A.D. Jain, Vice President:
1. This appeal is preferred by the assessee against the order of the CIT(Exemptions), dated 25.08.2017, denying the registration u/s 80G(5)(vi) of the Income Tax Act, 1961.
2. The assessee has raised the following grounds of appeal:
"1. Because on facts of the case and in law, the ld. Cit (exemptions), lucknow has erred in rejecting the application for grant of approval under section 80g(5)(vij of the income tax act, 1961 vide order dated 25.08.2017.
2. Because on facts of the case and in law, the ld. Cit (exemptions) did not appreciate that the appellant- society is registered under the societies registration act, 1860, and carrying out its activities as per objectives mentioned in its memorandum of the society.
3. Because on facts of the case and in law, the ld. Cit (exemptions) did not appreciate that the appellant- society is registered under section it of the income tax act, 1961 by the commissioner of income tax-1, lucknow w.e.f. 01.04.2008 vide registration no.34/36/2007-08 dated 12.09.2008.
4. Because on facts of the case and in law, the ld. Cit (exemptions) did not appreciate that the returns of income of the appellant have been accepted at nil income allowing benefit of the section 11 of the income 'ax act, 1961.
5. Because on facts of the case and in law, the ld. Cit (exemptions) has erred in recording his findings that neither the activities of the appellant society are genuine nor its business practices are incidental " the attainment of its objects, to deny the approval under section 80g (5)(vi) of the act.
6. Because the ld. Cit (exemptions) was wrong in not considering submissions dated 23.08.2017 furnished by the appellant society during the course of hearing of the case.
7. Because the ld. Cit (exemptions) acted arbitrarily in rejecting the application for approval under section 80g of the appellant society formed for the charitable purpose which carries out its charitable activities genuinely as per the bye laws under which it was formed.
8. Because on facts and in the circumstances of the case, the ld. Cit (exemptions) has erred in not providing the sufficient & reasonable opportunity of being heard to the appellant and which is against the principle of natural justice. '
9. Because on facts of the case and in law the ld. Cit (exemptions) has erred recording the findings that the appellant society engaged itself in business on commercial lines without providing any element of charity & involved in activities which apparently are for profit making and not for charitable purposes.
10. Because in law and on facts of the case, the order dated 25.08.2017 passed by the ld. Cit (exemptions) rejecting the application of the appellant society is arbitrary, unjustified and bad in law and, therefore deserve to be cancelled by allowing the approval to the appellant society.
11. Because on facts and in circumstances of the case, the appellant reserves the right to amend, to introduce other grounds of appeal and new facts with the kind permission of your honour."
3. The assessee in the present case is a society which came into existence on 01.04.2008. It filed an application in the prescribed Form 10G for grant of approval u/s 80G of the Act. The CIT (Exemptions), however, rejected the application of the assessee, holding that the applicant was not engaged in any charitable purpose.
4. The ld. Counsel for the assessee submitted that the ld. CIT (Exemptions) did not appreciate that the appellant- society is registered under section 12A of the Act, by the CIT-I, Lucknow, w.e.f. 01.04.2008, vide registration no.34/36/2007-08 dated 12.09.2008; and that the ld.
CIT(E) has rejected the application moved by the assessee u/s 80G on the ground that the assessee is not engaged in any charitable purpose, whereas the assessee society is formed for charitable purposes and it is engaged in charitable activities as per its bye laws.
5. The ld. Counsel has further contended that the assessee had placed before him, the complete books of account, bills and vouchers for verification, but the CIT(Exemptions), instead of examining the books of account, rejected the application for grant of approval u/s 80G(5)(vi) of the Act. In support of his contention, the ld. Counsel for the assessee has also invited our attention to reply (APB-11 to 13) dated 23.08.2017, filed before the ld. CIT(E). It has been submitted that as the registration granted under Section 12A of the Act is continuing to be granted to the assessee, approval under Section 80G cannot be refused to the assessee and the ld. CIT(E) has wrongly rejected the assessee's application in this regard. The ld. Counsel relied on the order of the Lucknow Bench of the Tribunal in the case of 'Kalyanam Karoti Vs. CIT', in ITA No. 682/Lkw/2008 and on 'Hiralal Bhagwati vs. CIT', 246 ITR 188 (Guj.).
6. The ld. DR, on the other hand, strongly supporting the impugned order, submitted that the CIT(Exemptions) has specifically recorded in his order that necessary documents were not produced for verification; and that the CIT(Exemptions) has every right to examine the books of account before granting of approval u/s 80G(5)(vi) of the Act.
7. Heard. In 'Hiralal Bhagwati' (Supra), rightly relied on by the assessee, it has been held that once registration 12A of the Act stands granted, the application u/s 80G(5) cannot be rejected. The Agra Bench of the ITAT has followed this legal position vide order dated 08.03.2018, passed in 'Dr.
Gyanendra Goel Foundation, Maa Saraswati Hospital Vs. CIT(Exemptions)', (authored by one of us, the Vice President).
