Assessee's appeal allowed under Section 80G(5) after amending trust objects; matter remanded for fresh consideration

The ITAT Mumbai - AT allowed the appeal of the assessee against the CIT(E)'s rejection of the application for approval of the trust under section 80G(5). The assessee had amended its object clauses to remove references to activities "abroad or anywhere," addressing the CIT(E)'s objections. The matter was remanded to the CIT(E) for fresh consideration on merits, directing that a reasonable opportunity be given to the assessee and that all necessary information regarding the trust's objects and activities be provided. The appeal was allowed for statistical purposes.

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ISSUES:

Whether the rejection of the application for approval under section 80G of the Income Tax Act on the ground that the memorandum of association (MOA) contains clauses indicating intention to receive or utilize funds outside India is justified.Whether the assessee should have been given an opportunity to amend the MOA/object clauses before rejection of the application under section 80G(5).Whether the assessee fulfills the conditions for obtaining approval under section 80G(5) after amending the object clauses.

RULINGS / HOLDINGS:

The rejection of the application under section 80G(5) solely based on the presence of clauses in the MOA indicating possible receipt or utilization of funds outside India was not justified without allowing the assessee an opportunity to amend those clauses.The assessee was not given a reasonable opportunity to amend the object clauses before the rejection, which is contrary to principles of natural justice.Since the assessee has now amended the object clauses by removing references to activities "abroad or anywhere," the matter is restored to the file of the CIT(E) for fresh consideration on merits.

RATIONALE:

The court applied the statutory framework of section 80G of the Income Tax Act, 1961, which governs approval of trusts for tax exemption purposes, emphasizing the necessity for the objects of the trust to align with the provisions of the Act.The decision underscores the principle that before rejecting an application on technical grounds related to the MOA, the assessee must be given a reasonable opportunity to rectify or amend the object clauses.The ruling reflects adherence to the doctrine of natural justice, requiring that an applicant be heard and allowed to make amendments before adverse orders are passed.No dissenting or concurring opinions were recorded; the judgment directs reconsideration in accordance with law after allowing the assessee to provide necessary information and amendments.

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