2025 (3) TMI 139 - AT - Income Tax

Trust's Appeal Succeeds: Tribunal Overturns Rejection of Section 80G Approval, Validates Fund Utilization Compliance

The Tribunal allowed the appeal of the assessee trust, overturning the CIT (Exemption)'s order that rejected approval under section 80G(v)(i) of the ... Rejecting the approval u/sec. 80G(v)(i) - as per DR assessee trust has huge amounts in bank FDs from preceding two assessment years and 82% of it’s donations not utilized for the objects of the trust and failed to substantiate it’s claim of non-utilization of funds for the objects of the trust - HELD THAT:- Assessee trust has displayed it’s utilization of funds from assessment years 2021-2023- 24 to meet out it’s objects by complying with the statutory requirements under the Act. CIT(E) observations to the effect that the funds are idle in FDRs in banks and as such, they are not being utilized for the objects of the assessee trust is not justified. In this connection, it is relevant to note here that the Tiger is a National Animal of India. Already the number of Tigers in India is in alarming/depleting level/status. Therefore, if any trust like the assessee-trust in the instant case, come forward to protect, conserve and do research on the Tigers to increase it’s number, such activities of the trust shall be encouraged. Thus, we find that the assessee society is utilizing it’s funds to meet out it’s objects and the CIT(E), Pune in his order is not justified in cancelling the approval granted to the assessee trust. Appeal of the assessee trust is allowed. The appeal in this case was filed by the assessee against the rejection of approval under section 80G(v)(i) of the Income Tax Act, 1961 by the CIT (Exemption), Pune. The key issues considered in this case were the rejection of approval due to discrepancies in documents provided by the assessee and the non-utilization of funds for the objects of the trust.The assessee trust had applied for approval under section 80G of the Act, but the CIT (Exemption) found various discrepancies in the documents submitted by the assessee. The CIT (Exemption) specifically noted the failure of the assessee to provide copies of bills, vouchers, invoices, research activity papers, and details of donations received through FCRA. Additionally, the CIT (Exemption) raised concerns about a large amount of funds lying idle in bank accounts without being utilized for the trust's objects.During the appeal before the Tribunal, the assessee argued that the registration under section 12AB of the Act was valid up to the assessment year 2026-2027, and the approval under section 80G was also valid for the same period. The assessee contended that there was no statutory provision to cancel approval with retrospective effect and that the cancellation of approval was unjustified.On the other hand, the Departmental Representative (DR) relied on the CIT (Exemption)'s order and highlighted the significant amount of funds in bank fixed deposits and the alleged non-utilization of donations for the trust's objects. The DR supported the cancellation of approval by the CIT (Exemption).After considering the submissions of both parties and examining the documents on record, the Tribunal found that the assessee trust had valid registrations under section 12AB and approval under section 80G up to the relevant assessment years. The Tribunal also noted that the assessee trust had provided details of FCRA funds utilization and displayed compliance with statutory requirements.The Tribunal disagreed with the CIT (Exemption)'s observations regarding the non-utilization of funds and emphasized the importance of activities aimed at protecting and conserving national assets like tigers. The Tribunal concluded that the assessee trust was utilizing its funds for its objects and overturned the CIT (Exemption)'s order, allowing the grounds of the assessee.In conclusion, the Tribunal allowed the appeal of the assessee trust, canceling the order of the CIT (Exemption) and finding in favor of the assessee.