M/s. Association for Advocacy and Legal Initiatives, Lucknow v. CIT, Lucknow

ITA 674/LKW/2010 | misc
Pronouncement Date: 28-02-2011

Appeal Details

RSA Number 67423714 RSA 2010
Bench Lucknow
Appeal Number ITA 674/LKW/2010
Duration Of Justice 3 month(s) 5 day(s)
Appellant M/s. Association for Advocacy and Legal Initiatives, Lucknow
Respondent CIT, Lucknow
Appeal Type Income Tax Appeal
Pronouncement Date 28-02-2011
Appeal Filed By Assessee
Bench Allotted A
Date Of Final Hearing 09-02-2011
Next Hearing Date 09-02-2011
Assessment Year misc
Appeal Filed On 22-11-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH A LUCKNOW IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH A LUCKNOW IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH A LUCKNOW IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH A LUCKNOW BEFORE HONBLE SHRI H.L. KARWA BEFORE HONBLE SHRI H.L. KARWA BEFORE HONBLE SHRI H.L. KARWA BEFORE HONBLE SHRI H.L. KARWA AND HONBLE SHRI N.K . SAINI AND HONBLE SHRI N.K. SAINI AND HONBLE SHRI N.K. SAINI AND HONBLE SHRI N.K. SAINI ITA NO.674/LUC/2010 ASSESSMENT YEAR:N.A. M/S ASSOCIATION FOR ADVOCACY AND LEGAL INITIATIVES LUCKNOW V. CIT-I LUCKNOW PAN:AAATA5717E (APPELLANT) (RESPONDENT) APPELLANT BY: SRI YOGESH AGARWAL ADVOCATE RESPONDENT BY: SRI ANADI VERMA D.R. O OO O R RR R D DD D E EE E R RR R PER N.K. SAINI: PER N.K. SAINI: PER N.K. SAINI: PER N.K. SAINI: THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDE R DATED 29.9.2010 OF THE CIT-I LUCKNOW. THE FOLLOWING GROUNDS HAVE BEEN RA ISED IN THIS APPEAL:- I. THE LEARNED COMMIS S IONER O F INCOM E TAX -I L UCKNOW [HERE-IN-A F TER RE F ERR E D TO AS TH E LD. C I T] G ROSSL Y E RR E D ON FACTS AND IN LAW IN RE JECTIN G THE CLAIM OF THE APPELLANT TRU S T FOR RE NEWAL U L S 80G(5 ) O F TH E I . T . A CT 1961 A S SUBSEQUENT TO THE AM E NDMENT IN THE AC T W . E . F. 1-10- 2 009 THE PRO V ISO T O SECT ION 80G (5)(V I ) HA S BEEN OMITTED A ND THU S N O F R ES H APPRO VA L IS R E QUIR E D AND TH A T TH E SAM E WAS AVA IL A BL E F O R LIFE AND T HU S TH E ORD ER PASSE D IN V I O L AT I ON OF T H E ACT IS N O T S U S T A IN ABLE AND NEE D S TO B E Q U ASHED. II. THE L D. C I T F U R TH E R G R OSS L Y ERRE D O N FACTS A ND I N L AW I N REFUS IN G T HE R E N EWA L U L S 80G (5) AS T H E R EG I S TR A T IO N G R A NT E D U L S 1 2A WAS N OT CA N CE L LE D A ND THU S TH E REN EWA L C OULD NO T H AVE B EE N REJ ECT E D A ND T HU S M AY KINDL Y BE ALL OWE D . NOTWITHSTANDING AND WITHOUT PR E JUDICE TO GROUND NOS. I & II TAK E N ABOV E : - III. T H E L D. CIT GRO S SL Y E RR E D ON F ACT S A ND IN L AW IN NO T AFF ORDIN G A N Y OP PORTUNIT Y TO TH E APP E LL A NT T RU S T T O H AVE ITS SAY OR MAK E NECESSARY C OMP L I A N CE O F T H E R EASO N S R E L IE D UP O N BY HIM W HIL E PA SS IN G T H E P R ESE NT ORDER U L S 8 0 G(5) OF TH E I. T . ACT 1 96 1 A ND I N HO LD I N G TH AT AS T H E R E ARE N O D ETAILS