Unniti Foundation India, New Delhi V. DIT (E), New Delhi

ITA 564/DEL/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 74336 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 1 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-03-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: H
• Next Hearing Date: 30-12-2013
• Assessment Year: 2009-2010
• Appeal Filed On: 02-02-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R S MEETA
• Assessee Lawyers: UPENDER TANEJA
• Keywords: Charitable institution
• Section: 80G

Judgement Text

INCOME TAX APPELLATE TRIBUNAL DELHI BENCH H: NEW DELHI BEFORE SHRI J. S REDDY, ACCOUNTANT MEMBER AND SHRI A. T. VARKEY, JUDICIAL MEMBER ITA NO. 564/DEL/2011 (ASSESSMENT YEAR: 2009 - 10) UNNITI FOUNDATION INDIA, 140, SUNDER NAGAR, NEW DELHI PAN AAATU0 077D VS. DIT( E), AAYAKAR BHAWAN, LAXMI NAGAR, DISTT CENTER, NEW DELHI (APPELLANT) (RESPONDENT) APPELLANT BY : UPENDER TANEJA, FCA RESPONDENT BY: R.S. MEETA, CIT DR O R D E R PER A. T. VARKEY , JUDICIAL MEMBER THIS APPEAL IS PREFERRED BY THE ASSESSEE AGAINST THE ORDER OF THE LD DIT (EXEMPTIONS), NEW DELHI DATED 29.11.2010 FOR THE ASSESSMENT YEAR 2009 - 10. 2. THE GROUND OF APPEAL IS AS FOLLOWS: - THE LEARNED DIT(E), ASSESSING AUTHORITY ERRED IN REJECTING THE APPROVAL OF DEDUCTI ON U/S 80G(5) ( VI) OF THE INCOME TAX ACT 1961. 3. APROPOS THE SOLE GROUND RAISED BY THE ASSESSEE IS THAT ITS APPLICATION DATED 24.05.2010 IN FORM NO. 10G SEEKING EXCEPTION U/S 8 0 G OF THE INCOME TAX ACT, 1961 (HEREINAFTER THE ACT) WAS REJECTED. 4. BRIEF FACTS OF THE CASE IS THAT THE APPELLANT IS A TRUST WHICH WAS FORMED IN THE YEAR 1993 ; AND ITS OBJECTIVE IS TO CONTRIBUTE TO THE ALLEVIATION OF POVERTY IN INDIA, IRRESPECTIVE OF GENDER, CASTE OR CREED AND IN PURSUIT OF THIS GOAL THE TRUST WILL DO THE FOLLO WING: - 1. GIVE GRANTS TO INDIVIDUALS, SPECIALLY GIRLS AND WOMEN, FOR THE PURPOSE OF ENHANCING SKILLS AND OPPORTUNITIES FOR PRODUCTIVE ENDEAVORS. 2. HELP FINANCE POVERTY ALLEVIATION PROJECTS. 3. HELP FINANCE NEW ORGANIZATION OR STRENGTHEN EXISTING ONES PURSUING THE AIM OF POVERTY ALLEVIATION. 4. FINANCE OR CARRY OUT POLICY - RELEVANT RESEARCH, CONSISTENT WITH THE POVERTY ALLEVIATION OBJECTIVE. AND THE TRUST WAS DECLARE D T O BE A PUBLIC CHARITABLE TRUST. 5. THE APPELLANT FILE D AN APPLICATION ON 24.05.2010 IN FORM NO. 10G SEEKING EXEMPTION U/S 80G OF THE ACT BEFORE THE LD D IT(E). HOWEVER, BY A LETTER DATED PAGE NO. 2 ITA NO. 564/DEL/2011 29.11.2010 , LD DIT(E) DENIED RENEWAL OF EXEMPTION SOUGHT U/S 80G OF THE ACT AND REJECTED THE APPLICATION FOR RENEWAL. 6. AGGRIEVED BY THE SAID REJECTION OF ITS APPLICATION FOR RENEWAL BY THE LD DIT(E) THE APPELLANT HAS PREFERRED AN APPEAL BEFORE US. 7. LD AR SUBMITTED THAT VIDE LETTER DATED 15.11.2010, THE LD DIT(E) ASKED THE ASSESSEE TO PROVIDE THE DETAILS OF THE GRANTS DISTRIBUTED BY IT , OUT OF THE ACCU MULATED INCOME OF CURRENT YEAR RECEIPT AND ENQUIRED WHETHER THE DONE E SOCIETIES ALSO HAVE THE SAME OBJECTS/ AIMS AS THAT OF THE ASSESSEE OR NOT. IN RESPONSE TO THE SAID QUERY , THE ASSESSEE VIDE LETTER DATED 26.11.2010 INFORMED DIT(E) THAT THE GRANT WAS GIV