Commissioner Of Income Tax (Exemptions), 3Rd Floor, Kailash Heights, Lal Kothi, Tonk Road, Jaipur v. Gangadeen Niranjan Lal Data Charitable Trust, Alwar

HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH ATJAIPUR D.B. Income Tax Appeal No. 14 / 2018 Commissioner of Income Tax (Exemptions), 3rd Floor, Kailash Heights, Lal Kothi, Tonk Road, Jaipur ----Appellant Versus Gangadeen Niranjan Lal Data Charitable Trust, Alwar ----Respondent _____________________________________________________ For Appellant(s) : Mr. Daksh Pareek for Mr. Sameer Jain _____________________________________________________ HON'BLE MR. JUSTICE K.S.JHAVERIHON'BLE MR. JUSTICE VIJAY KUMAR VYASJudgment 19/01/2018 1. By way of this appeal, the appellant has assailed thejudgment and order of the tribunal whereby tribunal has allowedthe appeal of the assessee and granted exemption u/s 80G(5) ofthe Act. 2.Counsel for the appellant has framed following substantialquestion of law:- “i. Whether on the facts and in thecircumstances of the case and in law, theHon’ble ITAT is justified in allowing ofapproval u/s 80G(5) notwithstanding thatthe applicant has not commencedsignificant charitable activity as per itsobjects?” 3.The facts of the case are that the applicant filed applicationon 21.10.2016 in Form No.10G for seeking approval U/s 80G (5)(vi) of the Income Tax Act, 1961. The applicant was issued a letter/notice No. 3887 dated 24/25.10.2016 requesting it tosubmit certain documents/explanations by 07.12.2016 and also toproduce original Trust Deed/MOA for verification on that date. Incompliance to which Shri V.K. Data, CA/AR of the applicant trustattended and filed written submission and case discussed withhim. 3.1The details were examined in view of the provisions ofsection 80G(5) of the I.T. Act, 1961 and Rule 11AA of the I.T.Rules, 1962. The section 80G(5) lays emphasis on activities of thecharitable organization as well as the application of the incometowards the objects of the organization. Section 80G(5)(iv)requires the applicant to maintain regular accounts of receipts andexpenditure. Rule 11AA of Income Tax Rule 1962, which governsthe procedure of approval u/s 80G also specifies certainrequirements. As per sub rule-2 of Rule 11AA, the applicant isrequired to file note on activities and the copies of accounts of theinstitution or found since its inception or during the last threeyears, whichever is less. 4.Counsel for the appellant has contended that CIT(A) whileconsidering the matter has come to the conclusion that no charityactivities were carried out by the assessee. 5.He has taken us to the order of CIT(A) wherein it has beenheld as under:- 4. In light of above objects, the activitiescarried out by the trust were examined. TheCharity accounts submitted by the applicantfor the period 01.04.2016 to 31.03.2017 isreproduced as under:-carried out by the trust were examined. TheCharity accounts submitted by the applicantfor the period 01.04.2016 to 31.03.2017 isreproduced as under:- Charity Account April-2016 to 31-March-2017 DateParticularsVch Vch DebitCreditTypeNo.To opening Balance31.12.2016 To Sanskrit BhartiJournal11,000.00Nyas-For food31.12.2016 To Global GreenJournal31,800.00Energy-PurchaseInverter for donationto Gauri Devi RajkiyaMahavidhyalaya20.01.2017 To Deepak Plastic &Journal 23,650.00Gift Corner-PurchaseLunchboxfordonation to Karwafoundation26.01.2017 To Primary EducationJournal20,000.00Department, Alwar-for milk, food andchairBy Closing Balance86,450.0086,450.00Total86,450.0086,450.00 5. On examination of the above charityaccount, it is seen that no significant activitieshas been started by the applicant as per theobjects. The trust came into existence on21.07.2016 and in period of more than eihtmonths no significant charitable activity hasbeen commenced. Seeing the insignificantnature of activity the case does not seems tobe fit for granting exemption u/s 80G at thisstage. 6. Therefore, its application in form No.10Gseeking exemption u/s 80G is rejected. 5. On examination of the above charityaccount, it is seen that no significant activitieshas been started by the applicant as per theobjects. The trust came into existence on21.07.2016 and in period of more than eihtmonths no significant charitable activity hasbeen commenced. Seeing the insignificantnature of activity the case does not seems tobe fit for granting exemption u/s 80G at thisstage. 6. Therefore, its application in form No.10Gseeking exemption u/s 80G is rejected. 6.While considering the matter, the tribunal has observed as 6. We have heard the rival contention, perusedthe material available on record. Ld. CIT inPara 4 has recorded the fact with regard to theactivity carried out by the assessee. It isobserved by the Ld. CIT that the activity whichhas been carried out by the assessee is notthe significant charitable activity. Therefore,he was of the view that the case is not fit forgranting exemption u/s 80G at this stage. Inthe sake of clarity the observation of the Ld.CIT has record in para 5 of his impugned orderare reproduced herein below:- “5. On examination of the above charityaccount, it is seen that no significant activitieshas been started by the applicant as per theobjects. The trust came into existence on21/07/2016 and in period of more than eightmonths no significant charitable activity hasbeen commenced. Seeing the insignificantnature of activity the case does not seems tobe fit for granting exemption u/s 80G at thisstage.” 