OR EVI D ENCE TO P R OVE T H E C H AR I TA BL E AC T IV IT IES CA RRI E D O UT B Y T H E TR U ST AND ARE T HU S NOT JUST I FIE D A ND GE NU I N E . :-2-: IV. THE LD. CIT ERRE D ON FAC T S A ND IN L AW IN REJE CTIN G THE R E N EWA L U L S 8 0G (5) A ND IN HOLDIN G THAT HE IS NOT SATISFIED R EGAR D ING T H E EX I S T E N CE A ND G ENUINENE SS OF T H E TRUST D ES PI TE THE FAC T T H AT THE COPIES OF TH E A UDIT E D ACCOUNT S F ROM A.Y . 2 007- 0 8 TO 2 00 9 -10 I NC LUDIN G T H E R EG I S T E RED TRUST DEED S UPPORTIN G D OC UM E NT S I N C LUDIN G A CTI V I TY R E PORT RESOLUTION S E T C. WER E DUL Y FIL E D / PRODUCED BEFORE HIM . A LL TH E A BOVE DOCUMENTS IN ITSEL F WE R E S UFFICIENT TO PROVE TH E EXIS TENCE A ND G ENUIN E NE SS OF TH E T RU S T A ND T HU S T H E OR D E R S O PAS SE D M AY KINDL Y B E O RDER E D T O B E SET AS ID E A N D THE L D . CIT BE D I R ECTED TO G R A N T THE APP R OVAL U / S 80G( 5). V. WHILE PASSING THE ORDER U/S. 80G(5) THE LD CIT CHOS E TO IGNORE AND COMPLETELY FAILED TO APPRECIATE THAT THE OBJECTS AN D THE ACTIVITIES OF THE TRUST ARE CHARITABLE IN NATURE AND FOR GENERAL PUBLIC UTILITY AND THAT IT IS NOT EXISTING FOR THE PURPOSES OF PROFIT AND THUS HE WAS NOT AT ALL JUSTI FIED IN REJECTING THE EXTENSION OF APPROVAL U/S. 80G(5). 2. THE ONLY GRIEVANCE OF THE ASSESSEE IN THIS APPEAL R ELATES TO THE RENEWAL OF APPROVAL U/S. 80G(5) OF THE INCOME-TAX ACT 1961. 3. THE FACTS RELATING TO THE ISSUE UNDER CONSIDERATIO N IN BRIEF ARE THAT THE ASSESSEE APPLIED FOR RECOGNITION U/S. 80G(5) OF THE ACT ON 3 1.3.2010. THE LD. COMMISSIONER OF INCOME TAX CALLED FOR REPORT FROM THE ASSESSING OFF ICER WHO DID NOT RECOMMEND THE CASE FOR RECOGNITION U/S. 80G(5) OF THE ACT BY STATING A S UNDER:- ' THIS I S A CASE OF RENEWAL O F A P P R O V AL U L S 80G AND THE TRUST HAS BEEN APPROVED U L S 80G TILL 31 . 03 . 2010 . TH E TR US T IS EN G AGED IN C HAR I TAB L E A CTIVITIES ESPECIALLY IN THE AREA OF WOMEN EM P O W E R M E NT . TH E TRUST HA S R E C E IV E D HUGE GRANTS DURING THE LAST THREE YEARS . ON PERUSAL OF RECORDS AND AC COU N T S IT H AS BE E N F OU ND TH A T THE TRUST HAS MADE HUGE EXPENDITURE ON THE S E M I N A R S AN D WORKSHOP S F O R S P R EA DING AW ARENESS ABOUT THE LAWS AND RULE S M E A N T FO R W OM EN EMPOWERMENT . A T A F E W OCCASI ONS TH E SEM I NA R S AND W ORKS H O PS HA V E BEEN C ONDUCTED IN STAR HOTE LS. T HE AMOUNT SPENT DIRECTLY ON THE ASSI S T A NC E PROV I DED TO BENEFICIARIES IS QUI T E S MALL . ON PERUSAL OF ACCOUNTS IT W AS S E E N THAT V ARI OU S PAYM EN TS HAVE BEEN MADE TO TRUSTEES IN ALL THE THREE PRE CE D I NG Y EARS B UT THES E P AYMENTS HA VE :-3-: NOT B EEN REPORTED I N ANNEXURE - II TO THE A U D IT RE P O RT IN FORM 10B . ON BEING C ONFRONTED THE AUTHORIZED REPRESE NTA T I V E S HRI S. R . LATH CA FUR NISHED A REPLY DATED 13 . 09 . 2010 STATING THEREIN T H AT T H E S E PAYME N TS ARE A UT H O RIZED BY THE R ESOLUTION DATED 22 . 