EN TO THOSE ORGANIZATIONS WHICH WERE PURSUING THE SAME OBJECTS AS THAT OF THE ASSESSEE ( UNNITI FOUNDATION ) . HOWEVER , THE LD DIT(E) REJECTED THE APPLICATION FOR RENEWAL OF EXEMPTION U/S 80G ON THE GROUND THAT THE APPELLANT HAS NOT CARRIED OUT ANY CHARITABLE ACTIVITY OTHER THAN GIVING GRANTS TO SIMILAR ORGANIZATION AND ALSO OBSERVED THAT THE ASSESSEE TRUST HAS NOT BEEN INVOLVE D DIRECTLY IN DOING ANY CHARITABLE ACTIVITIES. THIS REASON RENDERED BY THE LD DIT(E) ACCORDING TO THE LD AR IS PER - SE INVALID. ON THE O THER HAND THE LD DR SUPPORTED THE DECISION OF THE DIT(E). 8. FURTHER ACCORDING TO THE LD AR THE ASSESSEE IS REGISTERED U/S 12A(A) OF THE ACT AND THE REGISTRATION WAS GRANTED TO IT BY THE LD DIT(E) VIDE ORDER DATED 31.01.1994. THE LD AR ALSO SUBMITTED THAT THEY HAVE FCRA APPROVAL CERTIFICATE REGISTERED U/S 6(1) FROM THE YEAR 1995 ONWARDS AND THE SAME WAS REGISTERED UNDER FOREIGN CONTRIBUTION (REGULATION) ACT, 1976 ; AND IT WAS ALSO ENJOYING REGISTRATION U/S 80G OF THE ACT UP TO 31.03.2009 WHICH WAS GRANTED T O IT VIDE ORDER DATED 22.08.2006 FROM THE DIT(E). THEREFORE, THE LD AR PLEA D S THAT THERE WAS NO JUSTIFICATION FOR THE LD DIT(E) TO DENY RENEWAL OF THE EXEMPTION U/S 80G OF THE ACT AND THE REASONING THAT THE ASSESSEE IS NOT ITSELF DOING ANY CHARITY OTHER TH AN DONATION TO LIKE MINDED CHARITABLE ORGANIZATION HAS WRONGLY REJECTED THE APPLICATION FOR EXEMPTION U/S 80G. ACCORDINGLY , THE LD AR PLEADS THAT THE IMPUGNED ORDER IS AGAINST THE LAW LAID BY THE JURISDICTIONAL HIGH COURT IN CIT VS. SHRI RAM MEMORIAL FOUND ATION (2004) 269 ITR 35 AND THEREFORE PAYS THAT THE IMPUGNED ORDER MAY BE SET - ASIDE AND EXEMPTION BE GRANTED TO IT. ON THE OTHER HAND, THE LD DR SUPPORTED THE DECISION OF THE LD DIT(E) AND EXPRESSED HIS DOUBT PAGE NO. 3 ITA NO. 564/DEL/2011 ABOUT THE CURRENT STATUS OF ASSESSEES CLAIM OF REGISTRATION U/S 12A(A) OF THE ACT AND SUBMITTED THAT THE SAME NEED TO BE VERIFIED BY THE LD DIT(E) . 10 . WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RECORDS AND THE CASE LAWS CITED BEFORE US. THE MAIN REASON FOR DENYING THE RENEWAL OF EXEMPTION U/S 80G WAS ON THE GROUND THAT THE ASSESSEE HAS NOT CARRIED OUT ANY CHARITABLE ACTIVITY OTHER THAN GIVING GRANTS TO SIMILAR ORGANIZATION AND ALSO OBSERVED THAT THE ASSESSEE TRUST HAS NOT INVOLVED ITSELF DIRECTLY IN DOING ANY CHARITABLE ACTIVITIES. THE SAID REASON CANNOT BE COUNTENANCED IN THE LIGHT OF THE JURISDICTION AL HIGH COURTS DECISION IN CIT VS. SHRI RAM MEMORIAL FOUNDATION (2004) 269 ITR 35 , WHEREIN, IT WAS HELD THAT DONATION TO ANOTHER CHARITABLE TRUST AMOUNTS TO APPLICATION OF INCOME, IF THE PURPO SE FOR WHICH IT IS DONATED IS CONSISTENT WITH THE OBJECTS OF THE DONOR TRUST. 