2014 (1) TMI 1084 - HC - Income Tax

Trust's Charitable Recognition Upheld, Revenue Appeal Dismissed

Commissioner of Income Tax -Ii Versus Vihangam Yoga Prachar And Social Welfare Trust Lucknow

The High Court upheld the Tribunal's decision to grant recognition under Section 80G(5)(vi) to the trust, emphasizing the charitable nature of the ... Application u/s 80G(5) - Held that:- The CIT(A) passed the order of rejection on a sole issue that the assessee was not carrying out all the activities mentioned in the objects clause of the trust - The statute does not require that the assessee should carry out all the activities which are mentioned in the objects clause - The assessee was carrying on the activity of conducting Yoga Camps which constitutes a charitable activity - Any activity which is not of a charitable nature was not being conducted - There is nothing on the record before the Commissioner to doubt the charitable nature of the activity which is being conducted - The Tribunal was justified in allowing the application of the assessee - Decided against Revenue. Issues:Recognition under Section 80G(5)(vi) of the Income Tax Act, 1961.Detailed Analysis:1. Issue of Recognition under Section 80G(5)(vi):The appeal before the Tribunal was regarding the denial of recognition under Section 80G(5)(vi) of the Income Tax Act, 1961 by the Commissioner of Income Tax-II, Lucknow. The Commissioner had declined recognition stating that the trust was not carrying out all charitable activities listed in its objects, with the dominant object being establishing hospitals and imparting medical treatment, which had not commenced. The Tribunal, upon reviewing the evidence presented by the assessee, found that organizing Yoga Camps was a charitable activity as per the trust's objects. The Tribunal also noted that there was no evidence to suggest the trust was engaged in any non-charitable activities. Consequently, the Tribunal set aside the Commissioner's order and directed recognition under Section 80G(5)(vi) to be granted.2. Interpretation of Statute and Charitable Activities:The High Court emphasized that the statute does not mandate the trust to carry out all activities mentioned in its objects clause for recognition under Section 80G(5)(vi). The Court acknowledged that conducting Yoga Camps by the assessee was a charitable activity. It was noted that the revenue did not contest the charitable nature of the activities being conducted by the trust. The Court held that the mere fact that the trust had not yet started the activity of establishing a hospital for medical treatment did not justify rejection of the recognition claim, especially when the charitable nature of the trust's activities was evident.3. Compliance with Section 80G(5) Requirements:The Court emphasized that Section 80G(5) requires the institution to be established in India for a charitable purpose. In this case, the trust had fulfilled this requirement, as evidenced by the charitable activities it was engaged in, such as organizing Yoga Camps. The Court concluded that since there was no other valid ground for rejection presented by the Commissioner and the trust was compliant with the statutory requirements, the Tribunal's decision to grant recognition under Section 80G(5)(vi) was justified.4. Dismissal of Appeal:Based on the above analysis, the High Court dismissed the appeal by the revenue, stating that it did not raise any substantial question of law. The Court held that there was no basis for interfering with the Tribunal's decision to grant recognition to the trust under Section 80G(5)(vi). Consequently, the appeal was dismissed, and no costs were awarded.In conclusion, the High Court upheld the Tribunal's decision to grant recognition under Section 80G(5)(vi) to the trust, emphasizing the charitable nature of the activities being conducted and the trust's compliance with statutory requirements.