Income Tax Appellate Tribunal - Jaipur
Keshar Devi Godara Samajik Kalyan, ... vs Cit (Exemption), Jaipur on 11 January, 2017
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IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR
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BEFORE: SHRI KUL BHARAT, JM & SHRI VIKRAM SINGH YADAV, AM
vk;dj vihy la-@ITA No. 877/JP/2016
Keshar Devi Godara Samajik Kalyan Sansthan Singor,
vPO: Singor, Via: Bhorki
Distt. Jhunjhunu.
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Vs.
The Commissioner of Income Tax (Exemptions)
Jaipur.
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vihykFkhZ@Appellant
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fu/kZkfjrh dh vksj ls@ Assessee by : Shri P.C. Parwal (CA)
jktLo dh vksj ls@ Revenue by : Shri H.V. Gurjar (CIT)
lquokbZ dh rkjh[k@ Date of Hearing : 03.01.2017.
?kks"k.kk dh rkjh[k@ Date of Pronouncement : 11/01/2017.
vkns'k@ ORDER
PER SHRI KUL BHARAT, JM.
The appeal by the assessee is directed against the order of ld. CIT (Exemptions), Jaipur dated 09.09.2016. The only effective ground raised by the assessee in the appeal is as under :-
" The learned Commissioner of Income Tax has erred on facts and in law in rejecting the application of assessee seeking exemption u/s 80G(5) of the Income Tax Act, 1961."
2. Briefly stated the facts are that the assessee had filed an application on 21.03.2016 in Form No. 10G seeking approval under section 80G(5)(vi) of the Income Tax Act, 1961 (hereinafter referred to as the Act). However, the said application was rejected by the CIT (Exemptions) on the ground that no significant activities have been started by the applicant as per the objects. Aggrieved by this, the assessee has preferred the present appeal before this Tribunal.
3. The ld. Counsel for the assessee has reiterated the submissions as made in the written brief. The submissions of the assessee are reproduced as under :-
" Rule 11AA of the IT Rules, 1962 provides that the application for approval of any institution or trust u/s 80G(5)(vi) of the IT Act, 1961 shall be in Form No. 10G and be accompanied by copy of registration certificate u/s 12A, notes on the activities of the institution and copy of accounts of the institution of last three years. In the present case, all these requirements are fulfilled.
The ld. CIT has not doubted genuineness of the objects and its activities in as much as registration u/s 12AA has been granted. Once, registration u/s 12AA is granted there is no reason not to grant approval u/s 80G. The only reason given by the ld. CIT at page 3, para 4 of the order is that in a period of more than 1 year since its existence, no significant activity has been commenced. The Act does not provide that approval u/s 80G(5) will be granted only when significant activities are carried out and what would be considered as significant activity. Further, the ld. CIT has not considered the reply dated 22.06.2016 where the nature of activities carried out in FY 2015-16 is explained and the same is also reflected in the income and expenditure account for that year.
Reliance in this connection is placed in case of Hardayal Charitable and Educational Trust vs. CIT (2013) 355 ITR 0534 (All.)(HC). In this case, assessee trust applied for grant of registration u/s 12AA and approval u/s 80G(5). Entire information asked by CIT was provided by assessee. CIT refused to grant registration and approval on grounds that trust was in process of construction of colleges for studies and that huge amount was spent on advertisement and promotion of business of its family concern. In subsequent A.Y registration u/s 12AA & approval u/s 80G was granted with conditions that exemption certificate would be effective from A.Y. 2012-13. Held that in case of registration u/s 12AA, which was necessary for claiming exemption u/s 11 and 12, the CIT was not required to look into activities, where such activities had not or were in process of its initiation. Where a trust, set up to achieve its objects of establishing educational institution, was in process of establishing such institutions, and received donations, registration u/s 12AA cannot be refused, on ground that Trust had not yet commenced charitable or religious activity. Enquiry of CIT at such preliminary stage should be restricted to genuineness of objects and not activities unless such activities had commenced. CIT was satisfied with genuineness of objects of trust for subsequent A.Y., refusal of registration for previous A.Y was not justified.