0 7. 1999 OF BOA R D OF T RU ST EE S A N D A R E IN THE NATURE OF EITHER REIMBURSEMENT OR FOR SERVICES REN DER E D B Y THE M AND T H AT IS WHY THE SAME WERE NOT REPORTED IN T HE AUD IT .R EP O RT. HE ALSO FURNISHED A CHART SHOWING T HAT THE AMOUNTS PAI D TO TRUSTEE IN F . Y. 2 0 0 6- 0 7 2007- 0 8 A N D 2008-09 ARE R S . 9 7 500/ - RS.1 19 955/- AND RS .3 76 119/- RESPECTIVELY. H E CO ULD N O T FURNISH ANY DETAILS OF SERVICES RENDERED BY TH E T RU S TEES . T H E R E PLY OF TH E AUTHORIZED R EPRESENTATIVE HAS BEEN CONSIDE R ED A N D F O U N D TO B E JUSTIFIED A ND CONVINCING . IN VIEW OF THE ABOVE I AM INCLINED TO HOLD THAT TH E AUDIT REPORT AND ACCOUNTS OF THE TRUST DO NOT REFLECT THE CORRECT PI CTURE OF APPLICATION OF FUNDS/MONEY RECEIVED BY THE TRUST AND THEREFORE THE RENEWAL OF APPROVAL U/S. 80G IS NOT RECOMMENDED. 4. THE SAME REPORT WAS FORWARDED TO THE LD. COMMISSIO NER OF INCOME TAX BY THE ADDITIONAL COMMISSIONER OF INCOME-TAX RANGE 3 LUC KNOW. THE LD. COMMISSIONER OF INCOME TAX DREW THE ATTENTION OF ONE OF THE TRUSTEE S WHO ATTENDED BEFORE HIM AND SUBMITTED THAT HUGE EXPENDITURE ON SEMINARS AND WOR KSHOP HAD BEEN INCURRED. THE ATTENTION WAS ALSO DRAWN TO THE VARIOUS PAYMENTS MA DE TO THE TRUSTEES WHICH HAD NOT BEEN DISCLOSED IN THE AUDIT REPORT AND BOOKS OF ACC OUNT. ACCORDING TO THE LD. COMMISSIONER OF INCOME TAX NOTHING WAS FURNISHED/SU BMITTED BY THE TRUSTEE. HE THEREFORE WAS OF THE VIEW THAT THE CHARITABLE ACTI VITIES CARRIED OUT BY THE ASSESSEE-TRUST WERE NOT GENUINE. THE LD. COMMISSIONER OF INCOME T AX HELD THAT THERE WAS NO MATERIAL ON RECORD TO ESTABLISH EITHER THE GENUINENESS OR TH E CHARITABLE NATURE OF THE ACTIVITIES OF THE ASSESSEE-TRUST. HE THEREFORE DID NOT GRANT A PPROVAL U/S. 80G(5) OF THE ACT AND REJECTED THE APPLICATION MOVED BY THE ASSESSEE. 5. NOW THE ASSESSEE IS IN APPEAL. 6. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT TH E ASSESSEE-TRUST CAME INTO EXISTENCE THROUGH A TRUST DEED DATED 10 TH NOVEMBER 1998 AND DULY REGISTERED WITH THE SUB-REGISTRAR LUCKNOW. IT WAS FURTHER SUBMITTED T HAT THE ASSESSEE-TRUST FILED FOR REGISTRATION U/S. 12AA OF THE ACT WHO AFTER VERIFYI NG THE OBJECTS AND THE ACTIVITIES OF THE TRUST GRANTED REGISTRATION VIDE REGISTRATION NO.67/ 99-2000 DATED 10.3.2000. OUR :-4-: ATTENTION WAS DRAWN TOWARDS PAGE NO.13 OF THE PAPER BOOK WHICH IS A COPY OF THE SAID REGISTRATION. IT WAS FURTHER STATED THAT ALONG WIT H REGISTRATION U/S. 12A THE ASSESSEE- TRUST WAS ALSO GRANTED APPROVAL U/S. 80G(5)(VI) OF THE ACT W.E.F. 31.3.2000 WHICH WAS VALID TILL 31.3.2003. COPY OF THE SAME IS PLACED AT PAGE 42 OF THE ASSESSEES PAPER BOOK. THEREAFTER THE ASSESSEE WAS GRANTED RENEWALS OF APP ROVAL U/S. 80G(5)(VI) OF THE ACT AND THE LAST APPROVAL WAS TO EXPIRE ON 31.3.2010. COPY OF THE SAME IS FURNISHED AT PAGES 39 TO 41 OF THE ASSESSEES PAPER BOOK. THE LD. COUNSE L FOR THE ASSESSEE SUBMITTED THAT ON THE ADVICE