Mela Singh Memorial Trust, Yamunanagar V. CIT(E), Chandigarh

ITA 987/CHANDI/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 4250 (ITAT-CHANDIGARH)
• Duration Of Justice: 9 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-05-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: misc
• Appeal Filed On: 12-07-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G S PHANI KISHORE
• Keywords: Depreciation; Charitable institution; Onus to prove; Set aside
• Section: 143(3); 80G; 12A; 12AA; 6; 12; 2; 11

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCH B , CHANDIGARH , !' # $ % &' , BEFORE: SHRI SANJAY GARG, JUDICIAL MEMBER AND SMT.ANNAPURNA GUPTA, ACCOUNTANT MEMBER ./ ITA NO.987/CHD/2018 ( UNDER SECTION 80G(5)) MELA SINGH MEMORIAL TRUST, YAMUNA NAGAR. THE C.I.T.(E), CHANDIGARH. ./PAN NO: AABTM9970A /ASSESSEE BY : SHRI SUDHIR SEHGAL, ADV. / REVENUE BY : SHRI G.S.PHANI KISHORE, CIT DR /DATE OF HEARING : 08.05.2019 !'#$%& /DATE OF PRONOUNCEMENT:10.05.2019 /ORDER PER ANNAPURNA GUPTA, ACCOUNTANT MEMBER THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSESS EE AGAINST THE ORDER DATED 31.5.2018 OF THE COMMISSION ER OF INCOME TAX (EXEMPTIONS), CHANDIGARH [HEREINAFTER RE FERRED TO AS CIT(E)] AGAINST THE DENIAL OF APPROVAL U/S 80G(5 )(VI) OF THE INCOME TAX ACT,1961(HEREINAFTER REFERRED TO AS ACT ). 2. BRIEF FACTS OF THE CASE ARE THAT AN APPLICATION IN FORM 10G WAS FILED BY THE APPLICANT/ASSESSEE ON ITA NO.987/CHD/2018 U/S 80G(5) 2 21.11.2017 TO THE CIT(E), SEEKING APPROVAL U/S 80G OF THE ACT. THE CIT(E) NOTED THAT THE APPLICANT/ASSESS EE HAD BEEN GRANTED REGISTRATION AS A CHARITABLE TRUST U/S 12AA OF THE ACT VIDE ORDER DATED 18.9.2008 BY THE CIT, PANCHKULA. HE FURTHER NOTED THAT THE APPLICANT/ASSESSEE WAS RUNNING TWO INSTITUTES UNDER THE NAME AND STYLE GURU NANAK INSTITUTE OF TECHNOLOGY AND GURU NANAK INSTITUTE OF MANAGEMENT AND THAT ITS STATED AIMS AND OBJECTS WERE TO PROMOT E AND DEVELOP EDUCATION, EMPLOYMENT, SCIENCE & TECHNOLOGY: TO ESTABLISH SCHOOL(S) COLLEGES, INSTITUTIONS, UNIVERS ITY, CHARITABLE HOSPITALS AND OTHER INSTITUTIONS, AGRICU LTURE AND ALLIED RESEARCH CENTRES INCLUDING ORGANIC FARMING, ENTREPRENEURSHIP DEVELOPMENT, EDUCATIONAL ORGANIZAT IONS AND OPENING HOSPITALS FOR WELFARE OF THE SOCIETY; T O COLLABORATE AND COOPERATE WITH OTHER PROFESSIONAL B ODIES, SOCIETIES AND WITH EDUCATIONAL AND RESEARCH INSTITU TIONS HAVING SIMILAR OBJECTS. THEREAFTER NECESSARY INFORM ATION WAS CALLED FOR TO EXAMINE THE ASSESS/APPLICANTS CLAIM F OR APPROVAL U/S 80G(5) OF THE ACT AND THE LD.CIT(E) F OUND THAT IT WAS NOT A FIT CASE FOR GRANTING APPROVAL FOR THE FOLLOWING REASONS: ITA NO.987/CHD/2018 U/S 80G(5) 