2017 (9) TMI 1812 - AT - Income Tax

Exemption u/s 11 - Application u/s 80G rejected - existing registration of the institution u/s 12AA - proof of institution as established for charitable purposes - HELD THAT - It is an undisputed fact that assessee is registered u/s 12AA and the said registration has not yet been withdrawn. We further find that assessee was earlier given registration u/s 80G of the Act which expired on 31.03.2009 Assessee filed its return of income for the assessment year 2016-17 on 08.10.2016 and has claimed exemption u/s 11 for whole of the income and has filed its income at Nil. DR was not able to demonstrate that the returns filed by assessee for assessment year 2013-14 and 2016-17 was not accepted by the department. There is no violation on the part of assessee which could lead to the withdrawal of registration u/s 12AA of the Act. Once the fact that assessee was charitable institution is established the Revenue Authorities at the time of granting registration u/s 80G of the Act can not deny registration u/s 80G of the Act in view of the judgment of Sonepat Hindu Educational Vs. CIT 2005 (5) TMI 52 - PUNJAB AND HARYANA HIGH COURT wherein held that registration of the institution u/s 12AA was itself a sufficient proof of the fact that the institution is established for charitable purpose. In the instant case the Commissioner had not found that the objects of the assessee established in India as set out in its memorandum of association were not for a charitable purpose or that the society was not carrying on its activities in furtherance of its objects. Registration of an institution under section 12 A(a) by itself is a sufficient proof of the fact that the trust or the institution concerned is created or established for charitable or religious purposes. Assessee had enjoyed approval under section 80G from the year 1991 to 31-3-1999 i.e. even after the amendment of its objects on 17-9-1989 and after the insertion of clause (Vi) in section 80G(5) with effect from 1-10-1991 the Commissioner was not justified in holding that either fresh registration under section 12A(a) was required or the memorandum should have been amended as per the procedure laid down in section 92 of Code of Civil Procedure. Above all assessee was already enjoying registration u/s 80G which expired on 31.03.2009 and as per circular no. 7/2010 dated 27.10.2010 the registration was deemed to have been extended in perpetuity (unless withdrawn) had the registration expired on or after 1st Oct. 2009. Therefore it is only a technical reason due to which the registration was not deemed to have been extended. - Decided in favour of assessee.

Summary

Issues:
Appeal against rejection of application for registration u/s 80G of the Act.

Analysis:
The appellant, a registered society under section 12AA, appealed against the rejection of its application for registration under section 80G by the Ld. CIT(E). The crux of the appeal was the Ld. CIT(E)'s decision to reject the application. The appellant argued that its 12AA registration was still valid and that the 80G registration, which had expired in 2009, was being renewed. The appellant contended that it met the conditions for exemption under section 11 of the Act for various assessment years, and its surplus funds were reinvested back into the institution. The appellant cited legal precedents to support its claim that registration under 12AA was sufficient proof of charitable purpose. The Ld. CIT(E) raised objections regarding lack of recent donations and surplus funds, which the appellant countered with explanations about ongoing projects and investments in fixed deposits. The Ld. DR supported the lower authorities' decisions.

The ITAT noted that the appellant's 12AA registration was valid and that it had previously held 80G registration until 2009. The appellant's returns for subsequent years claimed exemption under section 11, and the department had not rejected them. Citing legal precedents, the ITAT emphasized that registration under 12AA was indicative of charitable purpose, and the denial of 80G registration based on technicalities was unwarranted. The ITAT directed the Ld. CIT(E) to grant the appellant registration under section 80G from the date of application. The appeal was allowed based on judicial precedents and the facts of the case.

In conclusion, the ITAT ruled in favor of the appellant, directing the Ld. CIT(E) to grant registration under section 80G from the date of application. The decision was based on the appellant's valid 12AA registration, compliance with exemption conditions under section 11, and legal precedents supporting the linkage between 12AA registration and charitable purpose. The ITAT highlighted the importance of considering the true purpose of an institution and not denying approvals based on technicalities. The judgment emphasized the continuity of exemption under section 80G and the significance of existing registrations in determining eligibility for benefits.