2009 (7) TMI 1216 - AT - Income Tax

Tribunal grants renewal of recognition under Income-tax Act, 1961 despite minor irregularities

The Tribunal ruled in favor of the appellant in an appeal against the rejection of renewal of recognition under section 80G of the Income-tax Act, 1961. ... - Issues involved: Appeal against rejection of renewal of recognition u/s. 80G of the Income-tax Act, 1961.Summary:Issue 1: Rejection of renewal of recognition u/s. 80GThe appeal was filed against the order rejecting renewal of recognition u/s. 80G. The appellant raised grounds questioning the Director of Income-tax(E)'s decision, emphasizing the charitable nature of the institution and compliance with conditions u/s. 80G. The Director observed missing vouchers for certain expenditures, leading to the rejection based on non-compliance with conditions u/s. 80G(5)(i) to (iv) and relevant case laws.Issue 2: Compliance with conditions for 80G benefitsThe appellant trust, engaged in educational activities, applied for renewal of recognition u/s. 80G. The trust's main objects were related to education and public welfare. The trust claimed compliance with all conditions for 80G benefits, disputing the rejection based on missing vouchers for specific expenditures, arguing that it did not violate section 80G(i) to (v) of the Act.Issue 3: Violation of accounting provisionsThe Revenue contended that the trust failed to produce proper vouchers for certain expenditures, indicating potential misapplication of funds and violation of section 80G(5)(iv) requiring maintenance of regular accounts. The trust's compliance with accounting provisions was questioned, leading to the denial of recognition u/s. 80G(5)(vi) of the Act.Judgment:After considering submissions and evidence, the Tribunal found that the trust had minor irregularities in voucher production but had not deviated from its charitable objects. The trust's financial records showed no income generation, reliance on loans, and absence of malafide intentions. The trust maintained proper accounts, as evidenced by audit reports and financial statements. Having enjoyed recognition u/s. 80G previously, the Tribunal concluded that the trust deserved renewal of recognition u/s. 80G(5) of the Act, ruling in favor of the appellant.This summary encapsulates the issues, arguments, and the Tribunal's decision regarding the rejection of renewal of recognition u/s. 80G in the legal judgment.