TMI Blog2011 (8) TMI 1322X X X X Extracts X X X X X X X X Extracts X X X X ..... is concerned, it is to examine the eligibility of the assessee applicant to claim that its income is not liable to be included in the computation of total income. The Hon ble High Court emphasized that for the purposes of enquiry under section 80G(5), it is to be seen whether the Trust is registered u/s 12 or not. It has been specifically observed that, Once a trust is registered under section 12A, its income from property, which includes donations whether covered under section 11(1)(d) or u/s 12 such donations are deemed to be income from property, is not to be included in its total income u/s 11 or section 12. In the present case, the objection raised by the CIT to deny the recognition u/s 80G is founded on irrelevant considerations by embarking upon an exercise which is only in the realm of assessment proceedings. Undeniably the assessee is registered u/s 12A and such registration continues. In this view of the matter, in our view, the assessee fulfils the condition prescribed under clause (i) of section 80G(5). There being no other objection raised by the CIT, we therefore proceed on the basis that the assessee has fulfilled all the conditions prescribed under clauses ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , observed that the provisions of sect ion 13(1)(c) were violated for the relevant period and denied the exemption claimed of ₹ 2,62,24,003/ - shown as surplus in the income expenditure Account. Taking into account this aspect of the case, it is to be held that sect ion 13(1) (c) is violated for the periods for which renewal is sought fo. For this reason, the application in Form No. 10G made by the applicant seeking approval u/s 80G is hereby rejected. Aggrieved with the order of the Commissioner of Income-tax, the assessee is in appeal before us. 3. Before us, learned Counsel for the assessee has submitted that the Commissioner has denied the approval under sec. 80G of the Act on unjustified ground. According to the learned Counsel the assessee satisfies all the conditions prescribed under section 80G(5) and therefore, the Commissioner ought to have granted the approval under section 80G of the Act. It is submitted that the reason advanced by the Commissioner, namely, that the assessee had violated the provisions of section 13(1)(c) of the Act and therefore, it was ineligible for the approval under section 80G is not relevant. It has been submitted that the aforesaid s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssioner of Income-tax dated 21.1.2003 which was valid from 5.7.2001 upto March 31, 2004. Vide application dated 19.6.2009, the assessee applied to the Commissioner of Income-tax for renewal of the recognition under section 80G of the Act. That application has been rejected by the Commissioner of Income-tax by the impugned order dated 30.12.2009. Before making the order, it appears that certain queries were raised on certain aspects as contained in para 2 of the impugned order and the explanation of the assessee thereon has been noted in para 3 of the impugned order. Ultimately, the only reason that prevailed with the Commissioner of Income-tax to deny the renewal of recognition under section 80G is contained in para 5 of the impugned order, which has been extracted by us elsewhere in this order. From the perusal of para 5, it is clear that as per the Commissioner of Income-tax the assessee has violated section 13(1)(c) of the Act and it is noticed that for such reason the Assessing Officer has denied the exemption under section 11 12 of the Act for the assessment year 2007-08. Impliedly, as per the Commissioner of Income tax, the assessee does not fulfill condition contained in c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he prescribed conditions. 7. In so far as the approval required under section 80G(5) is concerned, the same is governed by the fulfilment of the conditions prescribed in clauses (i) to (v) of Section 80G(5) of the Act. Further, Rule 11AA of the Income-tax Rules 1962 prescribes the requirements to be seen by the Commissioner of Income-tax for grant of approval under section 80G(5) of the Act. The scheme of the Act read with the relevant Rules envisage that the Commissioner is required to be satisfied that all the conditions laid down in clause (i) to (v) of section 80G(5) are fulfilled. It is also envisaged that in case the Commissioner of Income-tax is not so satisfied, he shall record his reasons and thereafter reject the application in writing. The nature and scope of the enquiry that the Commissioner of Income tax is required to carry out, was a subject matter of consideration by the Hon ble Gujarat High Court in the case of N N Desai Charitable Trust (supra). In fact, the issue before the Hon ble High Court related to the denial of approval under section 80G on the please that the assessee did not fulfill the conditions as per clause (i) of section 80G(5) which is also the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nse would has been used and not in present or past perfect tense so as to take into consideration the actual inclusion or exclusion or the extent of inclusion or exclusion. The direct nexus of clause (i) of sub-section (5) of section 80G, as appears to us, is to the eligibility of the institution or the fund to claim that its income is not liable to be included in the computation of the total income. The two are different concepts. First, whether an institution or fund is such whose income is not liable to be included in the computation of the total income depends on its status or character. The second is the actual assessment of income, which necessarily takes place in future after donation is received by the done on fulfillment of other conditions about application of income by the eligible trusts, which in the very nature of things can operate only after receipt of income. The actual extent of exclusion from or inclusion in the computation of the total income, the receipts of such institution or fund, depends on fulfillment of further conditions which may or may not exist at the close of the year and has no direct relation to the purpose with which the provision is made. The l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... institution or fund to which sub-section (5) applies shall not be denied merely on either or both of the following grounds, namely, that any part of the income of the institution or fund has become chargeable to tax due to non-compliance with any of the provisions under section 11, section 12 and/or section 12A and under clause (c) of sub-section (1) of section 13, the exemption under section 11 or 12 can be denied to an institution or fund in respect of the income accruing or arising to it from any investment referred to in clause (h) of sub-section (2) of section 13. (underlined for emphasis by us) 7. From the aforesaid, it is clear that in so far as the relevance of 80G(5)(i) is concerned, it is to examine the eligibility of the assessee applicant to claim that its income is not liable to be included in the computation of total income. As per the Hon ble High Court, the first aspect of the matter is whether the applicant is such, whose income is not liable to be included in its total income depending on its status and character. The second aspect is the actual assessment of income, which takes place only in future after the donation is received by the done on fulfillment ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