OF ITS COUNSEL SHRI SITA RAM LATH THE ASSESSEE FILED AN APPLICATION IN FORM NO.10G WITH THE LD. COMMISSIONER OF INCOME TAX-I L UCKNOW ON 31.3.2010. THE SAID APPLICATION WAS FILED UNDER MISTAKEN BELIEF THAT TH E APPROVAL HAS TO BE RENEWED AND THE AMENDMENT OMITTING THE PROVISO WHICH PROVIDED FOR R ENEWAL WAS NOT IN THE KNOWLEDGE OF THE ASSESSEE-TRUST. IT WAS FURTHER SUBMITTED THAT THE PROVISO HAD BEEN OMITTED ONLY IN THIS YEAR WHICH ESCAPED THE ATTENTION OF THE COUNSEL AND THE APPLICATION FOR RENEWAL WAS FILED INADVERTENTLY. IN SUPPORT OF THE ABOVE THE ASSESS EE FURNISHED AN AFFIDAVIT OF THE MANAGING TRUSTEE SMT. TULIKA SRIVASTAVA. IT WAS C ONTENDED THAT AS PER THE PROVISIONS AS CONTAINED IN SECTION 80G(5)(VI) OF THE ACT THE INS TITUTIONS OR FUNDS TO WHICH DONATIONS ARE MADE HAD TO BE APPROVED BY THE LD. COMMISSIONER OF INCOME TAX IN ACCORDANCE WITH THE RULES PRESCRIBED IN RULE 11AA OF THE INCOME-TAX RUL ES 1962 AND FURTHER AS PER PROVISIONS OF SECTION 80G(5)(VI) OF THE ACT THE APP ROVAL WAS TO BE RENEWED FROM TIME TO TIME. THE SAID CLAUSE PROVIDED THAT ANY APPROVAL G RANTED UNDER THIS CLAUSE SHALL HAVE THE EFFECT FOR SUCH ASSESSMENT YEAR OR YEARS NOT EXCEED ING FIVE ASSESSMENT YEARS AS MAY BE SPECIFIED IN THE APPROVAL. IT WAS FURTHER SUBMITTE D THAT THE AFORESAID CLAUSE HAS BEEN OMITTED W.E.F. 1.10.2009 VIDE FINANCE (NO.2) ACT 2 009 AND THEREFORE THE LEGISLATURE IN ALL ITS WISDOM HAS SOUGHT TO OMIT THIS PROVISO TO PROVI DE THAT APPROVAL ONCE GRANTED SHALL CONTINUE TO BE VALID IN PERPETUITY. THUS AS PER T HIS AMENDMENT ANY APPROVAL EXPIRING ON OR AFTER 1 ST DAY OF OCTOBER 2009 SHALL BE DEEMED TO HAVE BEEN E XTENDED IN PERPETUITY. IT WAS POINTED OUT THAT IN ASSESSEE;S CASE THE APPROVA L WAS EXPIRING ON 31.3.2010 I.E. AFTER ALMOST SIX MONTHS AND THE CUT OFF DATE AND THE SAI D AMENDMENT WAS BROUGHT IN THE STATUTE ONLY TO REDUCE THE HARDSHIPS OF GETTING THE APPROVAL RENEWED FROM TIME TO TIME AND THIS WAS ALSO BURDENSOME FOR THE BONA FIDE INST ITUTIONS OR FUNDS AND ALSO LEAD TO WASTAGE OF TIME AND RESOURCES OF THE TAX ADMINISTRA TION IN RENEWING SUCH APPROVALS IN A ROUTINE MANNER. IT WAS CONTENDED THAT EVEN IF THE ASSESSEE HAD FILED FOR RENEWAL UNDER AN ERRONEOUS IMPRESSION OR MISCONCEPTION OF LAW STI LL THE MERE FILING SHALL NOT EMPOWER THE LD. COMMISSIONER OF INCOME TAX TO PASS ANY ORDE R AND REJECT THE APPLICATION. IT WAS :-5-: STATED THAT THE APPLICATION HAS BEEN FILED UNDER A MISCONCEPTION. THE SAME SHOULD HAVE BEEN TREATED AS NOT FILED AND NO COGNIZANCE TAKEN T HEREOF. IT WAS STATED THAT THE LANGUAGE OF THE STATUTE IS CLEAR AND UNAMBIGUOUS NO THING CAN BE READ INTO IT BY IMPLICATION AND THE INTENTION OF THE LEGISLATURE HA S TO BE GATHERED FROM THE LANGUAGE USED. THE RELIANCE WAS PLACED ON THE FOLLOWING CAS E LAW:- 1. MITHILESH SINGH V. UNION OF INDIA AIR 2003 SC 1 724 2. DAYAL SINGH V. UNION OF INDIA AIR 2003 SC 1140 7. IT WAS FURTHER STATED THAT THE