Income Tax Appellate Tribunal - Bangalore
Valmark Foundations , Bangalore vs Assessee
IN THE INCOME TAX APPELLATE TRIBUNAL
"B" BENCH : BANGALORE
BEFORE SHRI GEORGE GEORGE K., JUDICIAL MEMBER
AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER
ITA No.1022/Bang/2009
Assessment year : 2009-10
M/s. Valmark Foundations,
No.12/5, 2nd Floor,
Dickenson Road,
Bangalore - 560 042. : APPELLANT
Vs.
The Director of Income-tax
(Exemptions),
Bangalore. : RESPONDENT
Appellant by : Shri V. Srinivasan, C.A.
Respondent by : Smt. Swati S. Patil, CIT-II(DR)
ORDER
Per A. Mohan Alankamony, Accountant Member
This appeal of the assessee is directed against the order of the DIT(E)'s order dated 1.9.09 refusing to grant renewal u/s. 80G(5) of the I.T. Act.
2. Briefly stated, the facts are as follows. The assessee trust is a public charitable trust constituted by trust deed dated 26.4.04. The main ITA No.1022/Bang/09 Page 2 of 5 objects of the trust was to carry on charitable activities in the field of education, medical relief, relief to the poor and other objects of general public utility.
3. The assessee trust had applied for registration u/s. 12A of the Act and same was granted by the ld. DIT(E) which is still in force. The assessee trust had applied for recognition u/s. 80G of the Act and DIT(E) was pleased to grant recognition by his order dated 31.1.08 for the period from 31.1.08 to 31.3.09. Thereafter an application for renewal of exemption u/s. 80G was filed on 17.3.09.
4. After the application was made by the assessee trust, the ld. DIT(E) called for details and particulars and the assessee trust vide its letter dated 24.6.09 furnished the details called for by the DIT(E). After considering the details furnished by the trust, DIT(E) held the assessee trust had not carried out any activity during the previous year ending 31.3.08 and the trust had not filed Form NO.10 for accumulation of its income as it had not spent more than 85% of the gross receipts for the year ending 31.3.09. In this view of the mater, the ld. DIT(E) held that the assessee trust had violated one of the conditions mentioned u/s. 80G(5) of the act i.e., the income of the assessee trust would not be liable to be exempted and had to be included in the total income. Therefore, he rejected the application filed by the assessee trust for renewal of recognition u/s. 80G of the Act.
5. Being aggrieved by the order of the ld. DIT(E) dated 1.9.09, the assessee is in appeal before us raising the following effective grounds : ITA No.1022/Bang/09 Page 3 of 5
1. The order of the learned DIT(E) in so far as it is against the appellant, is opposed to law, equity, weight of evidence, probabilities facts and circumstances of the case.
2. The ld. DIT(E) is not justified in refusing to grant recognition u/s. 80G of the Income-tax Act, 1961 under the facts and in the circumstances of the appellant's case.
6. The ld. AR submitted that the ld. DIT(E) is not justified in holding that the assessee trust is not eligible for renewal of grant of recognition u/s. 80G of the Act on the ground that the assessee trust had violated the condition mentioned u/s. 80G(5) of the Act. The ld. DIT(E) ought to have appreciated that the year ended 31.3.2008 was the first year of the assessee trust and there was no much activity at all. Secondly, for the year ended 31.3.2009, the assessee trust had only received a donation of Rs.35,000/- and had incurred various expenses and the excess of income over expense for the said year was only Rs.17,153. It is submitted that the assessee trust had suffered a deficit of Rs.19,084 for the year ended 31.3.2008 and the same was not met out of the donation received during the subsequent year. Be that as it may, there is no dispute that the assessee trust exists for carrying on charitable activities like free education, medical relief and other activities to the poor and that recognition u/s. 80G of the Act was already granted upto 31.3.2009. Therefore, it was prayed that the ld. DIT(E) may kindly be directed to renew the grant of recognition u/s. 80G of the Act.
7. The ld. DR on the other hand relied on the findings of the ld. DIT(E).
8. We have heard the rival submissions and perused the material on record. The ld. DIT(E) had called for certain details and particulars and the ITA No.1022/Bang/09 Page 4 of 5 assessee trust vide its letter dated 24.6.09 furnished the details called for by the ld. DIT(E). After considering the details furnished by the assessee, the ld. DIT(E) denied the benefit of renewal of grant of recognition u/s. 80G of the Act primarily for two reasons viz., (i) that assessee trust did not carry on any activity during the previous year ending 31.3.08, and (ii) that the assessee trust had not filed Form No.10 for accumulation of its income as it had not spent more than 85% of the gross receipts for the year ending 31.3.09. We find the ld. DIT(E) had not called for explanation of the assessee trust with reference to the two reasons he had in his mind for denying the benefit of renewal of recognition u/s. 80G of the Act. The assessee had raised various contentions before us, which do not find place in the order of DIT(E). The reason which weighed with the ld. DIT(E) for denying the benefit of exemption u/s. 80G was not conveyed to the assessee trust prior to passing of the impugned order dated 1.9.09. In the interest of justice and fairplay, we are of the firm opinion that the assessee trust ought to have provided adequate opportunity to explain its case with reference to the two reasons which the ld. DIT(E) had in his mind for refusing to grant recognition u/s. 80G of the I.T. Act. Therefore, this issue is restored to the file of the ld. DIT(E) for fresh consideration of the matter. The ld. DIT(E) shall pass fresh orders after affording reasonable opportunity of hearing to the assessee.
9. In the result, the appeal filed by the assessee is allowed for statistical purposes.
ITA No.1022/Bang/09Page 5 of 5
Pronounced in the open court on this 5th day of March, 2010.
Sd/- Sd/-
( GEORGE GEORGE K. ) (A. MOHAN ALANKAMONY )
Judicial Member Accountant Member
Bangalore,
Dated, the 5th March, 2010.
Ds/-
Copy to:
1. Appellant
2. Respondent
3. CIT
4. CIT(A)
5. DR, ITAT, Bangalore.
6. Guard file (1+1)
By order
Assistant Registrar
ITAT, Bangalore.