2012 (5) TMI 182 - AT - Income Tax

Tribunal overturns denial of approval under Income-tax Act Section 80G(5)(vi)

Shiv Shankar Memorial Education Society Versus Commissioner of Income-tax, Meerut

The Tribunal allowed the appeal, overturning the CIT's decision to deny the renewal of approval under Section 80G(5)(vi) of the Income-tax Act. The ... Extension of approval granted u/s 80G denied - The assessee society was registered u/s 12A – Held that:- For granting approval under section 80G(5)(vi) the society has to satisfy that, it is established in India for a charitable purpose and the conditions stipulated under provisions of section 80G(5)(i) to (vi ) are to be additionally fulfilled - Revenue have not placed any material, suggesting that the assessee society did not fulfill the conditions stipulated under the section 80G(5) and rule 11AA thereunder - there is nothing to suggest that any part of income or property of the society was used or applied directly or indirectly for the benefit of any person referred to in section 13(3) - once the registration under s. 12A(a) of the Act is granted, the grant of benefit cannot be denied, especially when the facts and circumstances are the same as in earlier years since grant of registration u/s 12A – in favour of assessee. Issues Involved:1. Rejection of registration and renewal of approval under Section 80G(5) of the Income-tax Act.2. Legality and factual correctness of the CIT's order.3. Potential for raising additional grounds during the appeal.Issue-wise Detailed Analysis:1. Rejection of Registration and Renewal of Approval under Section 80G(5) of the Income-tax Act:The assessee society submitted an application on 15.5.2009 seeking an extension of approval under Section 80G for the period after 31.3.2009. The CIT denied this approval, citing that the society had constructed a building on leased land from persons covered under Section 13(3) of the Act, paying only a nominal rent, which was seen as passing on huge income to founder trustees and other interested persons. The CIT also noted that registration under Section 12AA was being canceled separately.2. Legality and Factual Correctness of the CIT's Order:The assessee argued that the CIT had not canceled the registration under Section 12A and that the nominal rent paid did not violate any provisions of the Act. The assessee relied on various judicial precedents to support their claim that the conditions under Section 80G(5) had not been violated. The Tribunal observed that the society was registered under Section 12A and had been filing returns since AY 2000-01, with exemptions under Section 10(23C) being accepted for several years. The Tribunal noted that the CIT had not quantified any alleged benefit to the persons under Section 13(3) and had not provided evidence that the society did not fulfill the conditions under Section 80G(5). The Tribunal emphasized that the CIT's role was to verify compliance with Section 80G(5) conditions and not to act as an Assessing Officer. The Tribunal concluded that the CIT was not justified in denying the renewal of approval under Section 80G(5)(vi) since the society's registration under Section 12A was still valid and there was no material change in circumstances.3. Potential for Raising Additional Grounds During the Appeal:The Tribunal noted that no additional grounds were raised during the appeal, and therefore, the residuary ground was dismissed.Conclusion:The Tribunal allowed the appeal, concluding that the CIT was not justified in denying the renewal of approval under Section 80G(5)(vi) of the Act. The appeal was allowed, and the order of the CIT was overturned.