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TMI Blog2020 (1) TMI 1017X X X X Extracts X X X X X X X X Extracts X X X X ..... (Exemptions) denied the approval under section 80G of the Act observing that the assessee-company was not established for charitable purposes, which was the first and foremost requirement for grant of approval under section 80G of the Act. The learned Commissioner of Income-tax (Exemptions) further observed that section 12A registration was only pre-requisite to make an application under section 80G of the Act and that the real purpose of the institution was to be ascertained while granting approval under section 80G of the Act. Further, after considering the records and activities of the assessee, the learned Commissioner of Income-tax (Exemptions) observed that, in fact, the assessee-company, in fact, was a corporate social responsibility (CSR) arm of another company namely M/s. Edifecs Technologies Pvt Ltd. That the major source of income of the appellant-company was donations from the said company in which Mr. Gurpreeet Singh was one of the members. He further observed that Shri Gurpreet Singh, director of the company and Mrs. Sabina Singh, member of the appellant-company were also members in Edifec's Technologies Pvt Ltd. from whom the appellant-company had been receiving ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y, admittedly, has been granted registration under section 12A of the Act. The said registration is subsisting and is not cancelled till today. Under the circumstances, no doubt has been raised about the charitable objects of the assessee-society. A perusal of the impugned order of the Commissioner of Income-tax (Appeals) further shows that even the learned Commissioner of Income-tax (Exemptions) has not doubted the charitable object and activities of the assessee. The only contention has been raised is that the company has been formed to carry out the corporate social responsibility of the other company. However, there is no averment or allegation that the assessee-company does not fulfil the condition as required under section 80G(5) of the Act. For the sake of ready reference, provisions of section 80G(5) are reproduced as under : "80G. Deduction in respect of donations to certain funds, charitable institutions, etc.-. . .(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, namely :- (i) where the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the company has been formed to fulfil the corporate social responsibility of the another company, the issue has been settled by the co-ordinate Delhi Bench of the Tribunal in Nanak Chand Jain Charitable Trust v. CIT(E) [2018] 91 taxmann.com 197 (Delhi-ITAT) dated February 9, 2018, wherein, it has been held that merely because the assessee-trust/ company has been formed by another company for complying the corporate social responsibility requirements, it cannot be denied registration under section 12AA unless the genuineness of the activities of the assessee-trust or its charitable objects is doubtful. The relevant part of the order of the hon'ble Delhi Bench of the Tribunal (supra) is reproduced as under : "9. We have heard both the parties and perused the material avail able on record. It is pertinent to note that the reasons (i) and (ii) given by the Commissioner of Income-tax (Exemptions) is that the main aim appears to be forming a trust merely for complying with corpo rate social responsibility requirements. When a trust is created for the purpose of carrying out corporate social responsibility activities, the registration under section 12AA of the Income-tax Act, 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e for the purpose of exemption under section 11 of the Income-tax Act, 1961. At the time of granting the registration under section 12AA of the Income-tax Act, 1961, the Commissioner of Income-tax (Exemptions) need not go beyond the two parameters that the object being charitable in nature and the activities being genuine. All other activities are the matters to be taken care of by the Assessing Officer at the time of assessment for granted exemption under section 11 of the Act. Reasons (vi) given by the Commissioner of Income-tax (Exemptions) that it also militates against the legal principle that social enterprises cannot be a direct recipient of money from corporate as it is a profit making company. This reasons given by the Commissioner of Income-tax (Exemptions) is not in conformity with any of the provisions of the Income-tax Act. A profit making company can grant certain donation to the charitable trust, how can the activities of the trust become not charitable with this act. The fact that the corporate social responsibility expenditure are not allowable expenditure under section 37 of the Act is relevant only for the taxability of the company incurring such expenditure. Fro ..... X X X X Extracts X X X X X X X X Extracts X X X X
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