Registration u/s 80G(5)(vi)-Applicant need not justify taking donations. Receiving fees in cash do not impair charitable character. Approval cannot be denied for contemplating carrying out in the future an activity not as per its stated objects.
ABCAUS Case Law Citation:
ABCAUS 2990 (2019) (06) ITAT
The present appeal had been preferred by the assessee against the order of the Commissioner of Income Tax (Exemptions) against the denial of approval u/s 80G(5)(vi) of the Income Tax Act, 1961 (the Act).
The applicant trust had applied in Form 10G seeking approval u/s 80G of the Act. The applicant was already registered as charitable trust u/s 12AA of the Act.
The trust was running two institutes and its stated aims and objects were to promote and develop Education, Employment, Science & Technology, to establish school(s) colleges, Institutions, University, Charitable Hospitals and other institutions etc.
The CIT(E) called the necessary information to examine the assess/applicants claim for approval u/s 80G(5) of the Act. However, the CIT(E) found that it was not a fit case for granting approval for the following reasons:
(a) That the applicant/assessee was having an assured fees structure and taking any other receipt apart from what has been allowed by regulating agencies would have a bearing on its charitable character.
(b) that it had a large asset base which did not justify taking donation, having never sought donations in the past.
(c) That the applicant accepted fees in cash which was not deposited in bank.
(d) That it intended to run a Varidh Ashram which was not as per its stated object.
The Tribunal observed that for the purpose of grant of approval u/s 80G, what is to be seen by the Commissioner is that the institution or fund seeking approval is established for charitable purpose and is genuinely carrying out the activities of the institution or funds and further that it fulfills all the conditions laid down in clauses (i) to (v) of section 80G(5) of the Act.
The Tribunal further observed that the conditions specified in the section 80G are primarily to the effect that the Commissioner has to ensure that the Fund or Institution seeking approval is appropriately constituted as specified in sub clause (v), is not for the benefit of any particular religious community or caste and is formed for the purpose of and is genuinely carrying out charitable activities. The Commissioner has to record the fulfillment of all the conditions in writing and thereafter grant approval.
The Tribunal noted that in the instant case, the CIT(E) had not considered the application of the assessee in accordance with that prescribed under the Act and the Rules read alongwith it.
The Tribunal noted that there is no finding in the entire order vis a vis the genuineness of the activities carried out by the applicant/assessee. It was seen that all the findings of the CIT(E) whether regarding no reason being given by the applicant for seeking donations considering that it had enough funds, or that it was receiving fees in cash, or that it intended opening a vridh ashram which was not its object, did not impinge on its charitable character or the genuineness of the activities carried out by it.
The Tribunal opined that the section does not state that the applicant has to justify taking donations. Similarly receiving fees in cash does not impinges its charitable character in the absence of any finding that such cash receipts were not being recorded in its books of accounts.
Also the Tribunal opined that vision/plan of the applicant/assessee to undertake a project in the future of opening vridh ashram could not be the reason for denying approval as being not part of its stated object, since the assessee had not undertaken the activity and it could not be denied approval for contemplating carrying out in the future an activity not as per its stated objects since it can very well modify its objects when doing so.
Accordingly, in the absence of any finding of the CIT(E), as required by law for granting approval u/s 80G of the Act, regarding the charitable character and genuineness of the activities carried out by the assessee/applicant, the Tribunal restored the issue back to the CIT(E).
(vi)-Applicant not required to justify need for taking donations – ITAT){kind=link}