3 A) THAT THE APPLICANT/ASSESSEE WAS HAVING AN ASSURE D FEES STRUCTURE AND TAKING ANY OTHER RECEIPT APART FROM WHAT HAS BEEN ALLOWED BY REGULATING AGENCIES WOULD HAVE A BEARING ON ITS CHARITABLE CHARACTER. B) THAT IT HAD A LARGE ASSET BASE WHICH DID NOT JUS TIFY TAKING DONATION ,HAVING NEVER SOUGHT DONATIONS IN T HE PAST. C) THAT THE APPLICANT ACCEPTED FEES IN CASH WHICH W AS NOT DEPOSITED IN BANK. D) THAT IT INTENDED TO RUN A VARIDH ASHRAM WHICH WA S NOT AS PER ITS STATED OBJECT. THE RELEVANT FINDINGS OF THE LD.CIT(E) AT PARAS 8 TO 10 OF HIS ORDER ARE AS UNDER: 8. ON 28.05.2018 SH. GAURAV GANDHI, C.A. COUNSEL F OR THE APPLICANT ATTENDED THIS OFFICE AND FILED REPLY IN RESPONSE TO ABOVE NOTED QUERIES. AS REGARD THE RATIONALE FOR DONATIONS WHEN THERE IS NO HISTORY OF DONATIONS IN THE PAST, APPLICANT STATED THAT IT IS RUNNING EDUCATIONAL INSTITUTIONS AND RECEIVING FEES AND DEVELOPMENT FUND FROM STUDENT AN D UPTO DATE THE SAME WAS SUFFICIENT ENOUGH TO MEET THE REL ATING EXPENSES BUT DURING THE LAST F.Y. APPLICANT HAS A D EFICIT OF RS.45.46 LAKHS AND TO COVER THIS DEFICIT AND FUTURE DEFICIT IT REQUIRES DONATIONS. THIS CONTENTION OF THE APPLICAN T IS NOT ACCEPTABLE BECAUSE ALLOWING DONATIONS TO PROFESSION AL INSTITUTIONS WOULD LEAD TO AN OPEN ACKNOWLEDGEMENT/ACCEPTANCE IN RESPECT OF CAPITATION FEES ETC. A FACET THAT HAS BEEN NEGATED BY THE JUDICIALL AUTHORITIES. THIS CANT BE ALLOWED IN A CASE WHICH HAS BEEN OPER ATING ON THE BASIS OF AN ASSURED FEE STRUCTURE. FURTHER THE APPLICANT FAILED TO HIGHLIGHT THE COGENT REASON OF SUDDEN DEF ICIT IN THE F.Y. 2016-17, WHEN IN THE PRECEEDING YEARS APPLICAN T WAS INTO HUGE INCOME/PROFITS. THE PREDOMINANT PURPOSE O F THE ITA NO.987/CHD/2018 U/S 80G(5) 4 APPLICANT HAS BEEN RUNNING EDUCATION AND ENGINEERIN G COURSES. ALLOWING EXEMPTION OF DONATIONS TO SUCH EN TITIES MAY BE CONTRARY TO THUMBS DOWN ACCORDED BY THE JUDICIARY ON SUCH PRACTICES IN CASE OF INSTITUTI ONS IMPARTIN G PROFESSIONAL DEGREES. THE INSTITUTION AS IT IS BASE D ON A FEE STRUCTURE AND TAKING OF ANY OTHER RECEIPTS APART FR OM WHAT HAS BEEN ALLOWED BY THE REGULATING AGENCIES MAY HAV E A BEARING ON THEIR CLAIMED CHARITABLE PURPOSE ON THE BASIS OF WHICH 12AA REGISTRATION HAS BEEN GIVEN. THE FACT TH AT THE APPLICANT HAS ALREADY CREATED LARGE ASSET BASE (FIN ANCED BY THE PUBLIC MONEY OF THE SOCIETY) AS ALSO THAT IT HA S AMPLE CURRENT ASSETS FURTHER IMPINGE ON THE RATIONALE FOR SEEKING APPROVAL U/S 80G. THE ISSUE IS ALSO IMPINGED BY THE FACT THAT APPLICANT IS IN PRACTICE OF KEEPING THE RECEIPTS OU T OF THE BANKING CHANNEL AND IN RESPONSE TO SPECIFIC QUERY I N THIS REGARD APPLICANT HAS MERELY STATED STUDENTS ARE COM ING FROM RURAL BACKGROUND AND THEIR PARENTS BEING AGRICULTUR IST THEY FIND IT EASY TO DEAL IN CASH THIS CONTENTION IS CER TAINLY NOT ACCEPTABLE WHEN THE RECEIPTS OF THE APPLICANT ARE I N CRORES. 