2021 (10) TMI 308 - AT - Income Tax

Appeal Granted for Charitable Trust Recognition Under Section 80G: Importance of Evaluation and Support

The Tribunal allowed the appeal, directing the CIT(E) to reevaluate the application for recognition under section 80G(5)(vi) for a public charitable ... Grant of recognition u/s 80G(5)(vi) denied - reason given by CIT(E) is that in absence of any charitable activities, the genuineness of the charitable activity could not be examined - HELD THAT:- The assessee trust was granted registration u/s 12AA of the I.T.Act vide order of CIT(E) dated 16.12.2019. Department has not doubted the charitable nature of objects of the assessee for which it is established. The grant of approval / recognition u/s 80G of the I.T.Act, acts as catalyst and results in donations which in turn results in charitable activities - grant of recognition u/s 80G of the I.T.Act may be condition precedent for achieving the objects for which the trust is established. On identical factual situation, in the case of M/s.Chiranthana v. CIT(E) [2020 (1) TMI 1332 - ITAT BANGALORE] had held that rejection of assessee’s application for the sole reason that no activities has been started by the assessee is not correct and not mandated as per the provisions of the Act. The Co-ordinate Bench of the Tribunal after holding that the reasons stated by the CIT(E) cannot be a ground to deny the benefit of recognition u/s 80G(5)(vi) of the I.T.Act, restored the matter to the CIT(E) for de novo consideration. Thus in the present we restore the case to the files of CIT(E). The CIT(E) is directed to consider the assessee’s application for recognition u/s 80G(5)(vi) of the I.T.Act afresh. The CIT(E) shall afford a reasonable opportunity of hearing to the assessee and shall take a decision in accordance with law. Assessee ground raised is allowed for statistical purposes. Issues:- Recognition u/s 80G of the Income-tax Act, 1961 based on the genuineness of charitable activities.- Refusal of recognition by CIT(E) due to absence of noticeable charitable activities.- Applicability of previous tribunal judgments on similar issues.- Grant of approval/recognition under section 80G as a catalyst for charitable activities.Analysis:1. Recognition u/s 80G: The appeal concerned the refusal of recognition u/s 80G of the Income-tax Act, 1961 to a public charitable trust. The CIT(E) rejected the application citing the absence of noticeable charitable activities since the formation of the trust. The appellant contended that the recognition is crucial for donations and subsequent charitable activities. The Tribunal emphasized that recognition under section 80G acts as a catalyst for encouraging donations and supporting charitable endeavors, making it a vital aspect for achieving the trust's objectives.2. Refusal based on Absence of Activities: The CIT(E) based the rejection on the lack of visible charitable activities, which was deemed insufficient by the Tribunal as the registration u/s 12AA had already been granted to the trust. The Tribunal highlighted that the absence of activities alone cannot be a ground for denying recognition u/s 80G(5)(vi) as it does not align with the provisions of the Act. Previous tribunal judgments were cited to support this stance, emphasizing the importance of recognition in facilitating donations for charitable purposes.3. Applicability of Previous Judgments: The Tribunal referred to previous decisions where similar issues were addressed, emphasizing that the grounds cited by the CIT(E) for rejection were not in line with statutory requirements. The Tribunal, following the precedent set by the Co-ordinate Bench, remanded the matter to the CIT(E) for fresh consideration, stressing the need for proper evaluation of the application for recognition under section 80G.4. Grant of Approval as Catalyst: The Tribunal reiterated that the grant of approval/recognition under section 80G serves as an incentive for potential donors to support the trust's activities financially. It highlighted that the satisfaction of the CIT(E) regarding the trust's objects through registration under section 12AA should not be disregarded when considering recognition under section 80G. The Tribunal emphasized the need for a comprehensive review of the application in accordance with the law, ensuring a fair opportunity for the appellant to present their case.In conclusion, the Tribunal allowed the appeal for statistical purposes, directing the CIT(E) to reevaluate the application for recognition u/s 80G(5)(vi) in light of the legal provisions and previous tribunal decisions. The judgment underscored the significance of recognition under section 80G as a crucial factor in promoting charitable activities and facilitating donations for the trust's objectives.