2019 (3) TMI 907 - AT - Income Tax

Assessee's Appeal Allowed: Fresh Examination Ordered Under Sections 12AA and 80G

M/s. Unnati Educational and Charitable Trust Versus The Income-Tax Officer (Exemptions), Ward-2, Bengaluru

M/s. Unnati Educational and Charitable Trust Versus The Income-Tax Officer (Exemptions), Ward-2, Bengaluru - TMI Issues:1. Rejection of application for recognition under section 80G of the Income Tax Act, 1961.2. Consideration of noticeable activities by the assessee trust.3. Dismissal of application by CIT(Exemptions) and subsequent appeal by the assessee.4. Grant of registration under section 12AA and rejection under section 80G.Analysis:Issue 1: Rejection of application for recognition under section 80GThe appeal was against the order of the CIT(Exemptions) rejecting the assessee's application for recognition under section 80G of the Income Tax Act, 1961. The CIT(E) dismissed the application after considering the details furnished by the assessee trust in response to the clarifications sought. The grounds of appeal raised by the assessee included errors in the order passed by the CIT(E) and failure to properly consider the evidence on record. The assessee contended that it had fulfilled all conditions for recognition under section 80G, and the rejection was unjustified.Issue 2: Consideration of noticeable activitiesThe main objection raised by the CIT(E) for rejecting the recognition under section 80G was the lack of noticeable activities by the assessee trust until the formation of the trust. The CIT(E) believed that this absence of significant activity made the trust ineligible for recognition under section 80G. However, the Tribunal found this criterion to be subjective and not a valid basis for rejection. It emphasized that the decision on which activities to undertake initially should be left to the assessee. Recognition under section 80G could attract potential donors to support the trust's objectives financially.Issue 3: Dismissal of application and subsequent appealThe appeal before the Tribunal challenged the CIT(E)'s order dated 20.08.2018. The assessee argued that since registration under section 12AA was granted, the trust's objects and establishment for charitable purposes were already verified. Therefore, the CIT(E) should also grant recognition under section 80G. The Tribunal considered the arguments of both parties and examined the material on record, including judicial precedents cited.Issue 4: Grant of registration under section 12AA and rejection under section 80GThe Tribunal noted that the CIT(E) had granted the assessee trust registration under section 12AA of the Act but rejected the application for recognition under section 80G. Given this discrepancy and the subsequent grant of registration under section 12AA, the Tribunal set aside the CIT(E)'s order rejecting recognition under section 80G. The matter was remanded to the CIT(E) for fresh examination in light of the registration under section 12AA and the observations made by the Tribunal. The CIT(E) was directed to provide the assessee with a reasonable opportunity to be heard before making a decision.In conclusion, the Tribunal allowed the assessee's appeal for statistical purposes, emphasizing the need for a fair reconsideration of the application for recognition under section 80G.