By Ajay R. Singh
Advocate
D.I.T. (Exemptions) Mumbai vs. Shri Sai
Baba Charitable Trust. [ Income tax Appeal no. 902 of 2014 dt : 15/10/2016
(Bombay High Court)].
[D.I.T. (Exemptions) Mumbai vs. Shri Sai
Baba Charitable Trust., [dated 13/11/2013 ; A Y: 2011-12. Mum. ITAT ]
The assessee is a Charitable Trust duly
registered u/s. 12AA Act. On 2nd December, 2011, the assessee Trust
applied to the Director of Income Tax (Exemption) for renewal of Certificate /
approval u/s. 80G. The application was rejected by the Director of Income Tax
(Exemption). This rejection was on the ground that the Trust had obtained
unsecured loan of Rs. 50 lakh from third parties without obtaining prior
approval of the Charity Commissioner as required u/s. 36A(3) of the Bombay
Public Trust Act, 1950. Thus, concluding that the assessee is not a genuine
trust.
Being aggrieved, the assessee filed an
appeal to the Tribunal. The Tribunal by the impugned order held that there is
no dispute that the assessee fully satisfied the conditions specified in
section 80G(5) of the Act for approval there under. It further observed that
there is no requirement under the Act that a breach / contravention of the
Bombay Public Trust Act, 1950 would result in the trust being disqualified from
being approved u/s. 80G of the Act. It held that the very fact that the Revenue
had not initiated any action u/s. 12AA of the Act to revoke its registration
would imply that the activities of the Trust are genuine.
Moreover, the Tribunal also records the fact
that the Charity Commissioner has not taken any action against the assessee for
violation of the provisions of section 36A of the Bombay Public Trust Act, 1950
in having borrowed funds without its prior permission. In the aforesaid circumstances,
the appeal of the assessee was allowed.
The Revenue appealed before the High Court
and urged that the Trust is not a genuine trust in as much as it has been
borrowing funds on regular basis from third persons and has been repaying it by
borrowing further funds from other parties on regular basis.
The Hon. High Court find that the impugned
order of the Tribunal has on the basis of the clear provision of section 80G
recorded that the assessee completely satisfies/fulfils all the conditions
specified in section 80G(5) for the purposes of availing benefit u/s. 80G. This
coupled with the fact that the Revenue itself has also not taken any
proceedings to have the registration cancelled, would itself imply that the
Revenue does consider the Trust to be a genuine trust.
It is an undisputed position that the assessee
satisfies all conditions for approval of the trust u/s. 80G. Therefore, it is
not open to the Authorities to refuse approval by imposing conditions which are
not mentioned in Section 80G. In the above circumstances, the impugned order of
the Tribunal was upheld. Therefore,
the appeal was dismissed.
