THE ACT, THE APPROVAL WAS TO BE RENEWED FROM TIME TO TIME. HOWEVER, CONSIDERING THE HARDSHIP, THE LEGISLATUR E IN ALL ITS WISDOM HAS SOUGHT TO OMIT THIS PROVISO 0N 1.10.2009 VIDE ITS FINANCE (NO.2) ACT, 2009. THEREFORE NOW APPR OVAL ONCE GRANTED SHALL CONTINUE TO BE VALID IN PERPETU ITY. 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, 2 009, THE APPROVAL ONCE GRANTED SHALL CONTINUE TO BE VALID IN P ERPETUITY. THE MEMO EXPLAINING THE PROVISIONS IN FINANCE (NO.2) B ILL, 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 2009-10 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 TH E COMMISSIONER OF INCOME-TAX IN ACCORDANCE WITH THE RULES PRESCRIBED IN RULE 11AA OF THE INCOME-TAX RULES, 19 62. THE PROVISO I.T.A. NO.4727/D/2011 8 TO THIS CLAUSE PROVIDES THAT ANY APPROVAL GRANTED U NDER THIS CLAUSE SHALL HAVE EFFECT FOR SUCH ASSESSMENT YEAR OR YEA RS, NOT EXCEEDING FIVE ASSESSMENT YEARS, AS MAY BE SP ECIFIED IN THE APPROVAL. DUE TO THIS LIMITATION IMPOSED ON THE VALIDI TY OF SUCH APPROVALS, THE APPROVED INSTITUTIONS OR FUNDS HAV E TO BEAR THE HARDSHIP OF GETTING THEIR APPROVALS RENEWED FROM T IME TO TIME. THIS IS UNDULY BURDENSOME FOR THE BONA FIDE INSTITUTIONS OR FUNDS AND ALSO LEADS TO WASTAGE OF TIME AND RESOURC ES OF THE TAX ADMINISTRATION IN RENEWING SUCH APPROVALS IN A ROUT INE MANNER. THEREFORE, IT IS PROPOSED TO OMIT THE PROVISO T O CLAUSE (VI) OF SUB-SECTION (5) OF SECTION 80G TO PROVIDE THAT T HE APPROVAL ONCE GRANTED SHALL CONTINUE TO BE VALID IN PERPETUITY. FURTHER, THE COMMISSIONER WILL ALSO HAVE THE POWER OF WITHDRAW T HE APPROVAL IF THE COMMISSIONER IS SATISFIED THAT THE ACTIV ITIES OF SUCH INSTITUTION OR FUND ARE NOT GENUINE OR ARE NOT BEIN G CARRIED OUT IN ACCORDANCE WITH THE OBJECTS OF THE INSTITUTION OR F UND. THIS AMENDMENT WILL TAKE EFFECT FROM 1ST DAY OF OCTOBER, 2009. ACCORDINGLY, EXISTING APPROVALS EXPIRING ON OR AFTER 1ST OCTOBER, 2009 SHALL BE DEEMED TO. HAVE BEEN 'EXTENDED IN PERPETUITY UNLESS SPECIFICALLY WITHDRAWN. HOWEV ER, IN CASE OF APPROVALS EXPIRING BEFORE 1ST OCTOBER, 2009, THESE WILL HAVE TO BE RENEWED AND ONCE RENEWED THESE SHALL CONTINUE TO BE VALID IN PERPETUITY, UNLESS SPECIFICALLY 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 CIRCUL AR NO.5 BEING EXPLANATORY CIRCULAR FOR FINANCE (NO.2) ACT, 200 9 AND PARA 29.7 OF THE SAID CIRCULAR READS AS UNDER:- 29.7 APPLICABILITY THIS AMENDMENT HAS BEEN MADE