Therein, it has been held as under:
"5. We have heard the parties and perused the material on record. At the outset, it is seen that registration u/s 12AA(1)(b)(i) of the I.T. Act was granted to the appellant Institution vide order dated 05.04.2016 (APB, 16-18). It is not disputed that this registration has hitherto not been revoked or cancelled. The ld. CIT(E) has observed, interalia, that approval u/s 80G(5) of the Act is not a mechanical process, wherein the according of registration u/s 12AA of the Act at one end would result in the issuance of approval u/s 80G(5) at the other. Consistent judicial opinion in this regard, however, is otherwise. The issue is, as such, no longer res integra.
6. In "Hiralal Bhagwati vs. CIT", 246 ITR 188 (Guj.), while holding that once registration u/s 12AA of the Act was granted, the order rejecting the application u/s 80G(5) of the Act was liable to be quashed, the Hon'ble High Court observed that the registration of a charitable trust u/s 12A of the Act is not an idle or empty formality; that this is apparent from the provisions of Section 12A; that it requires that not only an application should be filed in the prescribed form, setting out the details of the origin of the trust, but also the names and addresses of the trustees and/ or Managers should be furnished; that the CIT has to examine the objects of creating the trust as well as an empirical study of the past activities of the applicant; and that the CIT has to examine that it is really a charitable trust or Institution eligible for registration. The Hon'ble High Court took into account the submission that once registration u/s 12A of the Act is granted, a grant of benefits under the act cannot be denied; that the ITO was not justified in refusing the benefits under the act which would otherwise accrue under the registration; that if there was no registration, the Revenue would have been justified in submitting that the benefit cannot be granted, but where the application for registration is submitted and the registration has been granted, the benefit cannot be denied.
7. "Hiralal Bhagwati" (Supra) was followed by the Agra ITAT in "Maa Bhagwati Samagra Utthan Trust vs. CIT" vide order (APB, 72-75) dated 18.03.2011, in ITA No. 293/Agr/2009, holding that when the CIT has granted registration u/s 12AA of the Act after examining the genuineness of the activities of the Trust, it is not proper for the CIT to reject the application of the trust for the benefit of exemption u/s 80G(5) of the Act by holding that the activities of the trust are not genuine.
8. In "N.N. Desai Charitable Trust vs. CIT", 246 ITR 452 (Guj), it was held, interalia, that while considering the certification of the Institution for the purpose of Section 80G, inquiry should be confined to finding out if the Institution satisfies the prescribed conditions as mentioned in Section 80G; that it is well settled that at the time of granting the application u/s 80G, what is to be examined is whether the trust is registered u/s 12A and the objects of the trust; that so far as the aspect of income is concerned, the same can be very well examined by the Assessing Officer at the time of framing assessment; and that the Authority examining the question whether a trust/Institution is eligible to be certified for the purposes of Section 80G is not to act as an AO.
9. "N.N. Desai", (Supra) was followed by the Pune ITAT in "B.P.H.E. Society vs. ITO", in ITA No. 111/PN/2010, vide order dated 30.08.2011, holding that when the CIT is to examine an application seeking recognition u/s 80G, he is not required to act as an AO and decide upon the claim of the assessee in respect of his assessment of income; that the actual assessment of the assessee and its actual liability to tax are matters to be decided only in the assessment proceedings; and that since the assessee was (in that case, as herein also) registered u/s 12A of the Act and such registration continued, the assessee fulfilled the conditions prescribed u/s 80G(5)(i) of the Act.
10. "N.N. Desai" (Supra) has also been followed in "Marathi Vidyan Parishad Nashik Vibhag vs. CIT, Nashik", (APB, 95-102), by the Pune Tribunal, vide order dated 20.05.2016, in ITA No. 1465/PN/2014.
11. "N.N. Desai" (Supra) was also followed in "CIT vs. Pujya Jalarambpa & Matushri Virbaima Charitable Trust" (APB, 84-88), by the Raj
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kot Tribunal in ITA No. 249/Rjt/2014, vide order dated 30.05.2014. This order of the Tribunal stands approved by the Hon'ble Gujarat High Court in "CIT vs. Pujya Shri Jalarambapa & Matushri Virbaima Charitable Trust" 55 taxmann.com 52 (Rjt). 12. "Pujya Shri Jalarambapa"(Supra) rendered by the Hon'ble Gujarat High Court has been followed by this Bench in "M/s Samajik Pragya Prasar Samiti, Agra vs. CIT(E)" (APB, 76-83) vide order (authored by one of us, the ld. AM) dated 16.01.2018, in ITA No.343/Agr/2016. 13. No decision contrary to the above case laws has either been referred by the ld. CIT(E) in the impugned order, or cited before us." 8. In the present case, it remains undisputed that the registration granted u/s 12A(a) of the Act w.e.f. 01.04.2008, vide order dated 22.09.2008, passed by the ld. CIT, continues hitherto. As such, the ld. CIT(E) has erred in rejecting the assessee's application u/s 80G(5) of the Act. The order under appeal is, therefore, reversed. The application filed by the assessee u/s 80G is allowed. 9. In the result, the appeal is allowed.