HON'BLE APEX COURT A ND VARIOUS HIGH COURTS HAVE RULED THAT THE AUTHORITIES UNDER THE ACT ARE UNDER AN OBLIGATION TO ACT IN ACCORDANCE WITH LAW AND THAT TO DRAW AN ANALOGY WE CAN COMPARE IT W ITH THE PROCESS OF TAX COLLECTION AND ASSESSMENT TAX CAN BE COLLECTED ONLY AS PROVIDED U NDER THE ACT. IF ANY ASSESSEE UNDER A MISTAKE MISCONCEPTION OR ON NOT BEING PROPERLY I NSTRUCTED IS OVER ASSESSED THE AUTHORITIES UNDER THE ACT ARE REQUIRED TO ASSIST HI M AND ENSURE THAT ONLY LEGITIMATE TAXES DUE ARE COLLECTED. RELIANCE WAS PLACED ON THE FOLL OWING CASE LAW:- 1. S.R. KOSHTI V. CIT [2005] 276 ITR 165 (GUJ.) 2. CPA YOOSUF V. ITO [1970] 77 ITR 237 (KER.) 3. CIT V. BHARAT GENERAL REINSURANCE CO. LTD. [1971] 81 ITR 303 (DELHI) 4. CIT V. SMT. ARCHANA R. DHANWATAY [1982] 136 ITR 35 5 8. IT WAS FURTHER STATED THAT AN ADMISSION OR AN ACQUI ESCENCE CANNOT BE A FOUNDATION FOR AN ASSESSMENT WHERE THE INCOME IS RETURNED UNDE R THE ERRONEOUS IMPRESSION OR MISCONCEPTION IN LAW. RELIANCE WAS PLACED ON THE J UDGMENT OF THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF ABDUL QAUME V. CIT [1990] 184 ITR 404. IT WAS FURTHER STATED THAT THE LEGISLATURE HAS INTRODUCED SECTION 293C OF THE ACT W.E.F. 1.10.2009 TO PROVIDE POWERS TO THE AUTHORITY TO WITHDRAW SUCH APPROVAL IN CASE THE AUTHORITY WANTS TO WITHDRAW ANY APPROVAL HE HAS TO FIRST INVOKE THE PROVISIONS OF THIS SECTION AND ISSUE A SHOW CAUSE NOTICE AGAINST THE PROPOSED WITHDRAWAL TO THE ASSES SEE CONCERNED AND SINCE IN THE CASE OF THE ASSESSEE THE LD. COMMISSIONER OF INCOME TAX ACTED BEYOND HIS JURISDICTION IN PASSING THE IMPUGNED ORDER AND THUS THE ORDER SO PA SSED NEEDS TO BE QUASHED. 9. IN HIS RIVAL SUBMISSIONS THE LD. D.R. STRONGLY SUP PORTED THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX AND SUBMITTED THAT THE B OARD CIRCULAR RELIED UPON BY THE LD. COUNSEL FOR THE ASSESSEE DOES NOT ALLOW CONTINUATIO N OF 80G RECOGNITION IN PERPETUITY IN AN UNQUALIFIED MANNER BECAUSE THE SAID SECTION SAYS THAT A RENEWED 80G RECOGNITION :-6-: SHALL CONTINUE UNLESS SPECIFICALLY WITHDRAWN WHIC H MAKES IT AMPLY CLEAR THAT THE POWER TO WITHDRAW THE RECOGNITION WILL CONTINUE TO VEST W ITH THE LD. COMMISSIONER OF INCOME TAX. IT WAS FURTHER STATED THAT ON THE DATE ON WHICH THE PROVISO TO CLAUSE (VI) OF SUB-SECTION (5) OF SECTION 80G OF THE ACT WAS WITHDRAWN I.E. 1.10.2 009 ANOTHER SECTION WAS INTRODUCED IN THE INCOME-TAX ACT WHICH IS SECTION 293C. THE SAID SECTION IS APPLICABLE ON ANY AND EVERY APPROVAL GRANTED BY THE CONCERNED AUTHORITIES THEREFORE THE LD. COMMISSIONER OF INCOME TAX HAD THE POWER ON 1.10.2009 ONWARDS TO WI THDRAW THE SAID RECOGNITION. AS REGARDS TO THE AFFIDAVIT FILED BY THE MANAGING TRUS TEE OF THE ASSESSEE THAT AN APPLICATION FOR RECOGNITION WAS FILED IN IGNORANCE OF LAW THE LD. D.R. SUBMITTED THAT IT MAY BE SO BUT IT PROVIDED CAUSE OF ACTION TO THE LD. COMMISSIONER OF INCOME TAX TO RECONSIDER THE RECOGNITION GRANTED