The violation, if any, of the provision of a State Act, should not come in the way of processing the application filed u/s 80G, unless the provisions of the Income Tax Act require examination of the same- ITAT
ABCAUS Case Law Citation:
ABCAUS 1253 (2017) (05) ITAT
The appellant assessee had challenged the order passed by DIT (Exemptions) rejecting the application of the assessee seeking approval u/s 80G of the Income tax Act, 1961 (‘the Act’)
Date/Month of Pronouncement: May, 2017
Brief Facts of the Case:
The assessee was registered u/s 12A of the Act and was running schools and colleges. It obtained recognition u/s 80G of the Act earlier which had expired in 1995. Thereafter the assessee did not renew the recognition for a quiet long time. However, in 2012, the assessee moved an application for renewal of recognition.
The DIT took the view that the assessee had not properly explained the inordinate delay in seeking renewal of 80G approval. Further the DIT noticed that the assessee had taken loan from trustees & others. As per the provisions of State Public Trust Act, the trustees were required to obtain previous sanction of the Charity Commissioner for borrowing moneys. The DIT noticed that the assessee trust had obtained loan without obtaining previous sanction of the Charity Commissioner and accordingly rejected the application of the assessee by observing that the assessee had failed to comply with statutory obligations.
Contentions of the appellant assessee:
It was submitted that the provisions of section 80G(5) prescribes the conditions that are required to be fulfilled for obtaining approval u/s 80G of the Act and the assessee had fulfilled all the conditions. It was contended that failure of the assessee to obtain previous sanction from the Charity commissioner for availing loan should not come in the way of the DIT in granting approval u/s 80G of the Act.
Observations made by the Tribunal:
The Tribunal opined that the DIT(E) was not justified in rejecting the application of the assessee for the reasons stated by him.
According to the ITAT DIT was required to satisfy himself that the assessee had satisfied the conditions prescribed u/s 80G(5) of the Act before granting approval to the assessee u/s 80G of the Act. It was noticed that the DIT had not examined the same.
It was further opined that the violation, if any, of the provision of a State Act, should not come in the way of processing the application filed u/s 80G of the Act, unless the provisions of Income tax Act provide for examination of the same.
The Tribunal further stated that since the assessee was not seeking recognition retrospectively, the delay in filing application seeking renewal was not relevant.
It was held that the application should be examined afresh. Accordingly the order passed by DITwas aside to his file for examining the application of the assessee afresh in accordance with the law, after affording necessary opportunity of being heard to the assessee.