The ITAT Mumbai bench, while ruling in favour of Shiv Raj Sharma Shiksha Samit, held that the benefit of Section 80G under the Income Tax Act, 1961 cannot be denied to society solely for the reason that it is not involved in charitable activities.
The assessee society is providing relief to the poor by way of providing free education, etc., which falls under the provisions of section 2(15) of the Act. They also running educational institutions and providing education in different fields. Their application for approval under section 80G(5)(vi) of the Act was rejected by the department by holding that the assessee society is not engaged in any charitable purpose.
The assessee filed the application in form No.10G as required under rule 11AA of the I.T. Rules along with the copies of the objects of the institution/fund and the names and addresses of the office bearers. It was also mentioned therein that the assessee society has been granted registration under section 12AA(1)(b)(i) of the Act by the ld. CIT(E), Lucknow and the same is still continuing. The assessee society had filed a reply in response to the queries raised by the ld. CIT(E) vide letter dated 25/10/2017.
The CIT(E) rejected the application concluding that the assessee society is not engaged in any charitable purpose, which is not correct.
Allowing relief to the assessee, the Tribunal held that it is well-settled position of law that at the time of granting approval under Section 80G of the Act, what is to be examined is the object of the trust and so far as the aspect of income is concerned, the same can be very well examined by the AO at the time of framing assessment.
“We note that at the time of granting approval u/s 80G of the Act, only the object of trust is required to be examined and, therefore, assessee’s application seeking approval u/s. 80G(5) of the Act could not be rejected on the ground that the assessee society is not engaged in charitable activities,” the Tribunal said.
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