EARLIER. HENCE A CAUSE OF ACT ION WAS CREATED WHICH PROVIDED THE SITUATION WHEREIN AN ADJUDICATION ON THE MERITS OF 80G RECOGNITION BECOME POSSIBLE. IT WAS FURTHER STATED THAT SECTION 293C OF THE ACT IS AN OMNIBUS PROVISION WHICH IS APPLICABLE TO ALL THE APPROVALS IN THE INCOME-TAX A CT AND NOT RELATABLE TO SECTION 80G SPECIFICALLY THEREFORE THE CONTENTION OF THE LD. COUNSEL FOR THE ASSESSEE THAT THE ORDER HAS BEEN MADE U/S. 80G(5) WHEREAS IT SHOULD HAVE B EEN 293C HAS NO MERIT. IT WAS FURTHER STATED THAT SECTION 293C IS AN ENABLING PRO VISION BUT NOT A CODE BY ITSELF BECAUSE THIS PROVISION MERELY ENABLES WITHDRAWAL OF THE APP ROVAL BUT NOT EFFECTIVELY EMPLEMENT THIS SITUATION THE DOCTRINE OF REASONABLE CONSTRUCT ION MUST BE UTILIZED. RELIANCE WAS PLACED ON THE JUDGMENT OF THE HON'BLE SUPREME COURT IN THE CASE OF ALLIED MOTORS PVT. LTD. V. CIT 224 ITR 677. IT WAS FURTHER SUBMITTED THAT THE LD. COMMISSIONER OF INCOME TAX HAS NOT REFUSED CONTINUATION OF APPROVAL RATHE R FOUND THE CASE OF THE ASSESSEE A CASE WHICH WAS NOT FIT FOR GRANTING APPROVAL U/S. 8 0G(5) OF THE ACT. RELIANCE WAS PLACED ON THE FOLLOWING CASE LAW:- 1. POURNAMI OIL MILLS V. STATE OF KERALA AND ANOTHER [ 1987] 165 ITR 57 (SC). 2. SUBHARAM TRUST [2010] DTR 23 (BANGALORE) 3. AMAN SHIV MANDIR TRUST V. CIT [2008] 296 ITR 415 (P &H) 10. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PART IES AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. IN THE I NSTANT CASE IT IS NOT IN DISPUTE THAT THE ASSESSEE-TRUST IS REGISTERED WITH THE SUB-REGISTRAR LUCKNOW HAVING REGISTRATION U/S. 12AA OF THE ACT ALSO WHICH HAS BEEN GRANTED BY THE LD. COMMISSIONER OF INCOME TAX LUCKNOW VIDE ORDER DATED 10.2.2010. THE ASSESSEE W AS ALSO GRANTED APPROVAL U/S. 80G(5)(VI) OF THE ACT W.E.F. 10.3.2000 WHICH WAS VA LID TILL 31.3.2003 AND LATER ON RENEWAL :-7-: OF THE APPROVAL UNDER THE SAID SECTION WAS GRANTED VIDE ORDER DATED 9.9.2003 FROM 1.4.2003 TO 31.3.2006 AGAIN VIDE ORDER DATED 7.12. 2006 FROM 1.4.2006 TO 31.3.2008AND FINALLY VIDE ORDER DATED 16.9.2008 FROM 1.4.2008 TO 31.3.2010 BY THE LD. COMMISSIONER OF INCOME TAX-I LUCKNOW. THE COPIES OF THE SAID ORDE RS ARE PLACED AT PAGES 41 40 AND 39 RESPECTIVELY OF THE ASSESSEES PAPER BOOK. EARLIER AS PER PROVISIONS CONTAINED IN CLAUSE (VI) TO SUB-SECTION (5) OF SECTION 80G THE APPROVA L WAS TO BE GRANTED BY THE LD. COMMISSIONER OF INCOME TAX IN ACCORDANCE WITH RULES PRESCRIBED IN RULE 12AA OOF THE INCOME-TAX RULE 1962 AND AS PER THE PROVISO TO SEC TION 80G(5)(VI) OF THE ACT THE APPROVAL WAS TO BE RENEWED FROM TIME TO TIME. HOWE VER CONSIDERING THE HARDSHIP THE LEGISLATURE IN ALL ITS WISDOM HAS SOUGHT TO OMIT TH IS PROVISO 0N 1.10.2009 VIDE ITS FINANCE (NO.2) ACT 2009. THEREFORE NOW APPROVAL ONCE GRAN TED SHALL CONTINUE TO BE VALID IN PERPETUITY. IN THE INSTANT CASE THE APPROVAL WAS GRANTED TO THE ASSESSEE UPTO 31.3.2010 THEREFORE IN VIEW OF THE AFORESAID OMISSION