High Court Of Delhi
Parivar Seva Sanstha vs. Director Of Income Tax (Exemption)
Section 80G, Rule 11AA
S.B. Sinha, C.J. & D.K. Jain, J.
Civil Writ Petn. No. 2879 of 2001
21st December, 2001
Counsel Appeared
C.S. Aggarwal, for the Petitioner : R.D. Jolly with Ms. Premlata Bansal, for the Respondent
JUDGMENT
S.B. SINHA, C.J. :
The petitioner in this writ petition has prayed for issuance of a writ of mandamus directing the respondents to grant continuation of approval under s. 80G(5)(vi) of the IT Act, 1961 (hereinafter referred to as the ‘Act’). The petitioner has also prayed for quashing of an order dt. 24th May, 2001, passed by the respondent refusing to grant continuation of approval therein.
2. The brief facts, which are relevant to be noticed, are as follows : The petitioner is an institution, which was formed on 11th Sept., 1978, for carrying on charitable activities. A certificate of registration under Societies Registration Act No. XXI of 1860 (hereinafter referred to as the ‘Societies Act’) was issued to the petitioner on 11th Sept., 1978, in the name of Marie Stopes Society. The name of the petitioner-society was changed to Parivar Seva Sanstha and certificate of registration under the Societies Act was granted thereto on 24th Nov., 1982. An application for registration under s. 12A of the Act and approval was filed on 5th Nov., 1978, by the petitioner before the Commissioner of Income-tax (in short, the ‘CIT’). Certificate of Registration under s. 12A and approval under s. 80G(5)(vi) of the Act was granted to the petitioner by the CIT on 9th Nov., 1978. Continuation thereof was also granted till 31st March, 2000. Thereafter, an application in the prescribed Form No. 10G was filed on 2nd Feb., 2000, by the petitioner before the respondent for continuance of an approval under s. 80G(5)(vi) of the Act. Pursuant to the said application, the order dt. 22nd Dec., 2000, was passed, which reads thus : “Please refer to your application filed in Form No. 10G on the above-noted subject.
In continuation with the above, I am directed to inform you that an amount of Rs. 7,32,99,111 is outstanding for the asst. yr. 1997-98. You are requested to please make arrangements to clear the arrears outstanding against you. If the demand is paid, only then your application for renewal under s. 80G will be considered.” A perusal of the aforementioned order and the reply affidavit would show that the benefit under s. 80G(5)(vi) of the Act has been refused allegedly on the grounds : (i) that the petitioner has deliberately furnished inaccurate particulars of its outstanding demand in the application form in order to wrongly obtain exemption certificate; (ii) the demands for the asst. yr. 1997-98 were outstanding; (iii) the petitioner has been continuously violating the provisions of s. 13(1)(c) of the Act.
4. Sec. 80(G)(5) of the Act and r. 11AA of the IT Rules (in short, the ‘Rules’) read thus : Sec. 80G(5) : “This section applies to donations to any institution or fund referred to in sub-cl. (iv) of cl. (a) of sub-s. (2), only if it is established in India for a charitable purpose and if it fulfils the following conditions, namely : (i) Where the institution or fund derives any income, such income would not be liable to inclusion in its total income under the provisions of s. 11 and 12 or cl. (22A) or cl. (23) or cl. (23AA) or cl. (23C) of s. 10 : Provided that where an institution or fund derives any income, being profits and gains of business, the condition that such income would not be liable to inclusion in its total income under the provisions of s. 11 shall not apply in relation to such income, if : (a) the institution or fund maintains separate books of account in respect of such business; (b) the donations made to the institution or fund are not used by it, directly or indirectly, for the purposes of such business; and (c) the institution or fund issues to a person making the donation a certificate to the effect that it maintains separate books of account in respect of such business and that the donations received by it will not be used, directly or indirectly, for the purposes of such business; (ii) The instrument under which the institution or fund is constituted does not, or the rules governing the institution or fund do not, contain any provision for the transfer or application at any time of the whole or any part of the income or assets of the institution or fund for any purpose other than a charitable purpose; (iii) The institution or fund is not expressed to be for the benefit of any particular religious community or caste; (iv) The institution or fund maintains regular accounts of its receipts and expenditure; (v) The institution or fund is either constituted as a public charitable trust or is registered under the Societies Registration Act, 1860 (21 of 1860), or under any law corresponding to that Act in force in any part of India or under s. 25 of the Companies Act, 1956 (1 of 1956), or is a university established by law, or is any other educational