9. FURTHER, THE CONTENTION O THE APPLICANT THAT IT INTENDS TO CONSTRUCT VRIDH ASHRAM FOR WHOM IT HAS ASSURED DONA TIONS BY NRIS AND CORPORATE GROUP UNDER CSR IS NOT ACCEPTABL E IN THE ABSENCE OF ANY CONFIRMATIONS FROM THE NRI CONCERNED AND II: AT ALL THE CONTENTION OF THE APPLICANT IS ACCEPTED THE N ALSO APPLICANT IS NOT LEGALLY ENTITLED TO TAKE DONATIONS FROM OUTSIDE INDIA IN THE ABSENCE OF ANY FCRA CLEARANCE/REGISTRA TION, IT'S ALSO CLEAR THAT OPENING OF VRIDH AASHRAM IS NOT AS PER THE OBJECTS SPECIFIED IN THE MEMORANDUM OF THE APPLICAN T TRUST. THE ASSESSEE HAS CLAIMED THAT IT IS IN THE PROCESS OF U PDATING ITS MEMORANDUM TO INCLUDE THIS AS AN OBJECT, IN THE PRE SENT HOWEVER, THE ABSENCE OF THE OBJECT TO OPEN A VRIDH AASHRAM IMPINGES ON THE QUEST FOR ATTAINING APPROVAL, FOR E XEMPTION OF DONATIONS. MOREOVER THE SAME WOULD ALSO ENTAIL A RE -LOOK INTO REGISTRATION GRANTED EARLIER U/S 12AA AS PER THE PR OVISIONS OF THE ACT. MOREOVER THE CLAIMS THAT ONE NRI. WHO IS H AVING HIS ANCESTRAL ROOTS IN THE AREA VISITED US CAMPUS AND S HOWED INTEREST IN OPENING OF A. VRIDH AASHRAM ON THE VACA NT LAND OF THE APPLICANT TRUST ARE NOT BACKED UP BY ANY DOCUME NTARY EVIDENCE. THIS INTENTION OF THE APPLICANT IS BEYOND THE SCOPE OF THE OBJECTS ON THE BASIS OF WHICH APPLICANT WAS GIV EN THE REGISTRATION U/S 12AA AND TO THAT EXTENT NOT TENABL E FOR THE PRESENT. ITA NO.987/CHD/2018 U/S 80G(5) 5 10. KEEPING IN VIEW ALL OF ABOVE IT IS SAFE TO CONC LUDE THAT APPLICANT HAS FAILED TO DISCHARGE ITS ONUS TO PROVE ITS CLAIM FOR APPROVAL U/S 80G. THE REAL PURPOSE FOR SEEKING EXEM PTIONS TO DONATIONS I.E. CONSTRUCTION OF VRIDH AASHRAM IS N OT BROUGHT OUT IN THE ABSENCE OF THE PROPOSED ACTIVITY FROM THE OB JECTS CLAUSE AS ALSO THE LACK OF FCRA CLEARANCE FOR SEEKING DONA TIONS FROM ABROAD. IN THE LIGHT OF THE ABOVE, I HAVE NO OPTION BUT TO PROCEED ON MERITS AND DENY THE APPROVAL TO THE APPLICANT U/ S 80G OF INCOME TAX ACT, 1961. 4. AGGRIEVED BY THE SAME THE ASSESSEE HAS COME UP I N APPEAL BEFORE US RAISING THE FOLLOWING GROUNDS: 1. THAT THE CIT (EXEMPTION), CHANDIGARH HAS ERRED IN REJECTING THE APPLICATION FOR GRANT OF REGISTRATION U/S 80G OF THE ACT. ON THE BASIS THAT THE ASSESSEE IS CHARGING FEES FOR RUNNING THE EDUCATIONAL INSTITUTI ON AND IN THE CIRCUMSTANCES DOES NOT REQUIRE FUNDS OR HAS NOT RECEIVED THE DONATIONS IN THE PAST. THE CONDITION F OR GRANTING EXEMPTION U/S 80G IS THAT ASSESSEE IS GENUINELY WORKING FOR CHARITABLE PURPOSES AND HAS PROVIDED