Appellan v. M/S O.p. Munjal Foundations, Ludhiana

IN THE HIGH COURT OF PUNJAB AND HARYANA ATCHANDIGARH ITA No. 79 of 2017 (O&M)Date of decision: 06.11.2019 The Commissioner of Income Tax (Exemptions) ..... Appellan Vs. M/s O.P. Munjal Foundations, Ludhiana...Respondents CORAM:HON’BLE MR. JUSTICE AJAY TEWARIHON’BLE MRS. JUSTICE ALKA SARIN Present: Mr. Denesh Goyal, Advocate, for the appellant. Mr. Mukul Gupta, Advocate, for the respondent. AJAY TEWARI, J. (Oral) This appeal has been filed under Section 260-A of the Income TaxAct, 1961 (for short, 'the Act’) by the Revenue against the order dated 18.07.2016passed by the Income Tax Appellate Tribunal, Amritsar Bench, Amritsar (forshort, ‘the Tribunal’) in ITA No.76/Asr/2016, vide which it had set aside the orderof the Commissioner of Income Tax (Exemptions) (for short, 'CIT(E)’) rejectingan application under Section 80G of the Act filed by the assessee. © 2 The tacts which emerged are that assessee has set up PhilanthropicInstitution on 01.04.2015. On 13.05.2015, they moved two application, oneapplication under Section 12AA and one under Section 80G of the Act. As perthe record the application under Section 12AA of the Act was first processedwhile application under Section 80G of the Act was kept pending (to await thedecision on the application under Section 12AA of the Act). On 30.11.2015, theapplication under Section 12AA of the Act was allowed. Thereafter, CIT(E)rejected the application under Section 80G by holding as follows:- =onThe general interpretation of Rule IIAA is that societyshould have registration under Section 12AA and be in existence &active. It is also mandated that the society also maintains regularbooks of accounts of the receipt expenditure as per condition (iv) ofsub-section (5) ofS0G. 4 Sub-rule (4) of Rule IL1AA further lays down that where thCommissionner 1s satisfied that all conditions laid down in clauses (1)to (v) of sub-section (5) of 80G are fulfilled by institution or fund, heshall record such satisfaction in writing and grant approval to theinstitution orfund. 5 Since the society is at nascent stage, it can not beascertained as to whether the society 1s applying itsfunds or not on itsproposed activities. I am of the view that the present application 1spremature and the activities of the trust, in the present, cannot becorroborated vis-q vis the conditions laid down in section 80G. Therequestfor approval u/s S0G(5) (v1) by the trust is thus rejected. 3,The assessee carried the matter up in appeal. The Tribunal noticed thatduring the pendency of the application under Section 12AA of the Act, detailedinvestigation was conducted by the Income Tax Officer (Exemptions) into allfactors as are required to be considered under Section 12AA and it was only afterthe assessee had satisfied all the conditions that the application under Section12AA allowed. It is also not in dispute that the conditions numerated underSection I2AA are in parimeteria with the conditions as enumerated undersection 80G. The Tribunal rightly relied uponCIT Vs. Thangadagi Trust, 3TMI 595 _ (KarnatkandVinayaka_Vidyantketan, Indiranaga Vs. CIT((Exemption), 2 TMI, 746 (Bang) (CLPB4)and held that the CIT(E) had erred in 4In our opinion the reasoning of the Tribunal is apt. 5We find that the Commissioner had taken an unduly harsh and pedanticview of the matter and once it is not disputed that the stringent conditions underSection 12AA have been satisfied, the further action can only be taken at the endof the financial year to determine whether any donation etc or other theconditions of Section 80G have or have not been fulfilled. | 6 The appeal is dismissed, accordingly. | TiSince, the main case has been dismissed, pending application, if any,stands disposed of. (AJAY TEWARITJUDGE November 06, 2019tripti (ALKA SARIN)JUDGE Whether speaking/reasoned : Yes/NoWhether Reportable: Yes/No