institution recognized by Government or by a university established by law, or affiliated to any university established by law, or is an institution approved by the Central Government for the purposes of cl. (23) of s. 10, or is an institution financed wholly or in part by the Government or a local authority.” “Rule 11AA : Requirement for approval of an institution or fund under s. 80G : (1) The application for approval of any institution or fund under cl. (vi) of sub-s. (5) of s. 80G shall in Form No. 10G and shall be made in triplicate. (2) The application shall be accompanied by the following documents, namely : (i) Copy of registration granted under s. 12A or copy of notification issued under s. 10(23) or 10 (23C). (ii) Notes on activities of institution or fund since its inception or during the last three years, whichever is less. (iii) Copies of accounts of the institution or fund since its inception or during the last three years, whichever is less. (3) The CIT may call for such further documents or information from the institution or fund or cause such inquiries to be made as he may deem necessary in order to satisfy himself about the genuineness of the activities of such institution or fund. (4) Where the CIT is satisfied that all the conditions laid down in cls. (i) to (v) of sub-s. (5) of s. 80G are fulfilled by the institution or fund, he shall record such satisfaction in writing and grant approval to the institution or fund specifying the assessment year or years for which the approval is valid. (5) Where the CIT is satisfied that one or more of the conditions laid down in cls. (i) to (v) of subs. (5) of s. 80G are not fulfilled, he shall reject the application for approval, after recording the reasons for such rejection in writing : Provided that no order of rejection of an application shall be passed without giving the institution or fund an opportunity of being heard. (6) The time-limit within which the CIT shall pass an order either granting the approval or rejecting the application shall not exceed six months from the date on which such application was made : Provided that in computing the period of six months, any time taken by the applicant in not complying with the directions of the CIT under sub-r. (3) shall be excluded.”
5. Recognition for purposes of s. 80G of the Act is available when an institution or the fund satisfies all the five conditions listed under sub-s. (5). The aforementioned rule prescribes the procedure for obtaining the said benefit under s. 80G of the Act. In terms of the said rule, an application is required to be filed in Form No. 10G whereupon the CIT is required to pass an order. The proviso appended to sub-r. (6) of r. 11AA shows that in computing the period of six months, any time taken by the applicant in not complying with the directions of the CIT under sub-r. (3) shall be excluded. However, it has not been shown that there has been a delay on the part of the petitioner, but despite the same, order has been passed after a period of 15 months. But further, it appears that the demand for the asst. yr. 1997-98 was raised on 15th March, 2000, whereas application in Form No. 10G was filed on 2nd Feb., 2000. The respondent, therefore, took into consideration a factor, which was extraneous and not germane for passing of the said order.
6. It is evident from the afore-extracted relevant provisions of the Act and the Rules that these nowhere stipulate that the continuation of the benefit shall be granted only upon payment of the outstanding demand. According to the petitioner, said demand was the subject-matter of consideration before the Tribunal and in fact the same has been cancelled. Furthermore, an appeal filed by the Revenue in this Court under s. 260A of the Act has been dismissed, and therefore, benefit under s. 80G of the Act could not have been denied even on that ground. It appears that the Tribunal by an order dt. 29th Sept., 2000, had also held that the petitioner was engaged in charitable activities and its income was fully exempt under s. 11 of the Act. The said fact has also not been taken into consideration. Having regard to the orders passed subsequently, namely, appeals in relation to the asst. yr. 1997-98 having been allowed, the impugned order must be set aside.
For the reasons aforementioned, we are of the opinion that the impugned order cannot be sustained, inasmuch as the goods on the basis whereof the impugned order has been passed do not have any factual basis and, thus, must be held to be perverse. The view taken by the CIT cannot be said to be justified on the material on record.
This writ petition is, therefore, allowed. The impugned order is quashed. The CIT is directed to consider the application of the petitioner for grant of continuation of approval under s. 80G(5) of the Act afresh, as expeditiously as practicable but not later than eight weeks from the date of the order. In the facts and circumstances of the case, there will be no order as to costs.
[Citation : 255 ITR 132]