ALL THE NECESSARY DOCUMENTS AS SPECIFIED I N THE LAW. PROVIDING EDUCATION IS CHARITABLE ACTIVITY AS DEFINED U/S 2(15) AND DOES NOT CHANGE INTO NON CHARITABLE ACTIVITY EVEN IF FEES IS CHARGED PROVIDE D IT IS NOT FOR THE PURPOSE OF PROFITS. THE ASSESSEE HAS COMPLIED WITH ALL THE CONDITIONS OF THE LAW. 2. THAT THE REJECTION OF REGISTRATION U/S 80G BY TH E CIT (EXEMPTION) ON THE GROUND OF ADDITION IN FIXED ASSE TS AND INCREASING THE FIXED ASSET BASE IS NOT A VALID OBJECTION AS THESE FIXED ASSETS ARE BEING USED ONLY FOR THE PURPOSES OF EDUCATIONAL INSTITUTIONS AND IMPART ING EDUCATION TO THE STUDENTS WHICH ARE CHARITABLE IN NATURE AS DEFINED U/S 2(15) AND THUS IS ALSO APPLICATION OF THE FUNDS FOR CHARITABLE PURPOSE AND HAS BEEN ALLOWED TO THE ASSESSEE AS APPLICATION OF CHARITABLE PURPOSES IN VARIOUS INCOME TAX ASSESSMEN TS. 3. THAT THE FINDING OF CIT (EXEMPTIONS) ABOUT TAKIN G BENEFIT IS TOTALLY BAD IN LAW AS THE SAME HAD BEEN CLAIMED FROM EH BALANCE SHEET WHICH HAS BEEN PREPARED AS PER ACCOUNTING NORMS(WHICH REQUIRES COMPULSORY CHARGING OF ITA NO.987/CHD/2018 U/S 80G(5) 6 DEPRECIATION). BUT THE DEPRECIATION WAS NOT TAKEN A S APPLICATION OF FUNDS IN STATEMENT OF ASSESSABLE INC OME FOR CALCULATION OF APPLICATION OF INCOME. THUS ASSESSEE HAS COMPLIED WITH THE AMENDMENT IN LAW AS ON 01.04.2015 . 4. THAT THE OBJECTION OF THE CIT (EXEMPTION) AS PER PARA 6 OF THE ORDER WITH REGARD TO THE PURPOSE OF SEEKING APPROVAL AFTER THE GAP OF 10 YEARS IS BAD IN LAW AS NO TIME LIMIT HAS BEEN PRESCRIBED UNDER LAW FOR APPLIC ATION AND QUERY REGARDING THE SAME WAS RAISED FROM THE ASSESSEE. 5. THAT THE OBJECTION OF THE CIT (EXEMPTION) WITH R EGARD TO NON SUBMISSION OF ASSURANCES FROM CORPORATE SECT OR AND NRL DONEES IS DEVOID OF ANY VALID REASONS AND WHICH IS NOT A REQUIREMENT FOR EXEMPTION U/S 80G GRANTING. 6. THAT THE DENIAL OF REGISTRATION U/S 80G IS AGAIN ST THE FACTS AND CIRCUMSTANCES OF THE CASE. 7. THAT THE APPELLANT CRAVES FOR PERMISSION TO ADD, DELETE OR AMEND THE GROUNDS OF APPEAL BEFORE OR AT THE TIM E OF HEARING OF APPEAL. 5. AT THE OUTSET IT WAS ADMITTED BY THE LD. COUNSEL FOR ASSESSEE THAT ALL THE GROUNDS EXCEPT GROUND NO.6 WE RE ARGUMENTATIVE AND, THEREFORE, ONLY GROUND NO.6 WAS TO BE TAKEN UP FOR ADJUDICATION. THEREAFTER THE LD. COUNS EL FOR ASSESSEE CONTENDED THAT NONE OF THE REASONS GIVEN B Y THE CIT(E) WERE VALID FOR DENIAL OF APPROVAL U/S 80G(5) (VI) OF THE ACT. IT WAS POINTED OUT THAT ONLY THE CHARITABLE CH ARACTER OF THE ASSESSEE TRUST WAS TO BE LOOKED INTO FOR THE PU RPOSES OF GRANT OF APPROVAL AND THIS IN THE PRESENT CASE WAS NOT IN DISPUTE SINCE THE APPLICANT/ASSESSEE HAD BEEN GRANT ED ITA NO.987/CHD/2018 