Maintenance of regular accounts is a distinct eligibility requirement for donation deduction; renewal was set aside for non-compliance.

The article explains that eligibility for donation-deduction registration requires strict compliance with the specific maintenance-of-accounts requirement in the deduction provision, which is distinct from conditions for exemption of institutional income; the tribunal erred by treating exemption registration as satisfying deduction requirements. Undisputed facts that admitted receipts were not recorded demonstrate failure to maintain regular accounts of receipts and expenditure, leading to setting aside the renewal of deduction registration and answering the substantial question in favour of the revenue.

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Issues: Whether the Income Tax Appellate Tribunal erred in granting renewal of approval/registration under Section 80 G of the Income Tax Act, 1916 to the assessee on the basis that satisfying conditions of Section 10(23C) entitled the assessee to benefit under Section 80 G.

Analysis: The Court examined the statutory schemes of Section 10(23C) and Section 80 G of the Income Tax Act, 1916. Section 10(23C) excludes income of certain educational and charitable institutions from taxable income subject to its provisos, including Proviso VII which requires maintenance of separate books of account for business income incidental to objectives. Section 80 G(5) conditions eligibility for deduction of donations on additional requirements, including clause (iv) mandating that the institution "maintains regular accounts of its receipts and expenditure." The Court compared the distinct textual requirements and concluded the conditions under Section 10(23C) and Section 80 G(5) are not identical. The Court further considered the undisputed factual finding that a sum of Rs. 11.25 lacs recovered in search proceedings was admitted by the assessee and was not recorded in its accounts, and that the assessee admitted non-recording before the Income Tax Settlement Commission. Those facts demonstrate failure to maintain regular accounts of receipts and expenditure as required by Section 80 G(5)(iv). The Tribunal's reliance on the assessee's registration under Section 10(23C) as sufficient for renewal under Section 80 G was therefore misplaced because satisfying Section 10(23C) does not satisfy the separate and additional statutory requirements of Section 80 G(5).

Conclusion: The substantial question is answered in favour of the revenue and against the assessee. The ITAT's order granting renewal of approval/registration under Section 80 G is set aside because the assessee failed to fulfil the requirement of maintaining regular accounts of receipts and expenditure under Section 80 G(5).

Ratio Decidendi: Eligibility for registration or renewal under Section 80 G(5) requires strict compliance with its specific conditions, including maintenance of regular accounts of receipts and expenditure, which is a separate requirement distinct from conditions for exemption under Section 10(23C) of the Income Tax Act, 1916.

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