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TMI Blog2014 (8) TMI 561X X X X Extracts X X X X X X X X Extracts X X X X ..... ppeal No. 306 of 2014 with the following proposed question of law. "Whether ITAT is justified in law and on facts in directing to grant recognition under Section 80G(5) of the Income Tax Act to the assessee trust?" 2.1. Feeling aggrieved and dissatisfied with the impugned order passed by the learned Income Tax Appellate Tribunal, Rajkot Bench, Rajkot (hereinafter referred to as the "Tribunal") dated 13.12.2013 passed in ITA No.355/RJT/2013, by which, learned Tribunal has allowed the said appeal preferred by the respondentassessee and has quashed and set aside the order passed by the Commissioner of Income Tax, RajkotI and has directed him to grant the recognition under Section 80G(5) of the Income Tax Act, 1961 to the assessee truest, the revenue has preferred present Tax Appeal No. 409 of 2014 with the following proposed question of law. "Whether on the facts and in the circumstances of the case ITAT is justified in law and on facts in direction to grant approval under Section 80G(5) of the act to the assessee trust?" 2.2. Feeling aggrieved and dissatisfied with the impugned order passed by the learned Income Tax Appellate Tribunal, Rajkot Bench, Rajkot (hereinafter referred t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Punjab and Haryana High Court in the case of CIT vs. O.P.Jindal Global University reported in (2013) 38 Taxman.com 366 (P & H), by which, the Punjab and Haryana High Court has taken the view that at the time of granting approval exemption under Section 80G, the object of the trust is required to be examined and application of funds can be examined by Assessing Officer at the time of framing assessment, the Tribunal has held that the Commissioner has materially erred in refusing to registration/ recognition of Section 80G(5) of the Act and has consequently set aside the order of the Commissioner and has directed to grant recognition under Section 80G(5) of the Act to the assessee trust. 4.2. Feeling aggrieved and dissatisfied with the impugned judgment and order passed by the learned Tribunal, the Revenue has preferred present Tax Appeal with the aforesaid proposed substantial question of law. 5.0. Shri Pranav Desai, learned advocate has appeared on behalf of the revenue in the respective appeals and Shri Tushar Hemani, learned advocate has appeared on behalf of respondent trust in Tax Appeal Nos. 306 of 2014 and 409 of 2014. Though served, nobody appears on behalf of responden ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the respective assessee trust. Making above submissions and relying upon the above decisions, it is requested to dismiss present appeals. 7.0. Heard the learned advocates for the respective parties at length and perused the order passed by the learned Commissioner as well as impugned judgment and order passed by the learned Tribunal. At the outset, it is required to be noted that the question is with respect to the recognition approval under Section 80G(5) of the Act to the respective assessee trust. The same was refused by the Commissioner by observing that trust failed in making expenditure to the extent of 85% of its income which is required as per clause (i) of subsection (5) of Section 80G of the Act. However, it is required to be noted and it is not in dispute that as such main object of the trust as per trust deed are educational, social activities, medical etc. Therefore, the short question which is posed for consideration of this Court is whether in the facts and circumstances of the case learned Tribunal has committed any error in quashing and setting aside the order passed by the Commissioner rejecting the application made by the assessee trust seeking approval under Se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are not treated eligible for deduction, but only such donations as are made to funds or institution named in subs. (2) of s. 11(1) are eligible for such deduction and as noticed by us above, it also includes a general clause "any fund or institution to which this section applies" a provision was needed to identify the trusts or funds or institution not specifically named in statute, but fell in that category. That object was achieved by enacting subs. (5) of s. 11(1) which helps identify the funds or institutions donation to which qualifies for deduction under s. 11(1). It provides that fund or institution referred to in clause (2)(iv) are such whose income would not be liable to be included in its total income under the provisions of ss. 11 and 12 or clause (22) or clause (22A) or clause (23) or clause (23AA) or clause (23C) of s. 10. Prior to insertion of clause (vi), it being not a statutory requirement, even in the absence of a certificate under s. 11(1), it was possible for a donor to satisfy an ITO independently about the eligibility of donation made by him for deduction. It was in order to keep a check on an inquiry into such details which may not be possible for every donor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... val certificate issued under clause (vi) of subs. (5) of s. 11(1) nor it depends upon the fact whether donor is ultimately gets deduction in respect of such donation. It may be relevant to take cognisance that all donations are not in their entirety eligible for deduction. There exists a maximum limit also for such eligibility and donations beyond such limit by a person may not get deduction, even if it is to an approved institution under s. 11(1). Likewise, actual inclusion of any income in the assessment of the donee as taxable income, does not affect the entitlement of the donor to claim deduction under s. 11(1), if on the date when he made the donation the conditions were fulfilled. That was the law before the insertion of clause (vi) and apart from the fact that by introducing clause (vi) with r. 11AA a method of proving the eligibility to claim deduction has been provided by the statute, there has been no alternation in the substantive provision, that is to say, entitlement of the donor to claim deduction depends on the eligibility of the donee to claim exemption of its income on the date when donation is made. Examining from this angle, we find that for applicability of ss. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that will exist at the close of the year nor is it possible for the person considering the application for approval, which requires to consider whether the income derived by such trust would not be liable to be included in its total income, can determine, nor as on the date of application whether the income which will henceforth be derived by the trust asking for approval, if it is otherwise eligible to claim exemption from the inclusion of such income in the taxable income, would in fact be entitled to sustain that claim to the fullest extent or not at the time of assessment. That is the jurisdiction and Authority of the AO to enquire into and make appropriate order at the time when assessment of the trust is being made. The Authority examining the question whether a fund or institution is eligible to be certified for the purposes of s. 11(1) is not to act as an AO and pronounce upon the pending assessments. The CIT, in examining this aspect, in respect of pending assessments, in our opinion, exceeded his jurisdiction while considering the application for approval. He, as a matter of fact, stepped into the jurisdiction of the AO, decided upon the claim of the assessee in respect o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which may be notified by the Central Government in the Official Gazette having regard to the fact that the association or institution has as its object the control, supervision, regulation or encouragement in India of the games of cricket, hockey, football, tennis or such other games or sports as the Central Government may, by notification in the Official Gazette, specify in this behalf. The application for approval in respect of any such institution, if it falls within clause (iv) of subs. (2) of s. 80G, an enquiry by the CIT could only extend to find out whether the association or institution is so notified under s. 10(23). It cannot by itself examine the validity or correctness of notification nor can it grant approval even if he concludes that such institution exists for the purposes mentioned in subs. (23), if notification by Central Government is not issued in that regard. That is demonstrative of the scope of enquiry by the CIT while enquiring the existence of condition under s. 80G(5)(i). That extends to eligibility to exemption under various provisions of the IT Act referred to in that subsection, but not to actual assessment which depends on fulfilment of further conditi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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