Tribunal Grants Trust Approval Despite Lack of Charitable Activities

The Tribunal ruled in favor of the appellant trust, directing the Director to approve the trust under section 80G of the Income Tax Act. Despite the lack of charitable activities in the past three years, the Tribunal found that the trust's objectives aligned with public utility and benefits for the general public. The Tribunal distinguished previous cases cited by the Director and emphasized that meeting other statutory conditions qualified the trust for the certificate. The decision highlighted the trust's approval under section 12A and its formation for public welfare, ultimately overturning the Director's refusal and granting approval under section 80G.

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Issues:
1. Rejection of application for grant of certificate u/s 80G.
2. Denial of full and proper opportunity of being heard to the applicant trust.

Issue 1: Rejection of application for grant of certificate u/s 80G:
The appellant, a trust, filed an application for certificate u/s 80G of the Income Tax Act. The Director of Income-Tax (Exemption) observed that the trust had not engaged in any charitable activities or incurred any related expenses in the past three years. Consequently, a show cause letter was issued, and upon review, the application was rejected citing the lack of charitable activities. The appellant, aggrieved by this decision, contended that the trust had indeed received donations for constructing houses for the poor and needy, with corresponding expenses debited in the balance sheet. The appellant argued compliance with section 80G and challenged the rejection, distinguishing it from previous cases cited by the Director.

Issue 2: Denial of full and proper opportunity of being heard:
The appellant raised concerns regarding the denial of a full and proper opportunity to present their case before the Director's decision. During the appeal, the appellant's counsel highlighted the trust's approval under section 12A and the previous grant of a certificate u/s 80G. The counsel emphasized the trust's objective of providing housing for the underprivileged and the financial transactions related to this purpose. The Director's decision was challenged on the grounds that the trust had met the conditions of section 80G and that the cited precedents were not applicable to the current case due to distinguishable facts.

Judgment:
The Tribunal noted that while the trust had not conducted charitable activities in the past three years, this alone did not disqualify it from receiving a certificate u/s 80G if other statutory conditions were met. Distinguishing the cited cases, the Tribunal held that the trust's objectives aligned with public utility and benefits for the general public. As the trust had been approved under section 12A and was formed for public welfare, the Director's refusal to grant approval u/s 80G was deemed erroneous. Consequently, the Tribunal directed the Director to approve the trust u/s 80G, allowing the appeal and ruling in favor of the appellant trust.

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