The Income Tax Appellate Tribunal (ITAT), Mumbai Bench, has recently, while deciding an appeal filed before it and thereby granting relief to Sir Ratan Tata Trust, held that no conditions can be imposed by PCIT under clause 1 of section 80g (v), for granting registration to trusts.
The aforesaid observation was made by the Mumbai ITAT, when appeals were preferred before it by the assessees, namely, Sir Ratan Tata Trust and Sir Dorabji Tata, to set aside the impugned orders, dated 01.010.2021 & 02.10.2021, passed by the Principal Commissioner of Income Tax, Mumbai, qua the assessment year 2022-23 to 2026-27, on identically worded grounds.
The brief facts of the case were that both the assessees who were charitable trusts, had sought to grant approval with effect from assessment year A.Y. 2022-23 to A.Y. 2026-27, under section 80G of the Income Tax Act, 1961, after compliance with the necessary formalities.
However, the PCIT vide impugned order granted the registration under section 80G of the Income Tax Act, but subject to the conditions to be complied with by the assessee which is under challenge before the ITAT Bench in the present appeal.
The ground of the assessees’ appeal thus, being the question as to whether the PCIT is empowered to accord approval sought for by the assessee under section 80G, subject to the conditions to be complied with by the assessee trust, Shri Sukhsagar Syal, the A.R. for the assessee strongly argued in the assessee’s favour while Shri Kailash Kanojia, D.R, relied upon the orders of the Revenue.
Hearing the opposing contentions of both the sides and perusing the materials available on record, the ITAT Bench consisting of Amarjit Singh, the Accountant Member, along with Kuldip Singh, the Judicial Member observed:
“When we examine the questions raised by the assessee trust qua according of approval sought for under section 80G of the Income Tax Act granted by the Ld. 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 Income Tax 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 Income Tax Act.”
“Furthermore, compliance of the conditions for section 11 & 12 of the Income Tax Act by the assessee is to be examined by the Assessing Office (AO) during the assessment proceedings, and the role of Ld. PCIT while according registration and approval under section 12A & 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 ITAT Bench added.
“Had the assessee moved to the PCIT under clause II & III of proviso 2 to section 80G, then he would have been empowered to impose the condition”, the ITAT further observed.
Thus, allowing both the appeals of the assessees, the Mumbai ITAT thus ruled:
“In the instant case, the assessee has come up under clause I of sub section v of section 80G, no such condition can be imposed by the Ld. PCIT. So we are of the considered view that impugned order passed by the Ld. PCIT is not sustainable to the extent of imposing conditions in para 10(a) to (j) of the impugned order, in the eyes of law.”
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