6.1 From the above it can be inferred thatthere was no objection with regard to thegenuinity of the activity. It is only the volumeof activity carried out by the assessee. Ld.CIT’s objection is that in 8 months nosignificant charitable activity has been carriedout. In the light of these undisputed facts, weneed to examine whether the law mandatessignificant charitable activities to be carriedout for become eligible to be registered u/s80G(5)(vi) of the Act. 6.2 As per 80G(5), the provisions of Sectionapplies to donations to any institution or fundreferred to in sub clause (iv) of clause (a) ofsub-section(2), only if it is established in Indiafor a charitable purpose and if it fulfills thefollowings conditions. (i) Where the institution or fund derives anyincome, such income would not be liable toinclusion in its total income under theprovisions of section 11 and 12 of section 10.[Provided that where an institution or fundderives any income, being profits and gains ofbusiness, the condition that such incomewould not be liable to inclusion in its totalincome under the provisions of section 11 shallnot apply in relation to such income, if- (a) The institution or fund maintains separatebooks of accounts in respect of such business. (b) The donation made to the institution orfund are not used by it, directly or indirectly,for the purpose of such business and (c) The institution of fund issued to a personmaking the donation a certificate to the effectthat it maintains separate books of amount inrespect of such business and that thedonations received by it will not be used,directly or indirectly, for the purpose of suchbusiness. (ii) The instrument under which the institutionor fund is constituted does not, or the rulesgoverning the institution of fund do not,contain any provision for the transfer orapplication at any time of the whole or anypart of the income or assets of the institutionor fund for any purpose other than acharitable purpose. (iii) The institution or fund is not expressed tobe for the benefit of any particular religiouscommunity or case; (iv) The institution of fund maintains regularaccounts of its receipts and expenditure. (ii) The instrument under which the institutionor fund is constituted does not, or the rulesgoverning the institution of fund do not,contain any provision for the transfer orapplication at any time of the whole or anypart of the income or assets of the institutionor fund for any purpose other than acharitable purpose. (iii) The institution or fund is not expressed tobe for the benefit of any particular religiouscommunity or case; (iv) The institution of fund maintains regularaccounts of its receipts and expenditure. (v) The institutions of fund is eitherconstituted as a public charitable trust or thisregistered under the Societies RegistrationAct, 1860 (21 of 1860), or under any lawcorresponding to that Act in force in any partof India or under section 25 of the companiesAct, 1956 (1 of 1956), or is a Universityestablished by law, or is any other educationalinstitution recognized by the Government orby a University established by law, or affiliatedto any University established by law, or is aninstitution financed wholly or in part by theGovernment or a local authority. (vi) In relation to donations made after the 31st day of March, 1992, the institution or fundis for the time being approved by thecommissioner in accordance with the rulesmade in this behalf.” 6.3 Further, as per Rule 11AA(3) of IncomeTax Rules, 1962, The Commissioner may callfor such documents or information from theinstitutions or funds or cause such inquiries tobe made as he may deem necessary in orderto satisfy himself about the genuineness of theactivities of such institutions or funds. As perRule 11AA(5), The Commissioner may reject the application for approval, after recordingthe reasons for such rejection in writing,where he satisfied that one or more conditionslaid down in clauses (i) to (v) of Sub-section(5) of Section 80G are not fulfilled. From theabove statutory provisions it is clear that theCommissioner can reject the application forapproval if he is satisfied that one or moreconditions laid down in clauses (i) to (v) sub-section (5) of section 80G are not fulfilled. Inthe present case, Ld. CIT has not recorded anyreason that the assessee has failed to fulfillthe conditions laid down in clauses (i) to (v) ofsub-section (5) of section 80G are not fulfilled.Under these undisputed facts, we are unableto affirm the view of the Ld. CIT, therefore, wedirect him to grant approval u/s 80G(5) of theAct. 7.We are in complete agreement with the view taken by the tribunal. Hence, no substantial question of law arises. 8.The appeal stands dismissed. (VIJAY KUMAR VYAS)J. (K.S.JHAVERI)J. Brijesh 17.