2019 (2) TMI 661 - AT - Income Tax

Appeal granted for tax approval under Income Tax Act - Importance of legal compliance

The Tribunal allowed the appeal, directing the Ld. CIT(E) to grant approval under section 80G(5)(vi) of the Income Tax Act, 1961. The Tribunal held that ... Charitable activity - Grant of approval u/s 80G rejected - assessee has been granted registration under section 12AA - Held that:- Order u/s 80G(5) denying approval to the assessee cannot be sustained in Law. It is not in dispute that assessee has been granted registration under section 12AA by DIT (E) vide Order Dated 29.09.2018. CIT(E) was satisfied with the objects and activities of the assessee that it is meant for charitable purposes, therefore, different view cannot be taken while refusing the grant of approval under section 80G(5) - CIT(E) did not doubt the objects of the assessee and did not mention anything if assessee has violated any of the conditions of Section 80G(5). Considering the totality of the facts and circumstances of the case in the light of above decisions relied upon by the Learned Counsel for the Assessee, we are of the view that assessee is entitled for approval under section 80G(5) from the date of application. We, accordingly, set aside the impugned Order and direct the CIT(E), Chandigarh, to grant approval to the assessee under section 80G(5)(vi) - Decided in favour of assessee. Issues:1. Denial of approval under section 80G(5)(vi) of the Income Tax Act, 1961 despite registration under section 12AA.2. Interpretation of the legal provisions and precedents regarding approval under section 80G.Issue 1: Denial of Approval under Section 80G(5)(vi) despite Registration under Section 12AA:The appeal was against the Order of the Ld. CIT(E) denying approval under section 80G(5)(vi) of the Income Tax Act, 1961, despite the Assessee being granted registration under section 12AA. The Ld. CIT(E) found the application premature and rejected it based on the entity's status post the grant of 12A registration. The Assessee argued that it is a charitable trust engaged in various charitable activities, and relied on legal precedents to support their case. The Tribunal noted that the Ld. CIT(E) did not doubt the objects and activities of the Assessee, and since the entity was granted registration under section 12AA, approval under section 80G(5) cannot be denied. The Tribunal referred to relevant decisions and concluded that the Assessee is entitled to approval under section 80G(5) from the date of application, setting aside the impugned Order.Issue 2: Interpretation of Legal Provisions and Precedents:The Tribunal considered the arguments presented by both parties and analyzed the legal provisions and precedents cited. The Assessee contended that the Commissioner should grant approval under section 80G if the prescribed conditions are satisfied, which was not doubted in this case. The Ld. D.R. relied on the impugned Order, but the Tribunal, after evaluating the facts and circumstances along with the relevant decisions, held that the denial of approval to the Assessee under section 80G(5) cannot be sustained in law. The Tribunal emphasized that the Ld. CIT(E) did not raise any concerns regarding the Assessee's compliance with the conditions of Section 80G(5) and that the Assessee was entitled to approval under section 80G(5) from the date of application. Consequently, the Tribunal allowed the appeal of the Assessee, directing the Ld. CIT(E) to grant approval under section 80G(5)(vi) of the Income Tax Act, 1961.This judgment highlights the importance of adherence to legal provisions and precedents in matters concerning approval under different sections of the Income Tax Act, ensuring that decisions are made based on the facts and circumstances of each case while upholding the principles of charity and compliance with statutory requirements.