2014 (1) TMI 604

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....igh Court, by judgment dated 08-03-2012 set aside the order of the Tribunal and restored the matter to the file of the Commissioner with a direction to verify whether the assessee utilized 95% of the income for charitable purpose for the year under consideration or not. 3. As per the direction of the High Court, according to the ld.representative, the Commissioner verified the books of account and found that 95% of the donations received by the assessee was used for charitable activities, therefore, he observed that approval can be granted u/s 80G(5)(vi) after verification of the objects of the trust. Once the books of account are verified and it was found that the assessee utilized the income for charitable activities, according to the ld.representative, the assessee is entitled for approval u/s 80G of the Act. In spite of the Commissioner's observation that 95% of the donations were used for charitable activities, the Commissioner rejected the approval by the impugned order dated 29-04-2013. On a query from the bench, whether the Commissioner who observed that 95% of the donations were used for charitable purpose is the very same officer who passed the impugned order, the ld.rep....

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....tration was granted u/s 12AA of the Act, according to the ld.representative, the assessee is entitled for approval u/s 80G of the Act. The ld.representative further submitted that the direction of the High Court was specific and unambiguous. Therefore, the Commissioner cannot travel beyond the direction of the High Court. For this proposition, the ld.representative placed reliance on the judgment of the Orissa High Court in Miss Lopamudra Misra vs A.C.I.T. & Anr (23011) 337 ITR 92 (Orissa). The ld.representative submitted that the issue of approval is covered by the judgment of the Delhi High Court in Director of Income-tax vs Neel Gagan Charitable Trust (2013) 357 ITR 86 (Del). 6. On the contrary, Smt. Latha V Kumar, the ld.DR submitted that in the first round of litigation, this Tribunal, by an order dated 25-02-2010 found that registration u/s 12AA of the Act would be sufficient proof that the object of the trust is charitable in nature. Accordingly, this Tribunal found that the assessee is entitled for approval u/s 80G of the Act. This was challenged before the High Court specifically on the ground that 95% of the income of the trust was not applied for charitable purpose. The....

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....dered the rival submissions on either side and also perused the material available on record. In the first round of litigation, the assessee succeeded before this Tribunal. The approval was directed to be granted on the ground that registration u/s 12A was granted to the assessee. However, on appeal by the revenue, the High Court found that the utilization of the income was not examined either of the authorities below including the Tribunal and to give one more opportunity to the assessee, the matter was remanded back to the file of the Commissioner to examine the books of account. In fact, the High Court observed as follows on page 3 of the judgment: "After hearing both sides, we are satisfied that the assessee is entitled to one more opportunity to produce the accounts before the Commissioner to establish that 95% of the income is utilized for charitable purposes during the year for which registration is sought. We therefore allow the appeal by vacating the orders of the Tribunal and that of the Commissioner and restore the matter to the Commissioner for reconsideration based on accounts and evidence which will be produced by the assessee. We make it clear that the Commissioner ....

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....vations that approval can be granted u/s 80G after verification of the object. Therefore, even if the books of account are verified by the Commissioner, he has not satisfied about the grant of approval u/s 80G on 17-10-2012. Therefore, this Tribunal is of the considered opinion that the assessee cannot place much reliance on the entries said to be made by the Commissioner holding additional charge on 17-10-2012. 13. As rightly submitted by the ld.representative for the assessee, the Commissioner cannot go beyond the direction of the High Court. The direction of the High Court is only to examine the utilisation of the funds for charitable purpose. Therefore, going to the merit of the case may not be justified at all. However, that alone will not give any right to the assessee to claim approval u/s 80G of the Act. It is for the assessee to establish that 95% of the income was used for charitable purpose. 14. We have carefully gone through the provisions of section 80G(5B) of the Act which reads as follows: "(5B) Notwithstanding anything contained in clause (ii) of sub- section (5) and Explanation 3, an institution or fund which incurs expenditure, during any previous year, which i....