11 . IN CIT VS. SARLADEVI SARABHAI TRUST 172 ITR 698 ( GUJ ), THE HONBLE HIGH COURT HAS EXTRACTED THE CBDT INSTRUCTION NO. 1132, DATED JANUARY 5, 1978 AND HAS HELD THAT: - .THI S QUESTION IS ALSO FULLY COVERED BY THE INSTRUCTION ISSUED TO ALL COMMISSIONERS BY THE CBDT ON JANUARY 5, 1978, TO WHICH WE HAVE MADE A REFERENCE EARLIER. THE FULL TEXT OF THE SAID INSTRUCTION NO. 1132 READS AS UNDER: A QUESTION HAS BEEN RAISED REGARDING THE AVAILABILITY OF EXEMPTION IN THE HANDS OF CHARITABLE TRUSTS OF AMOUNTS PAID AS DONATION TO OTHER CHARITABLE TRUSTS. THE ISSUE HAS BEEN CONSIDERED BY THE BOARD AND IT HAS BEEN DECIDED THAT AS THE LAW STANDS AS PRESENT, THE PAYMENT OF A SUM OF ONE CHARI TABLE TRUST TO ANOTHER FOR UTILIZATION BY THE DONE TRUST TOWARDS ITS CHARITABLE OBJECTS IS PROPER APPLICATION OF INCOME FOR CHARITABLY PURPOSE IN THE HANDS OF THE DONE TRUST; AND THE DONOR TRUST WILL NOT LOSE EXEMPTION UNDER SECTION 11 OF THE INCOME - TAX AC T, 1961, MERELY BECAUSE THE DONE TRUST DID NOT SPEND THE DONATION DURING THE YEAR OF RECEIPT ITSELF. THE ABOVE POSITION MAY KINDLY BE BROUGHT TO BE NOTICE OF ALL OFFICERS WORKING IN YOUR CHARGE. THIS INSTRUCTION SHOWS THAT APART FROM THE LEGAL POSITION T HAT MAY BE EMANATING FROM VARIOUS PROVISIONS OF THE ACT, THE CENTRAL BOARD OF DIRECTOR TAXES ITSELF HAS ISSUED A CLEAR - CUT GUIDELINE TO ALL THE COMMISSIONERS OF INCOME - TAX THAT A CHARITABLE TRUST WILL NOT LOSE EXEMPTION UNDER SECTION 11 OF THE ACT IF IT PA SSES A SUM OF MONEY TO ANOTHER CHARITABLE TRUST FOR UTILIZATION BY THE DONE TRUST TOWARDS ITS CHARITABLE PURPOSES AND THAT IT SHALL BE PROPER UTLISATION OF MONEY BY THE DONOR TRUST FOR A CHARITABLE PURPOSE. WE AGREE WITH MR. PATEL FOR THE ASSESSEE THAT THE SAID INSTRUCTION SQUARELY COVERS THE FACTS OF THE PAGE NO. 4 ITA NO. 564/DEL/2011 PRESENT CASE. IT CANNOT BE DISPUTED THAT THE DONOR TRUST HAD MAD PAYMENT OF THE SUM OF MONEY COVERED BY THE DONATION TO ANOTHER CHARITABLE TRUST, VIZ., THE DONE TRUST AND ALSO IT WAS FOR UTILIZATION BY THE DONE TRUST FOR ITS CHARITABLE PURPOSE. UTILISATION DOES NOT MEAN THAT THE ENTIRE AMOUNT HAS TO BE SPENT FORTHWITH AND THAT IT CANNOT BE KEPT AS CORPUS AND ITS RECURRING INCOME UTILIZED FOR CHARITABLE PURPOSES. IN ANY CASE, SO FAR AS THE DONOR TRUST IS CON CERNED, ONCE IT MAKES PAYMENT OF THE DONATED AMOUNT TO THE DONE TRUST WHICH IS A RELIGIOUS AND CHARITABLE TRUST WHICH HAS TO UTILIZE THE DONATION FOR ITS OWN PURPOSES, IT WOULD BE A PROPER APPLICATION OF THE INCOME FOR CHARITABLE AND RELIGIOUS PURPOSES . 12. THE REASON GIVEN BY THE LD DIT(E) TO DENY EXEMPTION TO THE ASSESSEE US/ 80(G) OF THE ACT, IS NOT VALID IN THE EYES OF LAW I N THE LIGHT OF THE AFORESAID DECISIONS AND THEREFORE WE SET - ASIDE THE SAME. HOWEVER SINCE THE LD AR HAS CATEGORICALLY STATED BE FORE US THAT ITS REGISTRATION U/S 12A(A) HAS NOT BEEN WITHDRAWN OR CANCELLED AS ON DATE AND SINCE THE LD DR EXPRESSED HIS DOUBT REGARDING THE SAID STATEMENT OF THE AR, WE DIRECT THE LD DIT(E) TO VERIFY THE CLAIM OF THE ASSESSEE REGARDING REGISTRATION U/S 12A(A) BEFORE ADJUDICATING AND TAKE THAT ASPECT ALSO WHILE DECIDING THE RENEWAL APPLICATION SUBMITTED BY THE ASSESSEE FOR EXEMPTION U/S 80G OF THE ACT . 13 . IN THE RESULT THE APPEAL PREFERRED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE. ORDER PRON OUNCED IN THE OPEN COURT ON 14 . 03 .2014. - SD / - - SD / - ( J. S REDDY) (A. T. VARKEY) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED :14 / 03 / 2014 A K KEOT COPY FORWARDED TO 1. APPLICANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI