Appeal denied for section 80G approval due to lack of evidence supporting charitable activities

The appeal against the denial of approval under section 80G of the Income Tax Act was dismissed by the Tribunal. The appellant failed to demonstrate clear utilization of funds for charitable activities and lacked expenditure towards specified objects, leading to the rejection of approval. The Commissioner's decision was upheld as the agreement between the Government of Haryana and the appellant indicated the responsibility for building construction lay with the government until handed over to the society. The Tribunal affirmed the denial of approval under section 80G, emphasizing the lack of evidence to dispute the construction agreement's terms.

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Issues involved:
The issues involved in this judgment are the denial of approval under section 80G, failure to carry out specified objects, and the construction of a building by the Government of Haryana.

Denial of Approval under Section 80G:
The appellant filed an appeal against the order of the Commissioner of Income Tax (Exemptions)-Chandigarh, rejecting the application for approval under section 80G of the Income Tax Act, 1961. The appellant argued that the Commissioner erred in concluding that the construction of the building was to be undertaken by the Government of Haryana until handed over to the society. The Departmental Representative contended that the appellant failed in its pursuit for approval under section 80G and emphasized that the funds generated were for building construction without clear evidence of utilization. The Commissioner highlighted discrepancies in the appellant's accounts and lack of expenditure towards stated objects, leading to the rejection of the approval under section 80G.

Failure to Carry Out Specified Objects:
The Commissioner observed that the appellant's main source of income was corpus donations with a specific direction for constructing a building, which was not an expressed object in the Memorandum of Association. The appellant accumulated substantial funds through donations but did not incur expenses towards the stated objects. The Commissioner concluded that the appellant failed to pursue approval under section 80G as the real purpose seemed to be building construction rather than charitable activities, as required by the Act.

Construction of Building by Government of Haryana:
The Commissioner based the denial of approval under section 80G on an agreement between the Government of Haryana and the appellant society, wherein the Government was responsible for constructing the building until handing it over to the society. The Commissioner found no error in this conclusion and dismissed the appellant's appeal. The Tribunal upheld the Commissioner's decision, noting the lack of evidence to counter the agreement's terms regarding the construction responsibility. Consequently, the Tribunal dismissed the appellant's appeal, affirming the denial of approval under section 80G.

Separate Judgment by Judges:
The judgment was delivered by Shri Yogesh Kumar U.S., Judicial Member, and Shri Pradip Kumar Kedia, Accountant Member.

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