U/S 80G(5) 7 REGISTRATION AS A CHARITABLE TRUST U/S 12AA OF THE ACT AND WAS BEING ASSESSED AS CARRYING OUT CHARITABLE ACTIV ITIES FOR ASSESSMENT YEAR 2014-15 U/S 143(3) OF THE ACT. THE LD. COUNSEL FOR ASSESSEE CONTENDED THAT THE APPROVAL CO ULD NOT HAVE BEEN DENIED FOR THE REASON THAT IT WAS CHARGI NG FEES FOR RUNNING EDUCATIONAL INSTITUTE SINCE IT IS OBVIOUS T HAT CARRYING OUT ANY ACTIVITIES INVOLVED INCURRING COST BOTH CAP ITAL AS WELL AS REVENUE FOR WHICH FEES HAVE TO BE CHARGED. THE L D. COUNSEL FOR ASSESSEE CONTENDED THAT THE APPLICANT/ASSESSEE NEED NOT TO JUSTIFY TAKING DONATIONS FOR THE PURPOSE OF GRAN T OF APPROVAL U/S 80G(5)(VI) OF THE ACT AND, THEREFORE, THE DENIAL OF APPROVAL FOR THE REASON THAT SINCE IT HAD A LARG E ASSET BASE THERE WAS NO VALID REASON FOR TAKING DONATION, WAS NOT JUSTIFIED. THE LD. COUNSEL FOR ASSESSEE FURTHER POI NTED OUT THAT THE DENIAL OF APPROVAL FOR THE REASON THAT THE APPLICANT/ASSESSEE INTENDED OPENING A VRIDH ASHRAM WHICH WAS NOT AS PER HIS STATED OBJECTS WAS ALSO NOT JUST IFIED SINCE IT WAS JUST A PROPOSAL AND AS AND WHEN THE ASSESSEE DID GO ABOUT OPENING VRIDH ASHRAM IT WOULD ACCORDINGLY AME ND ITS BYELAWS. THE LD. COUNSEL FOR ASSESSEE, THEREFORE, C ONTENDED THAT THE LD.CIT(E) HAD REJECTED ITS APPROVAL FOR NO VALID ITA NO.987/CHD/2018 U/S 80G(5) 8 REASON AND REQUESTED THAT THE ORDER OF THE LD.CIT(E ), THEREFORE, BE SET ASIDE. 6. THE LD. DR RELIED UPON THE ORDER OF THE LD.CIT(E ). 7. WE HAVE GONE THROUGH THE ORDER OF THE LD.CIT(E) AND HAVE ALSO HEARD THE ARGUMENTS OF BOTH THE PARTIES. WE FIND MERIT IN THE CONTENTION OF THE LD. COUNSEL FOR ASSE SSEE. FOR THE PURPOSE OF GRANT OF APPROVAL U/S 80G(5)(VI) OF THE ACT THE NECESSARY CONDITIONS TO BE FULFILLED ARE AS LAID DO WN IN SECTION 80G(5) OF THE ACT AND RULE 11AA OF THE INCO ME TAX RULES, 1962, . SECTION 80G(5) OF THE ACT READS AS U NDER: (5) THIS SECTION APPLIES TO DONATIONS TO ANY INSTI TUTION OR FUND REFERRED TO IN SUB-CLAUSE (IV) OF CLAUSE (A) OF SUB -SECTION (2), ONLY IF IT IS ESTABLISHED IN INDIA FOR A CHARITABLE PURP OSE AND IF IT FULFILS THE FOLLOWING CONDITIONS, NAMELY : [(I) WHERE THE INSTITUTION OR FUND DERIVES ANY INCO ME, SUCH INCOME WOULD NOT BE LIABLE TO INCLUSION IN ITS TOTA L INCOME UNDER THE PROVISIONS OF SECTIONS 11 AND 12 2[* * *] 3[4[***]] 5[OR CLAUSE (23AA)] 6[OR CLAUSE (23C)] OF SECTION 1 0 : [PROVIDED THAT WHERE AN INSTITUTION OR FUND DERIVES ANY INCOME, BEING PROFITS AND GAINS OF BUSINESS, THE CO NDITION THAT SUCH INCOME WOULD NOT BE LIABLE TO INCLUSION I N ITS TOTAL INCOME UNDER THE PROVISIONS OF SECTION 11 SHA LL NOT APPLY IN RELATION TO SUCH INCOME, IF (A) THE INSTITUTION OR FUND MAINTAINS SEPARATE