TaxTMI 
TaxTMI 
TaxTMI 
2019 (8) TMI 511
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....unal has erred in setting aside the order of the CIT and in directing to pass order granting approval u/s.80G to the assessee without appreciating that the assessee trust has not fulfilled the condition laid down for approval u/s.80G(5) read with rule 11AA(2)(i) of the Income Tax Rules, 1962 ? (B) Whether on the facts and in the circumstances of the case and in law, the Appellate Tribunal has erred in not appreciating that as the assessee was not registered u/s.12AA of the Act, which is a pre-requisite for grant of approval u/s.80G, approval u/s.80G could not have been granted to the assessee trust ?" 4. It appears from the materials on record that the respondent assessee preferred an application addressed to the Commissioner of Income Tax, Valsad, seeking approval under Section 80G(5) of the Act. The Commissioner of Income Tax, Valsad, rejected the application observing as under : "The trust is constituted as public charitable trust and registered with the ofice of the Assistant Charity Commissioner VIDE Registration No.E-2584, Valsad on 08.08.2011. The trust has filed an application for issue of certificate u/s.80G of the Income Tax Act, 1961 in the prescribed form No.10G....
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....st works, according to which the assessee Trust is to spread and promote religious scriptures reading, distribute consecrated food, running gymnasium, upliftment of economically poorer sections of the society, doing sociocultural activities in society without any bar of any caste, filling devotions towards the country for human well being and contribute in imperative services like students education books, scholarships, foods and clothes etc. According to which the aims of the Trust are as under : "i) To repair Shree Tapeshwar Hanumanji Bajrang temple. ii) To appoint pujari for temple iii) To celebrate religious worship prayers enchanting devotional holy story of several kinds, during then to distribute consecrated food great consecrated food. iv) To run gymnasium, religious reading room v) To colonize devotee sitting prayer hall along with necessary furniture. vi) To arrange tours enmasse to visit other religious places to achieve divinity. vii) To provide help in whole to economically poors of the society. viii) To accept the donation and other things from the society as to maintain Trust. ix) This Trust shall do all the truthful non violent works witho....
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....sections with the Osmania University and full-fledged post-graduate course- M.Tech. (Information Technology) with specialization in banking technology and information security with costs with the University of Hyderabad. Sponsoring educational courses would fall within the ambit of "education" as defined under Section 2(15) of the Act. Merely because education is provided at cost does not result in the Society ceasing to carry on its activities for a charitable purpose. There is no material on record, nor has any finding been recorded by the D.I.T. (E) referring to particular instances, to hold that the respondent-assessee was carrying on its educational activities with a profit motive or on commercial lines. The Tribunal has rightly held that the reasons assigned by the D.I.T.(A) in cancelling registration of the respondent-assessee, was vague and without reference to any particular instance." 10. Therefore, in the circumstances, we are inclined to hold that when a Trust mainly engaged in spreading and promoting religious scriptures reading, distribute consecrated food, running gymnasium, upliftment of economically poorer sections of the society, doing socio cultural activities....
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....G of the Act. 8. In such circumstances referred to above, Ms.Bhatt prays that there being merit in the present Tax Appeal, the same be allowed and the two questions formulated may be answered in favour of the Revenue. ANALYSIS : 9. Before adverting to the submissions canvassed on behalf of the Revenue, we must look into few relevant provisions of the Act as well as the Rules. 10. Section 80G of the Act applies for deduction in respect of donations to certain funds, charitable institutions, etc. Section 80G(5) of the Act, which is relevant for our purpose is as follows : "(5) This section applies to donations to any institutions or fund referred to in sub-clause (iv) of clause (a) of sub-section (2), only if it is established in India for a charitable purpose and if it fulfills the following conditions, namely :- (i) where the institution or fund derives any income, such income would not be liable to inclusion in its total income under the provisions of sections 11 and 12 or clause (23AA) or clause (23C) of section 10: Provided that where an institution or fund derives any income, being profits and gains of business, the condition that such income would not be liabl....
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....and ending on the 31st day of March, 2009; and (b) approved under the said clause (vi) for the previous year beginning on the 1st day of April, 2008 and ending on the 31st day of March, 2009." 11. Section 12A is with respect to the conditions for the applicability of Sections 11 and 12 of the Act. Section 12A reads as follows : "12A. Conditions for applicability of sections 11 and 12. - (1) The provisions of section 11 and section 12 shall not apply in relation to the income of any trust or institution unless the following conditions are fulfilled, namely :- (a) the person in receipt of the income has made an application for registration of the trust or institution in the prescribed form and in the prescribed manner to the Principal Commissioner or Commissioner before the 1st day of July, 1973, or before the expiry of a period of one year from the date of the creation of the trust or the establishment of the institution, whichever is later and such trust or institution is registered under section 12AA: Provided that where an application for registration of the trust or institution is made after the expiry of the period aforesaid, the provisions of sections 11 and 12 s....