APPLICABLE W.E.F. 1 ST OCTOBER 2009. ACCORDINGLY, EXISTING APPROVALS EXPIRING ON OR AFTER 1 ST OCTOBER 2009 WILL BE DEEMED TO HAVE BEEN EXTENDED IN PERPETUITY U NLESS SPECIALLY WITHDRAWN. HOWEVER, IN CASE OF APPROVALS EXPIRING BEFORE 1ST OCTOBER 2009, THESE WILL HAVE TO BE RENEWED AN D ONCE RENEWED THESE SHALL CONTINUE TO BE VALID IN PERPETUITY, 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 I.T.A. NO.4727/D/2011 9 RENEWAL, THE CIT WAS REQUIRED TO DECIDE THE SAME IN ACCORDANCE WITH THE AMENDED PROVISIONS. AS REGARDS TO THE CON TENTION OF THE LD. D.R. THAT THE PROVISIONS CONTAINED IN 293 C OF THE ACT ENABLES THE CIT TO WITHDRAW APPROVAL IS CONCERNED , IT IS NOTICED THAT THE SAID SECTION HAS BEEN INSERTED BY THE FINA NCE (NO.2) ACT, 2009 W.E.F. 1.10.2009 I.E. FROM THE DATE ON WHI CH PROVISIONS OF SECTION 80G(5)(VI) HAS BEEN WITHDRAWN, THE PROVISIO NS 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 UNDER ANY PROVISION OF THIS ACT TO GRANT ANY APP ROVAL TO ANY ASSESSEE, THE CENTRAL GOVERNMENT OR THE BOARD OR SUCH AUTHORITY MAY, NOTWITHSTANDING THAT A PROVISION T O WITHDRAW SUCH APPROVAL HAS NOT BEEN SPECIFICALLY PROVIDED FOR IN SUCH PROVISION, WITHDRAW SUCH APPROVAL AT ANY TIME : PROVIDED THAT THE CENTRAL GOVERNMENT OR BOARD OR IN COME-TAX AUTHORITY SHALL, AFTER GIVING A REASONABLE OPPORTUN ITY OF SHOWING CAUSE AGAINST THE PROPOSED WITHDRAWAL TO THE ASSES SEE CONCERNED, AT ANYTIME, 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 WITHDRAW APPROVAL, HE SHALL ISSUE A SHOW CAUSE NOTI CE AGAINST THE PROPOSED WITHDRAWAL TO THE ASSESSEE CONCERNED AND AFTER GIVING A REASONABLE OPPORTUNITY OF BEING HEARD SHA LL WITHDRAW APPROVAL AFTER RECORDING REASONS FOR DOING SO. T HE USE OF THE WORD SHALL IN THE AFORESAID PROVISO MAKES IT MANDATORY FOR COMMISSIONER OF INCOME-TAX TO ISSUE A SHOW CAUSE NOTICE TO THE ASSESSEE AGAINST THE PROPOSED WITHDRAWAL OF APPROV AL GRANTED U/S. 80G(5) OF THE ACT. HOWEVER, IN THE PRESENT CASE NO SUCH SHOW CAUSE NOTICE HAS BEEN ISSUED TO THE ASSESSEE. THER EFORE, WE DO NOT SEE ANY MERIT IN THIS CONTENTION OF THE LAD THA T THE PROVISIONS CONTAINED IN SECTION 293C OF THE ACT ENABLES THE LD. COMMISSIONER OF INCOME TAX TO WITHDRAW APPROV AL. WE, THEREFORE, CONSIDERING THE TOTALITY OF THE FACTS AS DISCUSSED HEREINABOVE ARE OF THE VIEW THAT THE LD. COMMISS IONER OF INCOME TAX WAS NOT JUSTIFIED IN WITHDRAWING APPROVAL ONC E GRANTED