BOOK S OF ACCOUNT IN RESPECT OF SUCH BUSINESS; (B) THE DONATIONS MADE TO THE INSTITUTION OR FUND A RE NOT USED BY IT, DIRECTLY OR INDIRECTLY, FOR THE PURPOSE S OF SUCH BUSINESS; AND ITA NO.987/CHD/2018 U/S 80G(5) 9 (C) THE INSTITUTION OR FUND ISSUES TO A PERSON MAKI NG THE DONATION A CERTIFICATE TO THE EFFECT THAT IT MAINTA INS SEPARATE BOOKS OF ACCOUNT IN RESPECT OF SUCH BUSINE SS AND THAT THE DONATIONS RECEIVED BY IT WILL NOT BE USED, DIRECTLY OR INDIRECTLY, FOR THE PURPOSES OF SUCH BUSINESS;]] (II) THE INSTRUMENT UNDER WHICH THE INSTITUTION OR FUND IS CONSTITUTED DOES NOT, OR THE RULES GOVERNING THE IN STITUTION OR FUND DO NOT, CONTAIN ANY PROVISION FOR THE TRANSFER OR APPLICATION AT ANY TIME OF THE WHOLE OR ANY PART OF THE INCOME OR ASSETS OF THE INSTITUTION OR FUND FOR ANY PURPOS E OTHER THAN A CHARITABLE PURPOSE; (III) THE INSTITUTION OR FUND IS NOT EXPRESSED TO B E FOR THE BENEFIT OF ANY PARTICULAR RELIGIOUS COMMUNITY OR CASTE; (IV) THE INSTITUTION OR FUND MAINTAINS REGULAR ACCO UNTS OF ITS RECEIPTS AND EXPENDITURE; 8[* * *] (V) THE INSTITUTION OR FUND IS EITHER CONSTITUTED A S A PUBLIC CHARITABLE TRUST OR IS REGISTERED UNDER THE SOCIETI ES REGISTRATION ACT, 1860 (21 OF 1860), OR UNDER ANY LAW CORRESPOND ING TO THAT ACT IN FORCE IN ANY PART OF INDIA OR UNDER SECTION 259 OF THE COMPANIES ACT, 1956 (1 OF 1956), OR IS A UNIVERSITY ESTABLISHED BY LAW, OR IS ANY OTHER EDUCATIONAL INSTITUTION REC OGNISED BY THE GOVERNMENT OR BY A UNIVERSITY ESTABLISHED BY LA W, OR AFFILIATED TO ANY UNIVERSITY ESTABLISHED BY LAW, [[ ***]] OR IS AN INSTITUTION FINANCED WHOLLY OR IN PART BY THE GOVER NMENT OR A LOCAL AUTHORITY; [***] [(VI) IN RELATION TO DONATIONS MADE AFTER THE 31ST DAY OF MARCH, 1992, THE INSTITUTION OR FUND IS FOR THE TIME BEING APPROVED BY THE COMMISSIONER IN ACCORDANCE WITH THE RULES MADE IN THIS BEHALF [; AND] [(VII) WHERE ANY INSTITUTION OR FUND HAD BEEN APPRO VED UNDER CLAUSE (VI) FOR THE PREVIOUS YEAR BEGINNING ON THE 1ST DAY OF APRIL, 2007 AND ENDING ON THE 31ST DAY OF MARCH, 20 08, SUCH INSTITUTION OR FUND SHALL, FOR THE PURPOSES OF THIS SECTION AND NOTWITHSTANDING ANYTHING CONTAINED IN THE PROVISO T O CLAUSE (15) OF SECTION 2, BE DEEMED TO HAVE BEEN, (A) ESTABLISHED FOR CHARITABLE PURPOSES FOR THE PRE VIOUS YEAR BEGINNING ON THE 1ST DAY OF APRIL, 2008 AND EN DING ON THE 31ST DAY OF MARCH, 2009; AND ITA NO.987/CHD/2018 U/S 80G(5) 10 (B) APPROVED UNDER THE SAID CLAUSE (VI) FOR THE PRE VIOUS YEAR BEGINNING ON THE 1ST DAY OF APRIL, 2008 AND EN DING ON THE 31ST DAY OF MARCH, 2009.] RULE 11AA OF THE INCOME TAX RULES,1962, READS AS UN DER: 11AA . (1) THE APPLICATION FOR APPROVAL OF ANY INSTITUTION OR