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....come has furnished the return of income for the previous year in accordance with the provisions of sub-section (4A) of section 139, within the time allowed under that section. (c) xxx xxxx (2) Where an application has been made on or after the 1st day of June, 2007, the provisions of sections 11 and 12 shall apply in relation to the income of such trust or institution from the assessment year immediately following the financial year in which such application is made." 12. Section 12AA of the Act provides for the procedure for registration. The same reads as under : "12AA. Procedure for registration.- (1) The Principal Commissioner or Commissioner, on receipt of an application for registration of a trust or institution made under clause (a) or clause (aa) or clause (ab) of sub-section (1) of section 12A, shall- (a) call for such documents or information from the trust or institution as he thinks necessary in order to satisfy himself about the genuineness of activities of the trust or institution and may also make such inquiries as he may deem necessary in this behalf; and (b) after satisfying himself about the objects of the trust or institution and the genuineness ....
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....or institution due to operation of sub-section (1) of section 13, then, the Principal Commissioner or the Commissioner may by an order in writing cancel the registration of such trust or institution: Provided that the registration shall not be cancelled under this sub-section, if the trust or institution proves that there was a reasonable cause for the activities to be carried out in the said manner." 13. Rule 11AA of the Rules, 1962, stipulates for the requirement for the approval of an institution or fund under Section 80G of the Act. Rule 11AA reads as under : "11AA. Requirements for approval of an institution or fund under Section 80G. (1) The application for approval of any institution or fund under clause (vi) of sub-section (5) of section 80G shall be in Form No. 10G and shall be made in triplicate. (2) The application shall be accompanied by the following documents, namely :- (i) Copy of registration granted under section 12A or copy of notification issued under section 10(23) or 10(23C); (ii) Notes on activities of institution or fund since its inception or during the last three years, whichever is less; (iii) Copies of accounts of the institution or fu....
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....ation of taxable income under the various provisions of the Act referred therein. Primarily, Section 80G is related to giving deduction in respect of the donations made by a person who, but for this provision, would not be eligible for such deduction because the donations are not ordinarily considered to be expenses incurred for the purpose of earning income and liable to be deducted therefrom, since all the donations generally are not treated as eligible for deduction, but only such donations as are made to the funds or institutions named in sub-section (2) of Section 80G of the Act are eligible for such deduction. It also includes general clause "any fund or institution to which this section applies" a provision which was needed to identify the trusts or funds or institution not specifically named in the statute, but fell in that category. That object was achieved by enacting sub-section (5) of Section 80G which helps identify the funds or institutions donation to which qualifies for deduction under Section 80G of the Act. It provides that the fund or institution referred to in sub-section (2)(iv) are such whose income would not be liable to be included in its total income under ....
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....actual extent of exclusion from or inclusion in the computation of total income, the receipts of such institution or fund, depends on fulfillment of further conditions which may or may not exist at the close of the year and has no direct relation to the purpose with which the provision is made. The latter falls in the realm of the assessment of the trust, institution or fund which derives income which is not ordinarily includible in its total income. The liability to assessment is not affected by issuance of recognition certificate or approval certificate issued under clause (vi) of sub-section (5) of Section 80G nor it depends upon the fact whether donor is ultimately gets deduction in respect of such donation. It may be relevant to take cognizance that all donations are not in their entirety eligible for deduction. There exists a maximum limit also for such eligibility and donations beyond such limit by a person may not get deduction, even if it is to an approved institution under Section 80G. Likewise, actual inclusion of any income in the assessment of the donee as taxable income, does not affect the entitlement of the donor to claim deduction under Section 80G, if on the dat....
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....trust or establishing the institution; (b) where the trust is created, or the institution is established, otherwise than under an instrument, selfcertified copy of the document evidencing the creation of the trust, or establishment of the institution; (c) self-certified copy of registration with Registrar of Companies or Registrar of Firms and Societies or Registrar of Public Trusts, as the case may be; (d) self-certified copy of the documents evidencing adoption or modification of the objects, if any; (e) where the trust or institution has been in existence during any year or years prior to the financial year in which the application for registration is made, self-certified copies of the annual accounts of the trust or institution relating to such prior year or years (not being more than three years immediately preceding the year in which the said application is made) for which such accounts have been made up; (f) note on the activities of the trust or institution; (g) self-certified copy of existing order granting registration under section 12A or section 12AA, as the case may be; and (h) self-certified copy of order of rejection of application for grant of r....
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....he Act, an application for registration of the Trust and Institution is required to be made within one year from the date of creation of the Trust or the Establishment of such Institution. The procedure for registration of the Trust or Institution is prescribed under Section 12AA of the Act. In terms of Clause (a) of Section 12AA of the Act, the Commissioner is to satisfy himself about the genuineness of the activities of the Trust on such inquiries as he may deem necessary. Sub-section (1A) and (2) of Section 12AA of the Act, are procedural in nature, whereas Sub-section (3) of Section 12AA of the Act, empowers the Commissioner to cancel the registration of the Trust or Institution, if he is satisfied that the activities of such Trust or Institution are not genuine or are not carried out in accordance with the objects of the Trust or Institution. Section 11 of the Act contemplates that the income as specified therein shall not be included in the total income of the previous year of the person in receipt of the income derived from the property held under the Trust wholly for charitable or religious purposes, whereas Section 12 of the Act, deals with the contributions received by....