2019 (1) TMI 2042 - AT - Income Tax

Tribunal Overturns Rejection; Approves Income Tax Sec. 80G Benefits for Charitable Organization with Valid Sec. 12AA Registration.

The Tribunal allowed the appeal, setting aside the Commissioner's order that denied approval u/s. 80G of the Income Tax Act. It held that the ... Rejection of Application u/s. 80G - assessee has been granted registration u/s. 12AA and the registration continues till date and the aforesaid registration has not been cancelled by the Commissioner of Income Tax - HELD THAT:- We find that the Agra Bench of the Tribunal in the case of Dr. Gyanendra Goel Foundation [2018 (3) TMI 1893 - ITAT AGRA] after relying on the decision of Hiralal Bhagwati [2000 (4) TMI 14 - GUJARAT HIGH COURT] in similar circumstance has held that when the CIT has granted registration u/s. 12AA after examining genuineness of activities of Trust, and the registration granted has not been revoked or cancelled then it is not proper for CIT to reject application of Trust for benefit of exemption u/s. 80G by holding that the activities of the Trust were not genuine. Before us, the Revenue has not pointed out any contrary binding decision nor has placed any material on record to demonstrate that the aforesaid decision of Agra Bench of Tribunal has been set aside by the higher judicial forum - We therefore set aside the order of LD. CIT and direct the granting of approval to assessee u/s. 80G of the Act. Thus the grounds of the assessee are allowed. Issues:- Rejection of application for approval u/s. 80G of the Income Tax Act by the Commissioner of Income Tax.- Whether the activities conducted by the assessee can be considered charitable.- Impact of registration u/s. 12AA on the approval u/s. 80G application.- Legal validity of rejecting the application for approval u/s. 80G.Analysis:The appeal arose from the Commissioner of Income Tax's order rejecting the assessee's application for approval u/s. 80G of the Income Tax Act. The Commissioner based the rejection on the grounds that the assessee society was engaged in commercial activities, which were not considered charitable. The assessee contended that the rejection was arbitrary and without proper consideration of the facts presented. The assessee also argued that it qualified as a Charitable Institution under sec. 2(15) and should be granted approval u/s. 80G.The assessee's representative highlighted that the assessee held registration u/s. 12AA, which had not been canceled, indicating the genuineness of its activities. The representative argued that the education provided by the assessee was formal and affiliated with various universities, contrary to the Commissioner's observations. Citing relevant precedents, including the decision of the Agra Bench of the Tribunal and the Gujarat High Court, the representative contended that the rejection of the application was unjustified.The Departmental Representative supported the Commissioner's order, emphasizing that the activities of the assessee were not charitable. However, upon considering the submissions and evidence, the Tribunal held that the Commissioner was not justified in rejecting the application. Relying on the Agra Bench's decision, the Tribunal emphasized that when registration u/s. 12AA had not been revoked or canceled, it was improper to reject the application for u/s. 80G benefits. As the Revenue failed to provide contrary binding decisions or evidence against the Agra Bench's decision, the Tribunal allowed the assessee's appeal, setting aside the Commissioner's order and directing the approval of u/s. 80G for the assessee.In conclusion, the Tribunal allowed the appeal, emphasizing the importance of registration u/s. 12AA in assessing the genuineness of charitable activities and directing the approval of u/s. 80G for the assessee based on the provided evidence and legal precedents.