FUND UNDER CLAUSE (VI) OF SUB-SECTION (5) OF SECTIO N 80G SHALL BE IN FORM NO. 10G AND SHALL BE MADE IN TRIPLICATE. (2) THE APPLICATION SHALL BE ACCOMPANIED BY THE FOL LOWING DOCUMENTS, NAMELY : ( I ) COPY OF REGISTRATION GRANTED UNDER SECTION 12A OR COPY OF NOTIFICATION ISSUED UNDER SECTION 10(23) OR 10(23C) ; (II) NOTES ON ACTIVITIES OF INSTITUTION OR FUND SINCE IT S INCEPTION OR DURING THE LAST THREE YEARS, WHICHEVER IS LESS ; ( III ) COPIES OF ACCOUNTS OF THE INSTITUTION OR FUND SINCE ITS INCEPTION OR DURING THE LAST THREE YEARS, WHICHEVER IS LESS. (3) THE COMMISSIONER MAY CALL FOR SUCH FURTHER DOCU MENTS OR INFORMATION FROM THE INSTITUTION OR FUND OR CAUSE S UCH INQUIRIES TO BE MADE AS HE MAY DEEM NECESSARY IN ORDER TO SAT ISFY HIMSELF ABOUT THE GENUINENESS OF THE ACTIVITIES OF SUCH INSTITUTION OR FUND. (4) WHERE THE COMMISSIONER IS SATISFIED THAT ALL TH E CONDITIONS LAID DOWN IN CLAUSES (I) TO (V) OF SUB-SECTION (5) OF SECTION 80G ARE FULFILLED BY THE INSTITUTION OR FUND, HE SHALL RECORD SUCH SATISFACTION IN WRITING AND GRANT APPROVAL TO THE I NSTITUTION OR FUND SPECIFYING THE ASSESSMENT YEAR OR YEARS FOR WH ICH THE APPROVAL IS VALID. (5) WHERE THE COMMISSIONER IS SATISFIED THAT ONE OR MORE OF THE CONDITIONS LAID DOWN IN CLAUSES (I) TO (V) OF SUB-S ECTION (5) OF SECTION 80G ARE NOT FULFILLED, HE SHALL REJECT THE APPLICATION FOR APPROVAL, AFTER RECORDING THE REASONS FOR SUCH REJE CTION IN WRITING : PROVIDED THAT NO ORDER OF REJECTION OF AN APPLICATION SHALL BE PASSED WITHOUT GIVING THE INSTITUTION OR FUND AN OP PORTUNITY OF BEING HEARD. ITA NO.987/CHD/2018 U/S 80G(5) 11 (6) THE TIME LIMIT WITHIN WHICH THE COMMISSIONER SH ALL PASS AN ORDER EITHER GRANTING THE APPROVAL OR REJECTING THE APPLICATION SHALL NOT EXCEED SIX MONTHS FROM THE [ END OF THE MONTH IN ] WHICH SUCH APPLICATION WAS MADE : PROVIDED THAT IN COMPUTING THE PERIOD OF SIX MONTHS, ANY TI ME TAKEN BY THE APPLICANT IN NOT COMPLYING WITH THE DI RECTIONS OF THE COMMISSIONER UNDER SUB-RULE (3) SHALL BE EXCLUD ED.] 8. CLEARLY, FOR THE PURPOSE OF GRANT OF APPROVAL WH AT IS TO BE SEEN BY THE COMMISSIONER IS THAT THE INSTITUTION OR FUND SEEKING APPROVAL IS ESTABLISHED FOR CHARITABLE PURP OSE AND IS GENUINELY CARRYING OUT THE ACTIVITIES OF THE INSTIT UTION OR FUNDS AND FURTHER THAT IT FULFILLS ALL THE CONDITIO NS LAID DOWN IN CLAUSES (I) TO (V) OF SECTION 80G(5) OF THE ACT. THE CONDITIONS SPECIFIED IN THE SECTION ARE PRIMARILY T O THE EFFECT THAT THE COMMISSIONER HAS TO ENSURE THAT THE FUND O R INSTITUTION SEEKING APPROVAL IS APPROPRIATELY CONST ITUTED AS SPECIFIED IN SUB CLAUSE (V), IS NOT FOR THE BENEFIT OF ANY PARTICULAR RELIGIOUS COMMUNITY OR CASTE