OF THE PROVISO TO SECTION 80G(5)(VI) OF THE ACT VIDE FINANCE (NO.2) ACT 2009 THE APPROVAL ONCE GR ANTED SHALL CONTINUE TO BE VALID IN PERPETUITY. THE MEMO EXPLAINING THE PROVISIONS IN FINANCE (NO.2) BILL 2009 AS REPORTED IN 314 ITR 193 (ST.) AT PAGE 194 READS AS UNDER:- THIS AMENDMENT WILL TAKE EFFECT FROM 1ST DAY OF APR IL 2009 AND SHALL ACCORDINGLY APPLY IN ' RELATION TO ASSESSMENT YEAR 2009-10 ONLY . FURTHER AS PER CLAUSE (VI) OF SUB-SECTION (5) OF SECTION 80G O F THE INCOME-TAX ACT 1961 THE INSTITUTIONS OR FUNDS TO WHICH THE DONATIONS AR E MADE HAVE TO BE APPROVED BY THE COMMISSIONER OF INCOME-TAX IN ACCOR DANCE WITH THE RULES PRESCRIBED IN RULE 11AA OF THE INCOME-TAX RULES 1962 . THE PROVISO TO THIS CLAUSE PROVIDES THAT ANY APPROVAL GRANTED UNDER THIS CLAUS E SHALL HAVE EFFECT FOR SUCH ASSESSMENT YEAR OR YEARS NOT EXCEEDING FIVE ASSESSMENT YEARS AS MAY BE SPECIFIED IN THE APPROVAL . DUE TO THIS LIMITATION IMPOSED ON THE VALIDITY OF S UCH APPROVALS THE APP R OVE D INSTIT UTI ONS OR FUNDS HAVE TO BEAR THE HARDSHIP OF GETTING T HEIR APPROV A LS RENEWE D FR OM TIME TO T IME. T HIS IS UNDULY BURDENSOME FOR THE BONA FIDE INSTIT U TIONS OR FUNDS AND ALSO LEADS TO WASTAGE OF TIME AND RESOURC ES OF THE TAX ADMI NI S T R A TION IN RENEWING SUCH APPROVALS IN A ROUTINE MANNER . THEREFORE IT IS PROPOSED TO OMIT THE PROVISO TO CLAUSE (VI) O F SUB-SEC T ION (5) OF SECTION 80G TO PR OV IDE T H A T THE APP ROVAL ONCE GRANTED SHALL CONTINUE TO BE VALID IN PERPETUITY. F UR THER THE COMMISSIONER WILL ALSO HAVE THE POWER OF WITHD R AW THE :-8-: APPROVAL IF THE COMMISSIONER IS SATISFIED THAT THE ACTIVITIES OF SUCH INSTITUTION OR FUND ARE NOT GENUINE OR ARE NOT BEING CARRIED OUT I N ACCORDANCE WITH THE OBJECTS OF THE INSTITUTION OR FUND . THIS AMENDMENT WILL TAKE EFFECT FROM 1ST DA Y OF OCTOBER 2009. ACCORDINGL Y EXISTING APPROVALS EXPIRING ON OR A F T ER 1 S T OCTOBER 2009 SHALL BE DEEMED TO . HAVE BEEN ' EXTENDED IN PE RP E T UITY UNLESS SPECIFICALLY WITHDRAWN . HOWEVER IN CASE OF APPRO V ALS EXP IRING BEFORE 1ST OCTOBER 2009 THESE WILL HAVE TO BE RENEWED AND ONCE RE NEW ED THESE SHALL CONTINUE TO BE VA LID IN PERP E TUITY UNL ES S SPECIFICALLY WI TH DRAWN . 11. FROM THE ABOVE IT IS CRYSTAL CLEAR THAT THE APPROVA L ONCE GRANTED U/S. 80G(5)(VI) OF THE ACT SHALL CONTINUE IN PERPETUITY. IT IS ALSO N OTICED THAT THE CBDT ISSUED ITS CIRCULAR NO.5 BEING EXPLANATORY CIRCULAR FOR FINANCE (NO.2) ACT 2009 AND PARA 29.7 OF THE SAID CIRCULAR READS AS UNDER:- 29.7 APPLICABILITY THIS AMENDMENT HAS BEEN MADE APPLICABLE W.E.F. 1 ST OCTOBER 2009. ACCORDINGLY EXISTING APPROVALS EXPI RING ON OR AFTER 1 ST OCTOBER 2009 WILL BE DEEMED TO HAVE BEEN EXTENDED IN PERPET UITY UNLESS SPECIALLY WITHDRAWN. HOWEVER IN CASE OF APPROVALS EXPIRING BEFORE 1 ST OCTOBER 2009 THESE WILL HAVE TO BE RENEWED AND ONCE RENEWED THESE SHAL L CONTINUE TO BE VALID IN PERPETUITY UNLESS SPECIFICALLY WITHDRAWN. 