2009 (4) TMI 973 - AT - Income Tax

Tribunal grants appeal for 80G approval renewal, emphasizing legitimate fund use and fair hearing

The Tribunal allowed the appeal, directing the renewal of approval u/s 80G. It emphasized the lack of benefit to the specified person under section 13(3) ... - Issues involved: Appeal against order of DIT(Exemptions), Bangalore; Non-application of mind by DIT(Exemptions); Violation of principles of natural justice; Interpretation of sections 13(2) and 13(3); Renewal of approval u/s 80G.Non-application of mind and violation of natural justice: The appellant raised concerns that the DIT(Exemptions) did not adequately consider the facts of the case and hastily concluded the order. It was argued that principles of natural justice were not followed as the appellant was not given a proper hearing to explain their case. The DIT(Exemptions) concluded that a refundable rental deposit paid to an executive committee member fell under section 13(3) and violated section 13(2) without fully considering the explanations provided by the appellant.Interpretation of sections 13(2) and 13(3): The DIT(Exemptions) held that lending income or property to a specified person without adequate interest violates section 13, leading to denial of renewal of approval u/s 80G. The appellant argued that the funds provided to the executive committee member were for construction purposes and not for personal benefit, thus not violating section 13. The AR highlighted the importance of consistency in granting renewals and argued for approval based on past approvals and circumstances.Renewal of approval u/s 80G: The DIT(Exemptions) denied renewal of approval u/s 80G, citing violations of section 13 and lack of benefit to the specified person. The AR contended that the refundable advances were utilized for construction purposes and did not constitute a violation of section 13. The Tribunal directed the DIT(Exemptions) to renew the approval u/s 80G, emphasizing that there was no benefit to the specified person and the funds were used for legitimate purposes.In conclusion, the Tribunal allowed the appeal, emphasizing the lack of benefit to the specified person under section 13(3) and directing the renewal of approval u/s 80G.