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TMI Blog2008 (4) TMI 396X X X X Extracts X X X X X X X X Extracts X X X X ..... al under section 80G, vide application in Form 10G received by the CITs office on 9-2-2007, the assessee was issued a questionnaire calling upon the assessee to furnish certain documents, information and clarification. This requisition was duly complied with. In the course of ensuing hearing on the renewal application, the CIT noted that, in terms of the findings of the Assessing Officer for the assessment years 2003-04 and 2004-05, there are certain irregularities as also contravention with rules in three out of 57 institutions of the following nature :- - Action of the applicant society in making collection over and above the prescribed fees; - Maintaining accounts in respect of such unauthorized collections separately, viz., under miscellaneous account, and taking it directly to the balance sheet without admitting it as income; - Collecting from the students contribution to development fund which, considering the same are over and above the normal fees are in the nature of capitation fees; - Taking such development funds directly to the balance sheet without routing the same through profit & loss account; - Treat donations which have not been specifically given towards corp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... des that, in order to be eligible for deduction under section 80G(2)(a)(iv), the institution or fund to which the amount is paid as donation, is for the time being approved by the CIT in accordance with the rules framed in this behalf. Rule 11AA of the Income-tax Rules provides for requirements for approval of any institution or fund under section 80G. An institution or fund seeking approval under section 80G is to move an application to CIT concerned, in the prescribed proforma and along with a copy of (i) registration granted under section 12A or copy of notification issued under section 10(23) or section 10(23C); (ii) notes on the activities of the institution or fund for the last three years or since inception, whichever is less, and (iii) copies of accounts of the institution or fund for the last three years or since inception, whichever is less. The CIT is also empowered to call for further documents or information from the trust or institution, or cause such enquiries to be made, as he deems fit, in order to satisfy himself about the genuineness of activities of such trust or institution. Where the CIT is satisfied that all the conditions laid down in clauses (i) to (v) of s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ormation and documents, and to have such enquiries conducted, as he considers appropriate to satisfy himself about 'genuineness of activities of trust or institution', but then there is no further elaboration about the connotations of expression 'genuineness' in this context, nor does that criterion find any place in the test on which the CIT must satisfy himself before granting the approval under section 80G. 7. At this stage, we may take note of order dated 6-8-2007 issued by the Chief CIT-II Pune granting exemption under section 10(23C) to the assessee applicant, from assessment years 2006-07 onwards. This document was filed before us as an additional evidence as the assessee received the above notification after proceedings before the CIT were already concluded. Having heard the parties on the petition seeking admission of this additional evidence, we deem it fit and proper to admit the same. By way this notification, exemption under section 10(23C) is granted on the following conditions:- (i) The assessee will apply its income or accumulate for application, wholly and exclusively to the objects for which it is established; (ii) The assessee will not invest or deposit its fu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssment years 2003-04 and 2004-05 and makes effort to show the fallacies inherent in such objections and the incorrect assumption of material facts. For the reasons we will set out a little later, we are not inclined to address ourselves to these factual aspects in greater detail. The other plea of the learned counsel is that all that is required to be seen by the CIT is whether or not the conditions set out in section 80G(5)(i) to (v) are satisfied, and once the objective tests contemplated in these provisions are satisfied, it is not open to the CIT to decline approval under section 80G on the basis of his subjective perceptions about genuineness of the charitable activities or on the basis of his apprehensions about possible non-fulfilment of the conditions subject to which exemption from income if granted. 9. In our considered view, [for the purpose of deciding on whether or not to grant approval under section 80G, a CIT has to only examine whether or not the conditions set out in section 80G(5)(i) to (v) are satisfied. The first and foremost thing to be seen is whether or not any income earned by the assessee is not being liable to inclusion in its total income under any of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee maintains accounts of its receipts and expenditure. The discrepancies pointed out by the Departmental Representative in wrong accounting treatment to receipts by taking the same directly to balance sheet are not really relevant in this context, because all that law requires is that accounts of receipts and expenditure be maintained by the assessee. The correctness of fine issue in accounting treatment are not covered by the scope of section 80G(5)(iv). The accounts having been regularly maintained by the assessee, it cannot even be case of the CIT that the assessee is wanting in this respect. Finally, in terms of the provisions of section 80G(5)(v), the CIT has to ensure that the assessee institution or fund has the nature of one of the organizations specified in that clause. The societies registered under Societies Registration Act, 1960, as admittedly the assessee is, are one such form of organization. This condition is also therefore satisfied. In the course of hearing before us, there was good deal of discussion on the objections raised by the Assessing Officer in the course of assessment years 2003-04 and 2004-05 and arguments on merits were advanced by both the sides. H ..... X X X X Extracts X X X X X X X X Extracts X X X X
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