2017 (11) TMI 77 - AT - Income Tax

Tribunal directs reconsideration of charity registration application emphasizing genuine charitable activities

The Tribunal allowed the appeal, directing the Ld. CIT(E) to reconsider the application for registration under section 80G(5)(vi) of the Act. Emphasizing ... Grant of registration u/s 80G(5)(vi) rejected - no significant charitable activity has been started by the assessee trust as per its objects since 7 months came into existence - Held that:- What is a significant activity is a very subjective term and cannot be a sole basis for rejection of application. Where the assessee has various objectives, it is not necessary that the activities in furtherance of each of the objectives should be started simultaneously and at the same pace and level. It is up to the assessee to determine which all activities can be started initially and how the same can be expanded subsequently. And for that purposes, grant of approval under section 80G act as an enabler and a catalyst to encourage the prospective donors to look at the intended activities of the assessee and where they find the same to be acceptable, to provide financial support through donations/contributions. In our view, what is of relevance for the purposes of grant of approval under section 80G is whether the objectives are charitable or not and the activities, so started, howsoever insignificant it may be, are genuine activities or not and whether the same are in consonance with and in furtherance of the objectives of the assessee society. As the appellant has been duly registered under section 12AA which shows that CIT has already verified its objectives and its establishment for charitable purposes. Regarding fulfillment of additional conditions specified in clause (i) to clause (v) of section 80G(5), we find that there is no recording of satisfaction regarding non-fulfilment of any of the conditions so specified and the ld CIT(E) has summarily rejected the assessee’s application. We are accordingly setting aside the matter to the file of the ld CIT(E) to examine the matter afresh in light of above directions. Appeal of the assessee is allowed for statistical purposes. Issues:- Rejection of application for grant of registration u/s 80G(5)(vi) of the Act by Ld. CIT(E)- Compliance with conditions for registration under section 80G- Consideration of significant charitable activities by the assessee trust- Interpretation of 'significant activity' for grant of approval under section 80G- Examination of conditions specified in clause (i) to clause (v) of section 80G(5)Analysis:The appeal was filed by the assessee against the order of Ld. CIT(E) rejecting the application for registration under section 80G(5)(vi) of the Act. The Ld. CIT(E) held that the assessee trust, established on 13.10.2016, did not engage in significant charitable activities within more than 7 months of its existence, leading to the rejection of the application. The assessee contended that all conditions under clause (i) to (v) of section 80G(5) were fulfilled, challenging the arbitrary rejection by the Ld. CIT(E) without specifying the unmet conditions.During the hearing, it was revealed that the assessee had started charitable activities by providing scholarships, which were overlooked by the Ld. CIT(E). The Tribunal emphasized that the commencement of significant activities is subjective, and the grant of approval under section 80G serves to encourage donors based on the genuineness of the activities aligned with charitable objectives. The Tribunal stressed that the relevance lies in the charitable nature of objectives and the genuine efforts towards their fulfillment, rather than the scale or pace of activities.The Tribunal highlighted the importance of verifying fulfillment of conditions specified in clause (i) to clause (v) of section 80G(5) before rejecting an application. As the assessee was already registered under section 12AA, indicating approval of charitable objectives, the Ld. CIT(E) was directed to reconsider the application, ensuring a detailed examination of compliance with all conditions under section 80G(5). The Tribunal allowed the appeal for statistical purposes, setting aside the initial rejection and prompting a fresh assessment by the Ld. CIT(E) in line with the provided directions.