Similar issue is decided by Hon'ble ITAT Jaipur Bench in case of Hemdha Medi Resources Pvt. Ltd. vs. CIT (Exemptions) in ITA No. 679/JP/15 dated 26.04.2016 where also the registration u/s 12AA was granted but the application for grant of approval u/s 80G(5)(vi) was rejected by holding that no activities has been started by the assessee as per the objects and only capital expenditure like acquisition of land, conversion of land, appointment of architect, soil testing etc. is done and in a period of more than five years. On these facts the Hon'ble ITAT at para 2.11 held "As the appellant has subsequently been granted approval under section 12AA and the decision of the Coordinate Bench in case of Hardayal Charitable and Educational Trust is overruled by the Allahabad High Court, shows that the appellant is well within its right to seek approval under section 80G as well. In view of above, the CIT (Exemption) is hereby directed to grant approval u/s 80G(5) of the IT Act, 1961 to the appellant.
In view of above, the ld. CIT be directed to grant approval u/s 80G(5) of the IT Act, 1961 to the assessee."
3.1. The ld. D/R has opposed the submissions and supported the orders of the authorities below.
3.2. We have heard rival contentions, perused the material available on record and gone through the orders of the authorities below. There is no dispute with regard to the fact that the assessee has been granted registration under section 12AA of the Act. The Coordinate Bench in the case of Hemdha Medi Resources Pvt. Ltd. vs. CIT (Exemptions) in ITA No. 679/JP/2015 under the identical facts has observed as under :-
"2.10. Further, we have gone through the decision of decision of Coordinate Bench in case of Pearls Educational Institute (Supra). The said decision was rendered in the context of renewal of approval under section 80G and the fact that the appellant in that case had not commenced construction activities even after 13 years which is distinguishable on facts as stated above. In our view, the said decision doesn't support the case of the Revenue. In fact, the Hon'ble Allahabad High Court in case of Hardayal Charitable and Educational Trust vs. CIT (supra) is directly on the issue and supports our view. In that case, assessee trust applied for grant of registration u/s 12AA and approval u/s 80G(5). The CIT refused to grant registration and approval on grounds that trust was in process of construction of college for studies and that huge amount was spent on advertisement and promotion of business of its family concern. In subsequent assessment year, registration u/s 12AA and approval 80G was granted with conditions that exemption certificate would be effective from A.Y. 2012-13. It was held that:
"For registration u/s 12AA which was necessary for claiming exemption u/s 11 and 12, CIT was not required to look into activities, where such activities had not or were in process of its initiation. Where a trust set up to achieve its objects of establishing educational institution, was in process of establishing such institutions, and receives donations, registration u/s 12AA cannot be refused on ground that Trust had not yet commenced charitable or religious activity. Enquiry of the CIT at such preliminary stage should be restricted to genuineness of objects and not activities unless such activities had commenced."
2.11 Interestingly, the decision of the Coordinate Bench in case of Hardayal Charitable and Educational Trust which was overruled by the Allahabad High Court was quoted by the Revenue while denying the exemption initially to the appellant under section 12AA. Given that the appellant has subsequently been granted approval under section 12AA and the said decision of the Coordinate Bench is overruled by the High Court shows that the appellant is well within its right to seek approval under section 80G as well. In view of above, the CIT(Exemption) is hereby directed to grant approval u/s 80G(5) of the IT Act, 1961 to the appellant."
The facts are identical in the present case. Therefore, taking a consistent view, the ld. CIT (Exemptions) is hereby directed to grant approval u/s 80G(5)(vi) of the IT Act, 1961 to the appellant.
4. In the result, appeal of the assessee is allowed.
Order pronounced in the open court on 11/01/2017. Sd/- Sd/- ¼foØe flag ;kno½ ( dqy Hkkjr) (VIKRAM SINGH YADAV) ( KUL BHARAT ) ys[kk lnL;@Accountant Member U;kf;d lnL;@Judicial Member Jaipur Dated:- 11/01/2017. Das/ vkns'k dh izfrfyfi vxzsf"kr@Copy of the order forwarded to:
1. The Appellant- Keshar Devi Godara Samajik Kalyan Sansthan Singor, Jhunjhunu.
2. The Respondent- The CIT (Exemptions), Jaipur.
3. The CIT,
4. The CIT (A)
5. The DR, ITAT, Jaipur
6. Guard File (ITA No. 877/JP/2016) vkns'kkuqlkj@ By order, lgk;d iathdkj@ Assistant. Registrar 6 ITA No. 877/JP/2016