2019 (11) TMI 605 - HC - Income Tax

High Court affirms Tribunal's decision on Section 80G application, criticizes Revenue's appeal

The High Court upheld the Tribunal's decision to allow the application under Section 80G of the Income Tax Act, rejecting the Revenue's appeal. The Court ... Registration u/s 80G - CIT(E) rejected the application u/s 80G stating it can not be ascertained as to whether the society is applying its funds or not on its proposed activities - ITAT allowed the registration - HELD THAT:- Tribunal noticed that during the pendency of the application under Section 12AA of the Act, detailed investigation was conducted by the Income Tax Officer (Exemptions) into all factors as are required to be considered under Section 12AA and it was only after the assessee had satisfied all the conditions that the application under Section 12AA allowed. It is also not in dispute that the conditions numerated under Section 12AA are in parimeteria with the conditions as enumerated under Section 80G. The Tribunal rightly relied upon CIT Vs. Thangadagi Trust [2016 (3) TMI 595 - KARNATAKA HIGH COURT] and Vinayaka Vidyaniketan, Indiranaga Vs. CIT (Exemption) [2016 (2) TMI 746 - ITAT BANGALORE] and held that the CIT(E) had erred in not allowing the application under Section 80G. In our opinion the reasoning of the Tribunal is apt. We find that the Commissioner had taken an unduly harsh and pedantic view of the matter and once it is not disputed that the stringent conditions under Section 12AA have been satisfied, the further action can only be taken at the end of the financial year to determine whether any donation etc or other the conditions of Section 80G have or have not been fulfilled. Issues:1. Appeal filed by Revenue against Tribunal's order rejecting application under Section 80G of the Income Tax Act.2. Interpretation of Rule 11AA regarding conditions for granting approval under Section 80G.3. Tribunal's decision in allowing the application under Section 80G.4. Assessment of Commissioner's view on the matter.5. Dismissal of the appeal and disposal of pending application.Analysis:1. The High Court dealt with an appeal filed by the Revenue challenging the order of the Income Tax Appellate Tribunal, which had set aside the Commissioner of Income Tax (Exemptions)'s rejection of an application under Section 80G of the Income Tax Act by the assessee. The Tribunal found that the conditions under Section 12AA, which were satisfied by the assessee, were in line with the conditions under Section 80G.2. The Court examined the interpretation of Rule 11AA, emphasizing the requirement for a society to have registration under Section 12AA and be active, along with maintaining regular books of accounts as per the conditions of Section 80G. The Commissioner's rejection of the application under Section 80G was based on the society's nascent stage and inability to ascertain the utilization of funds for proposed activities.3. The Tribunal's decision to allow the application under Section 80G was supported by the detailed investigation conducted during the pendency of the Section 12AA application. The Court referenced precedents to highlight the alignment of conditions under Section 12AA and Section 80G, emphasizing that the Commissioner had erred in not granting approval under Section 80G.4. The Court criticized the Commissioner's harsh and pedantic view, noting that once the stringent conditions under Section 12AA were met, further assessment regarding Section 80G compliance should occur at the end of the financial year. The Tribunal's reasoning was deemed appropriate, leading to the dismissal of the appeal.5. Ultimately, the High Court dismissed the appeal, affirming the Tribunal's decision to allow the application under Section 80G. Consequently, any pending applications were disposed of in light of the main case's dismissal.