BECAUSE THE LEGISLATURE IN ALL ITS WISDOM HA S SOUGHT TO OMIT THIS PROVISO TO SECTION 80G(5)(VI) OF THE ACT A ND AFTER OMISSION OF THE SAID PROVISO, THE APPROVAL ONCE GRANTED SHALL CONTINUE TO BE VALID IN PERPETUITY UNLESS AND UNTIL A SHOW CAUSE NOTICE IS ISSUED BY THE CONCERNED CIT SHOWING HIS INTE NTION TO WITHDRAW ALREADY GRANTED SUCH APPROVAL. HOWEVE R, IN THE I.T.A. NO.4727/D/2011 10 INSTANCE CASE, THE CIT WITHOUT ISSUING ANY SUCH NOTICE HAS WITHDRAWN APPROVAL. WE, THEREFORE, SET ASIDE TH E IMPUGNED ORDER OF THE LD. COMMISSIONER OF INCOME TAX AND AC CORDINGLY APPROVAL U/S. 80G(5) OF THE ACT ALREADY GRANT ED TO THE ASSESSEE SHALL CONTINUE UNLESS AND UNTIL THE CONCERNED AUTHORITY TAKE APPROPRIATE ACTION IN ACCORDANCE WI TH LAW. 6.1 FOLLOWING THE AFORESAID DECISION ,KOLKATA B ENCH IN THE CASE OF LIONS CLUB CALCUTTA HASTINGS VS. DIT(E) IN I.T.A. NO.2019/KOL/ 2010 CONCLUDED THAT THE RENEWAL OF EXEMPTION U/S 80G(5)(VI) CANNOT BE DENIE D TO THE ASSESSEE, HAVING VALID APPROVAL UPTO 31 ST MARCH, 2010 . 6.2 THUS, IN THE LIGHT OF VIEW TAKEN BY THE ITAT IN THEIR AFORESAID DECISIONS ALSO, ESPECIALLY WHEN THE ASSESSEE TRUST BEFORE US HAD ALREADY BEEN GRANTED APPROVAL U/S 80G(5)(VI) OF THE ACT UNTIL 31 ST MARCH, 2011, THE DIT(E) WAS NOT JUSTIFIED IN REFUSING THE APPROVAL. 7. IN VIEW OF THE FOREGOING, ESPECIALLY WHEN T HE LD. DR DID NOT BRING TO OUR NOTICE ANY CONTRARY DECISION OR ANY OTHER MATERIAL JUSTIFYING DENIAL OF APPROVAL, WE HAVE NO HESITATION IN CONCLUDING THAT THE LD. D IT(E) WAS NOT JUSTIFIED IN DENYING RENEWAL OF APPROVAL U/S 80G(5)(VI) OF THE A CT. THEREFORE, GROUND NOS.1 TO 3 IN THE APPEAL ARE ALLOWED. AS A COROLLARY, GROUND NO.4 IN THE APPEAL BECOMES ACADEMIC AND DOES NOT SURVIVE FOR ADJUDICATION , P ARTICULARLY WHEN THE LD. AR ON BEHALF OF THE ASSESSEE TRUST DID NOT MAKE ANY SUBMI SSIONS BEFORE US ON THIS GROUND. THEREFORE, GROUND NO.4 OF THE APPEAL IS DI SMISSED. 8. NO OTHER SUBMISSION OR ARGUMENT WAS MADE BEFOR E US. 9.. IN RESULT, APPEAL IS PARTLY ALLOWED. ORDER PRONOUNCED IN OPEN COURT SD/- SD/- (R.P. TOLANI) (A.N. PAHU JA) JUDICIAL MEMBER ACCOUNTANT MEMBER I.T.A. NO.4727/D/2011 11 COPY OF THE ORDER FORWARDED TO :- 1. INDER SHARMA FOUNDATION SUITE 101-103, FIRST F LOOR, KANCHANJUNGA BUILDING,NEW DELHI 2. DIRECTOR OF INCOME TAX (EXEMPTION), NEW DELHI. 3. THE DR, ITAT,C BENCH, NEW DELHI 4. GUARD FILE. BY ORDER, DEPUTY / ASSTT.REGISTRAR I TAT, DELHI