In a latest judgment, ITAT Chandigarh has upheld that provisions related to anonymous donations under 115BBC are not relevant for granting approval under section 80G of the Income Tax Act 1961.

Case Details:
Income Tax Appellate Tribunal Division Bench, Chandigarh
ITA No.103/Chd/2015 (Under section 80 (G) of the Act)
Shri Krishna Kirpa Gaushala Samiti (Appellant)  Vs. The CIT (Exemption) (Respondent)
Date of hearing: 10-09-2015
Date of Pronouncement: 21-09-2015

Facts of the Case:
The assessee was a society registered under section 12A of the Income Tax Act, 1961. According to assessee, it was running a Gaushala with more than 1100 cows. It filed an application under section 80G(5) (vi). Commissioner of Income Tax (Exemption), Chandigarh rejected the application.

Aggrieved by the order of CIT(Exemption), the assessee contested it in ITAT.

Contentions of the Assessee:
The assessee contended that the only reason on which the CIT(Exemption) has rejected the application under sect ion 80G(5)(vi)was that the assessee society had received anonymous donations, which cannot be a valid reason for rejecting the application under section 80G(5)(vi) in view of the fact that the assessee was already registered under section 12A.

ITAT Observations:
ITAT observed that the only reason for which the approval had been rejected was that the society had shown to have received anonymous donations. Which were liable to be assessed to tax under section 115BBC.

ITAT further observed that as per this provision, the approval of the Commissioner has to be made in accordance with Rule 11AA. Perusal of sub-rules (4) and (5) of Rule 11AA makes it quite clear that while granting the approval under section 80G, the only provision as per these rules is that the reject ion can only be made if one or more conditions as laid down in clauses (i) to (v) of sub-section (5) of section 80G of the Act are not fulfilled.

ITAT also observed that in clauses (i) to (v) there is nothing which says that the said approval can be rejected if any institution or fund accepts anonymous donations. The provisions of section 115BBC of the Act are not relevant for granting approval under section 80G as there is no mention of it or of anonymous donation in any of the provision of section 80G or rule 11AA. The taxability of anonymous donations under section 115BBC of the Act can always be taken care at the time of assessment.

ITAT also expressed concurrence with the assessee reliance on Kalyanam Karoti Vs. CIT in ITA No.682/LUCK/2008 dated 7.11.2008. In the words of ITAT:

“Reliance placed by the learned counsel for the assessee on the order of the Lucknow Bench of the ITAT in the case of Kalyanam Karoti (supra) is not out of place. In this case also, the registration under sect ion 80G of the Act was rejected on the same grounds. After analyzing in detail the relevant sect ions and rules, the Coordinate Bench of the ITAT observed as under :

“For granting recognition under s. 80G(5) or continuation thereof, it is only to be seen whether the conditions laid down under cls. (i) to (v) of s. 80G(5) are fulfilled or not. Further, r. 11AA also does not indicate that nature or type of donation received by the fund or institution would be relevant for granting recognition under s. 80G(5) or continuation thereof. Rule 11AA provides power to CIT to carry out enquiries as he considers necessary and call for documents or information from the institution/fund for satisfying himself about the genuineness of its activities. Further, cl. (5) of r. 11AA authorizes CIT to refuse recognition or continuation thereof only when the conditions laid down in cls. (i) to (v) of sub-s. (5) of s. 80G are not fulfilled. Thus neither in the main sub-s. (5) of rules made thereunder, there is any provision to refuse recognition or continuation thereof only or the ground that the particulars of donors are not provided by institution or fund. Non-availability of particulars may empower the AO to invoke s. 115BBC r/w s. 13(7) which are effective from Ist April, 2007 while making the assessment of the society but so far as recognition under s. 80G(5)is concerned, they have no role to play. The provisions of s. 115BBC and s. 13(7) are applicable for the purposes of considering the anonymous donations as income of the assessee while making the assessment. But such anonymous donations are not relevant for deciding whether continuation of recognition under s. 80G(5) is to be granted or not unless there is other material to justify that the assessee society is engaged in the activities which are not charitable activities and are only a camouflage and such anonymous/voluntary donations are a consequence of such uncharitable activities or activities which are not genuine. The only effect of not furnishing particulars by the anonymous donors or in case of donors who do not furnish full particulars including PAN is that certificate under s. 80G may not issued to them and hence deduction under s. 80G cannot be given to them in their own assessment. But in respect of other donors who are furnishing their particulars including PAN/ certificate and hence, deduction under s. 80G could not be denied by not giving recognition to the society under s. 80G(5) or continuation thereof. In any case, there is no change in the facts and circumstances of the case as in the earlier years and there is no cogent material reason for refusing continuation of recognition.— Radhasoami Satsang vs. CIT (1991) IOC CTR (SC) 267 : (1992) 193 ITR 321 (SC) applied.”

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