TMI Blog2009 (6) TMI 612X X X X Extracts X X X X X X X X Extracts X X X X ..... on) is, accordingly, directed to renew the recognition under s. 80G of the Act to the assessee trust – Decided in the favour of the assessee - IT APPEAL NO. 23 (BANG.) OF 2009 - - - Dated:- 26-6-2009 - Member(s) : S. K. YADAV., A. MOHAN ALANKAMONY. ORDER-A. MOHAN ALANKAMONY, A.M.: M/s Envisions-the assessee trust, aggrieved by non-renewal of approval for recognition under s. 80G of the Act by the learned Director of IT (Exemption), has preferred this appeal. 2. Though the assessee-trust has raised six grounds, the essence of the issue is that of the rejection of renewal of approval for recognition under s. 80G of the Act by the Director of IT (Exemption). 3. The assessee-trust had furnished its application in Form No. 10G on 30th June, 2008 with the Director of IT (Exemption), seeking renewal of recognition under s. 80G of the Act. The assessee trust was established by virtue of a trust deed dt. 21st March, 2003. 3.1 In response to a show-cause requiring the assessee trust to furnish certain clarification, the assessee trust had furnished the required clarifications as sought for. 3.2 The renewal for recognition under s. 80G was rejected by the learned Director ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tative, for the sake of convenience and clarity, is summarized as under: (i) the impugned order has been passed without due application of mind and on fact placed extensively which suffers from many errors, particularly, non-observance of rule of consistency; (ii) the trust has been obtaining recognition from time to time covering the period 11th Aug., 2003 to 31st March, 2008. The learned Director of IT (Exemption) who denied recognition in the impugned order had failed to follow the rule of consistency; (iii) buttress the argument, reliance is placed in the cases of- (a) Radhasoami Satsang vs. CIT (1991) 100 CTR (SC) 267 : (1992) 193 ITR 321 (SC); (b) CIT vs. Malborough Polychem (P) Ltd. (2008) 14 DTR (Raj) 15 : (2009) 309 ITR 43 (Raj); (c) Director of IT (Exemption) vs. Daulat Ram Education Society (2005) 278 ITR 260 (Del); and (d) CIT vs. Hotel Restaurant Association (2003) 182 CTR (Del) 374 : (2003) 261 ITR 190 (Del). (iv) Director of IT (Exemption) had not gathered any fresh or adverse material to unsettle the earlier orders granting recognition by different Directors of IT (Exemption). Thus, the present Director of IT (Exemption) had no authority to act in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ority, case laws etc. 4.2 On the other hand, the learned Departmental Representative argued that the trust had violated the provisions of s. 11 and thereafter its activities were not for charitable purposes which led the Director of IT (Exemption) to come to a conclusion that the trust was rendered ineligible for exemption. To strengthen his hand (stand), the learned Departmental Representative had placed strong reliance on the decisions of Hon'ble Kerala High Court reported in Mundakapadam Mandirams Society vs. CIT (2002) 178 CTR (Ker) 79 : (2002) 258 ITR 395 (Ker) and Hon'ble High Court of Karnataka reported in Ganjam Nagappa Son Trust vs. Director of IT (Exemption) and Bangalore Education Trust vs. Director of IT (Exemption) (2004) 188 CTR (Kar) 191 : (2004) 267 ITR 549 (Kar) and Sanjeevamma Hanumanthe Gowda Charitable Trust vs. Director of IT (Exemption) (2006) 203 CTR (Kar) 533 : (2006) 285 ITR 327 (Kar). Before concluding, he submitted that the assessee trust having violated s. 11 which rendered it ineligible for exemption of its income under s. 11 and pleaded that the trust's appeal doesn't carry any conviction which may be rejected by upholding the action of the Directo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itable in character, the benefit admissible under s. 11 must flow to the assessee. Held, that out of 29 purposes/objects stipulated in the memorandum of association, the assessee had specified eight purposes in Form No. 10 for which it was accumulating the unspent income while claiming benefit under s. 11. It was not the case of the Revenue that any of these eight purposes were not charitable or that the same did not figure in the memorandum of association. The assessee-trust was entitled to exemption under s. 11." (v) In yet another case of CIT vs. Hotel Restaurant Association (2003) 182 CTR (Del) 374 : (2003) 261 ITR 190 (Del), the Hon'ble Delhi High Court has held thus: "that it is true that specification of a certain purpose or purposes was needed for accumulation of the trust's income under s. 11(2) of the Act. At the same time the purpose or purposes to be specified cannot be beyond the objects of the trust. Plurality of the purposes of accumulation is not precluded but it depends on the precise purpose for which the accumulation is intended. In the present case, both the CIT(A) and the Tribunal had recorded a concurrent finding that the income was sought to be accumu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctor of IT (Exemption) had not found out that the assessee trust had not fulfilled any of the conditions as laid down in s. 80G(5) of the Act. 5.3 As could be seen from the impugned order, the learned Director of IT (Exemption) had resorted to reject the assessee-trust's application for renewal, primarily, on the ground that the intimation in Form No. 10 was not specific. 5.4 However, on a perusal of Form No. 10, it is seen that the assessee trust had specifically mentioned that "out of the income of the trust for the previous year relevant to the asst. yr. 2005-06 an amount of Rs. 27,53,196 being 84.76 per cent of the income of the trust should be accumulated or set apart till the previous year ending 31st March, 2010 in order to enable the governing body to accumulate sufficient funds for carrying out the following purposes of the trust: (a) to conduct various activities in the field of academics, architecture, music and literature for preservation of our heritage; (b) To run and maintain educational or other institutions for providing and promoting education for poor and weaker sections of the society; (c) to run, maintain or assist any medical institution to grant ass ..... 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