AND IS FOR MED FOR THE PURPOSE OF AND IS GENUINELY CARRYING OUT CHARITABLE ACTIVITIES. THE COMMISSIONER HAS TO RECORD THE FULFILLMENT OF ALL THE CONDITIONS IN WRITING AND THEREAFTER GRANT APPROVAL . IN THE PRESENT CASE, WE FIND, THE LD.CIT(E) HAS NOT CONSID ERED THE APPLICATION OF THE ASSESSEE IN ACCORDANCE WITH THAT PRESCRIBED UNDER THE ACT AND THE RULES READ ALONGWI TH IT. WE FIND THAT THERE IS NO FINDING IN THE ENTIRE ORDER V IS A VIS THE ITA NO.987/CHD/2018 U/S 80G(5) 12 GENUINENESS OF THE ACTIVITIES CARRIED OUT BY THE APPLICANT/ASSESSEE. ALL THE FINDINGS OF THE LD. CIT (E) WHETHER REGARDING NO REASON BEING GIVEN BY THE APPLICANT FO R SEEKING DONATIONS CONSIDERING THAT IT HAD ENOUGH FUNDS, OR THAT IT WAS RECEIVING FEES IN CASH, OR THAT IT INTENDED OPE NING A VRIDH ASHRAM WHICH WAS NOT ITS OBJECT, DO NOT IMPINGE ON ITS CHARITABLE CHARACTER OR THE GENUINENESS OF THE ACTI VITIES CARRIED OUT BY IT. THE SECTION DOES NOT STATE THAT THE APPLICANT HAS TO JUSTIFY TAKING DONATIONS. SIMILARL Y HOW RECEIVING FEES IN CASH IMPINGES ITS CHARITABLE CHAR ACTER, WE FAIL TO UNDERSTAND ,IN THE ABSENCE OF ANY FINDING T HAT SUCH CASH RECEIPTS WERE NOT BEING RECORDED IN ITS BOOKS OF ACCOUNTS. ALSO THE VISION/PLAN OF THE APPLICANT/ASS ESSEE TO UNDERTAKE A PROJECT IN THE FUTURE OF OPENING VRIDH ASHRAM CANNOT BE THE REASON FOR DENYING APPROVAL AS BEING NOT PART OF ITS STATED OBJECT, SINCE AS RIGHTLY POINTED OUT BY THE LD.COUNSEL FOR THE ASSESSEE, THE ASSESSEE HAS NOT U NDERTAKEN THE ACTIVITY AND IT CANNOT BE DENIED APPROVAL FOR CONTEMPLATING CARRYING OUT IN THE FUTURE AN ACTIVIT Y NOT AS PER ITS STATED OBJECTS SINCE IT CAN VERY WELL MODIF Y ITS OBJECTS WHEN DOING SO . ITA NO.987/CHD/2018 U/S 80G(5) 13 IN VIEW OF THE ABOVE, IN THE ABSENCE OF ANY FINDI NG OF THE LD.CIT(E), AS REQUIRED BY LAW FOR GRANTING APPROVAL U/S 80G OF THE ACT, REGARDING THE CHARITABLE CHARACTER AND GENUINENESS OF THE ACTIVITIES CARRIED OUT BY THE ASSESSEE/APPLICANT, WE CONSIDER IT FIT TO RESTORE THE ISSUE BACK TO THE LD.CIT(E) TO RECONSIDER THE APPLICATION OF THE ASSESSEE AFRESH AND THEREAFTER PASS AN ORDER IN ACC ORDANCE WITH LAW. WE MAY ADD THAT THE ASSESSEE BE GIVEN DUE OPPORTUNITY OF HEARING IN THIS REGARD. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE ALLOWE D FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- # $ % &' ( SANJAY GARG ) (ANNAPURNA GUPTA) / JUDICIAL MEMBER '( / ACCOUNTANT MEMBER *# /DATED: 10 TH MAY, 2019 * ' * ''()*+*% / COPY OF THE ORDER FORWARDED TO : 1. , / THE APPELLANT 2. (-, / THE RESPONDENT 3. . / CIT 4. . ( )/ THE CIT(A) 5. */0(1 , 1& , 23405 / DR, ITAT, CHANDIGARH 6. 046 / GUARD FILE '' / BY ORDER, / ASSISTANT REGISTRAR