TMI Blog2018 (5) TMI 625X X X X Extracts X X X X X X X X Extracts X X X X ..... the purpose of generating profits. CIT(E) has not given any cognizance to the above facts and has in fact not examined the eligibility of the assessee to grant of approval vis a vis the conditions set out in section 80G(5) - Restore the issue back to the Ld.CIT(E) to reconsider the application for grant of approval strictly in the light of the conditions set out in section 80G(5) - Decided in favour of assessee for statistical purposes. - ITA No.929/Chd/2017 - - - Dated:- 1-5-2018 - MS.DIVA SINGH, JUDICIAL MEMBER AND MS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER For The Appellant : Shri B.K. Nohria Vijay Jindal, CAs For The Respondent : Shri Ashis Abrol, CIT DR ORDER PER ANNAPURNA GUPTA, A.M.: This appeal has been preferred by the assessee against the order of Ld. Commissioner of Income Tax(Exemptions), Chandigarh (hereinafter referred to as ( Ld.CIT(E) dated 28.3.2017 rejecting the assessee s application for approval u/s 80G of the Income Tax Act, 1961 (in short the Act ). 2. Briefly stated, an application in Form No.10G has been filed by the assessee society on 26.9.2016 for approval u/s 80G of the Act, to seek donations eligible for deduct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -15 2015-16 are ₹ 2,91,41,935/-, ₹ 4,82,40,914/-, 6,93,09,522/- and ₹ 8,84,90,760 /- respectively. This shows that apart from a constant growth in the fixed asset of the applicant society, also there is an increase in the net current asset (As reflected in the table below) by 65.5%, 43.7% and 27.7% through the financial years 2012-13 to F.Y. 2015-16. The figures in the table and the reply of the applicant are a clear indicator that the applicant society's main focus is on acquiring assets and not the propagation of education as claimed. It has accumulated huge assets in the form of fixed assets and FDRs. On the basis of copy of financial statements the following figures correctly reflect the exact financial position of the applicant society: F.Y. Fixed Asset (Gross Block) Net Current asset 2012-13 ₹ 1,10,40,06,902/- ₹ 2,91,41,935/- 2013-14 ₹ 1,30,83,12,390/- ₹ 4,82,40,914/- 2014-15 ₹ 1,51,29,86,569/- ₹ 6,93,0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ive judge constitution Bench held that commercializing of educational sector is not permissible. 7. All of above clearly leads one to conclude that the entity has at its disposal investible surpluses and the rationale for seeking donations is not brought out in the case. Moreover, allowing donations to educational institutions would be contrarian to the thumbs down given to the practice of donations. No evidence has been provided by the applicant that could project safeguards that may have been built into the administrative and financial practices being followed by the society and the institutions being run under its aegis. Moreover, no purpose has been projected for donations although there is no history of any receipt of donations either. The activities and claim of the applicant society is not corroborated by its emphasis on assets creation and other investments till now. The application for approval u/s 80G is accordingly rejected. 4. Aggrieved by the same, the assessee society has come up in appeal by raising following grounds: 1. That the learned CIT (Exemption) Chandigarh has not denied the compliance of any of the five basic condition stated in sub section (i) to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the said order was placed before us. The Ld. counsel for assessee, therefore, contended that in the above backdrop there was no reason to deny the approval now specially without pointing the non fulfillment of any of the conditions prescribed u/s 80G(5) read with Rule 11AA of the Income Tax Rules,1962 in this regard. At this juncture, our attention was drawn to the provisions of section 80G(5) and Rule 11AA , which read as under: 80G. (1) In computing the total income of an assessee, there shall be deducted, in accordance with and subject to the provisions of this section. . . (5) This section applies to donations to any institution or fund referred to in sub-clause (iv) of clause (a) of sub-section (2), only if it is established in India for a charitable purpose and if it fulfils the following conditions. (i) where the institution or fund derives any income, such income would not be liable to inclusion in its total income under the provisions of sections 11 and 12 or clause (23)] or clause (23AA)] or clause (23C)] of section 10: Provided that where an institution or fund derives any income, being profits and gains of business, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es on activities of institution or fund since its inception or during the last three years, whichever is less ; (iii) Copies of accounts of the institution or fund since its inception or during the last three years, whichever is less. (3) The Commissioner may call for such further documents or information from the institution or fund or cause such inquiries to be made as he may deem necessary in order to satisfy himself about the genuineness of the activities of such institution or fund. (4) Where the Commissioner is satisfied that all the conditions laid down in clauses (i) to (v) of sub-section (5) of section 80G are fulfilled by the institution or fund, he shall record such satisfaction in writing and grant approval to the institution or fund specifying the assessment year or years for which the approval is valid (5) Where the Commissioner is satisfied that one or more of the conditions laid down in clauses (i) to (v) of sub-section (5) of section 80G are not fulfilled, he shall reject the application for approval, after recording the reasons for such rejection in writing : Provided that no order of rejection of an application shall be passed without giving the in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duced above are very clear, setting out conditions which are to be complied with for the purpose of being eligible for approval u/s 80G of the Act. The sufficiency of funds available with an institution seeking the approval is no where mentioned as condition to be looked into before granting approval. In fact as rightly pointed out by the Ld.Counsel for the assessee the primary conditions to be fulfilled are that it should be established for charitable purpose, carrying out only charitable activity and should not be for the benefit of any caste or religion. The facts emerging from the order of the Ld.CIT(E) itself is that the assessee society is registered u/s 12AA of the Act as a charitable society entitled to claim exemption u/s 11 of the Act and has also been granted approval u/s 10(23C)(vi) of the Act making it eligible to claim exemption under the said section as university/institution established wholly for the purpose of imparting education and not for the purpose of generating profits. The Ld.CIT(E) has not given any cognizance to the above facts and has in fact not examined the eligibility of the assessee to grant of approval vis a vis the conditions set out in section 80G ..... X X X X Extracts X X X X X X X X Extracts X X X X
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