PCIT cannot order conditional approval u/s 80G: ITAT [Read Order]

PCIT - approval - ITAT - taxscan

The Mumbai Bench of the Income Tax Appellate Tribunal ( ITAT ), ruled that Principal Commissioner of Income Tax ( PCIT ) cannot order conditional approval under Section 80G of the Income Tax Act, 1961.

M/s. Lady Tata Memorial Trust and M/s. Lady Meherbai D. Tata Education Trust, the assessees being a charitabletrust sought to grant the registration with effect from 23.03.2022 to A.Y. 2024-25 under section 80G of the Income Tax Act, 1961 for the assessment year 2022-23 after complying with the requisite formalities.

The PCIT accorded the registration under section 80G of the Act, however subject to the conditions to be complied with by the assessee which is under challenge before the Bench.

On examination of the questions raised by the assessee trust qua according of approval sought for under section 80G of the Act,granted by the PCIT subject to certain conditions in the light of the provisions contained in the scheme of Income Tax Act, 1961 consequent upon the registration under section 12A, approval under section 80G of the Act sought for by the assessee cannot be subjected to any condition as there is an inbuilt mechanism to be complied with by the assessee after getting registration/approval under section 12AA and 80G of the Act.

Furthermore, compliance of the conditions for section 11 and 12 of the Act by the assessee is to be examined by the Assessing Office (AO) during the assessment proceedings. The role of the PCIT while according registration and approval under section 12A and 80G is only to make himself satisfied about the genuineness of the activities to be carried out by the assessee trust and compliance of such requirement of any other law for the time being in force by the trust or institution material to achieve its object and then to accord the registration and approval.

The Counsel for the Revenue also contended that when the assessee trust itself moved an application for granting provisional approval as form 10AC only talks about “provisional approval”, the PCIT/CIT was well within his right to impose the conditions.

A Bench comprising Kuldip Singh, Judicial Member and S Rifaur Rahman, Accountant Member noted that “Consequently, approval granted by the PCIT/CIT under section 80G of the Act to the assessees is made absolute sans conditions of the impugned order. Hence, both the appeals filed by the assessee are allowed.”

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