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2015 (1) TMI 237 - AT - Income TaxDenial of grant of renewal u/s 80G(5)(vi) - cancellation of registration granted to the assessee u/s 12AA - Order passed by CIT u/s 80G is beyond the time limit prescribed in Rule 11AA(6) or not – Held that:- While granting the exemption or renewal of exemption u/s 80G(5) of the Act, the role of CIT is limited to look into the nature of activities being carried on by the institution or fund and the violation if any, of the provisions of section 13 of the Act and its various subsections are to be looked into by the AO while deciding the issue of grant of deduction u/s 11 and 12 - CIT while issuing the extension of exemption u/s 80G(5) of the Act has a limited role to play i.e. to see whether the activities of the assessee trust were charitable in nature - assessee was engaged in promoting educational activities by way of running schools, colleges, etc. - The activities carried on by the assessee were purely charitable in nature which entitled it to claim the exemption under section 80G(5) of the Act - merely because, the assessee had entered into an agreement for leasing out the part of its land to its sister concern M/s. ABL for establishing RMC Plant with the understanding that the RMC would be supplied to it at concessional rates and on priority basis, does not establish the case of the CIT that the assessee had allowed M/s. ABL to use its property for its benefit. Relying upon Orpat Charitable Trust Versus Commissioner of Income-Tax [2001 (12) TMI 36 - GUJARAT High Court] - where the assessee was engaged in promotion of educational activities, which with within the domain of being charitable, the CIT at the time of grant of extension of exemption u/s 80G(5) of the Act was not empowered to deny the exemption to the assessee on the ground that it had violated the provisions of section 13(1) - the arrangement entered into by the assessee with M/s. ABL was a beneficial arrangement and was for the purpose of carrying on the activities of the trust by way of construction of the buildings of the educational institutes to be run by the assessee, and where there was benefit to the assessee by way of such arrangement, the same does not establishes that the assessee was not engaged in providing charitable activities i.e. education – thus, the Commissioner is directed to grant renewal of exemption u/s 80G(5). The denial of registration u/s 12A by way of order passed u/s 12AA(3) of the Act was on similar grounds as in the case of exemption denied u/s 80G(5) – thus, the CIT is directed to grant registration u/s 12AA, as at the time of grant of registration, the CIT was only empowered to look into the nature of activities carried on by the assessee and whether the same were charitable in nature and not to look into the applicability of the provisions of section 13(1) - the agreement entered into by the assessee with M/s. ABL was for the benefit of the society and it cannot be the ground for denial of registration to the assessee trust u/s 12A – thus, the CIT is directed to allow the registration u/s 12AA – Decided in favour of assessee.
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