12. THE AFORESAID CIRCULAR IS IN FAVOUR OF THE ASSESSEE AND EVEN IF THE ASSESSEE BY IGNORANCE OR INADVERTENTLY FILED AN APPLICATION FOR RENEWAL THE CIT WAS REQUIRED TO DECIDE THE SAME IN ACCORDANCE WITH THE AMENDED PROVISIONS. AS REGARDS TO THE CONTENTION OF THE LD. D.R. THAT THE PROVISIONS CONTAINED IN 293C OF T HE ACT ENABLES THE CIT TO WITHDRAW APPROVAL IS CONCERNED IT IS NOTICED THAT THE SAID SECTION HAS BEEN INSERTED BY THE FINANCE (NO.2) ACT 2009 W.E.F. 1.10.2009 I.E. FROM THE DAT E ON WHICH PROVISIONS OF SECTION 80G(5)(IVI) HAS BEEN WITHDRAWN THE PROVISIONS CONT AINED IN 293C READ AS UNDER:- 293C. 293C. 293C. 293C. WHERE THE CENTRAL GOVERNMENT OR THE BOARD OR AN INCOME-TAX AUTHORITY WHO HAS BEEN CONFERRED UPON THE POWER UNDER ANY PRO VISION OF THIS ACT TO GRANT ANY APPROVAL TO ANY ASSESSEE THE CENTRAL GOVERNMEN T OR THE BOARD OR SUCH AUTHORITY MAY NOTWITHSTANDING THAT A PROVISION TO WITHDRAW SUCH APPROVAL HAS NOT BEEN SPECIFICALLY PROVIDED FOR IN SUCH PROVISION W ITHDRAW SUCH APPROVAL AT ANY TIME : :-9-: PROVIDED PROVIDED PROVIDED PROVIDED THAT THE CENTRAL GOVERNMENT OR BOARD OR IN COME-TAX AUTHORITY SHALL AFTER GIVING A REASONABLE OPPORTUNITY OF SHOWING CAUSE AG AINST THE PROPOSED WITHDRAWAL TO THE ASSESSEE CONCERNED AT ANYTIME WITHDRAW THE APPROVAL AFTER RECORDING THE REASONS FOR DOING SO.] ]] ] 13. FROM THE PROVISO ATTACHED TO THE SECTION 293C OF TH E ACT IT IS CRYSTAL CLEAR THAT EVEN IF ANY INCOME-TAX AUTHORITY WANTS TO WITHDRAW APPROVAL HE SHALL ISSUE A SHOW CAUSE NOTICE AGAINST THE PROPOSED WITHDRAWAL TO THE ASSES SEE CONCERNED AND AFTER GIVING A REASONABLE OPPORTUNITY OF BEING HEARD SHALL WITHDRA W APPROVAL AFTER RECORDING REASONS FOR DOING SO. THE USE OF THE WORD SHALL IN THE AFORE SAID PROVISO MAKES IT MANDATORY FOR COMMISSIONER OF INCOME-TAX TO ISSUE A SHOW CAUSE NO TICE TO THE ASSESSEE AGAINST THE PROPOSED WITHDRAWAL OF APPROVAL GRANTED U/S. 80G(5) OF THE ACT. HOWEVER IN THE PRESENT CASE NO SUCH SHOW CAUSE NOTICE HAS BEEN ISSUED TO T HE ASSESSEE. THEREFORE WE DO NOT SEE ANY MERIT IN THIS CONTENTION OF THE LAD THAT TH E PROVISIONS CONTAINED IN SECTION 293C OF THE ACT ENABLES THE LD. COMMISSIONER OF INCOME TAX TO WITHDRAW APPROVAL. WE THEREFORE CONSIDERING THE TOTALITY OF THE FACTS AS DISCUSSED HEREINABOVE ARE OF THE VIEW THAT THE LD. COMMISSIONER OF INCOME TAX WAS NOT JUS TIFIED IN WITHDRAWING APPROVAL ONCE GRANTED BECAUSE THE LEGISLATURE IN ALL ITS WISDOM H AS SOUGHT TO OMIT THIS PROVISO TO SECTION 80G(5)(VI) OF THE ACT AND AFTER OMISSION OF THE SAID PROVISO THE APPROVAL ONCE GRANTED SHALL CONTINUE TO BE VALID IN PERPETUITY UN LESS AND UNTIL A SHOW CAUSE NOTICE IS ISSUED BY THE CONCERNED CIT SHOWING HIS INTENTION T O WITHDRAW ALREADY GRANTED SUCH APPROVAL. HOWEVER IN THE INSTANCE CASE THE CIT W ITHOUT ISSUING ANY SUCH NOTICE HAS WITHDRAWN APPROVAL. WE THEREFORE SET ASIDE THE I MPUGNED ORDER OF THE LD. COMMISSIONER OF INCOME TAX AND ACCORDINGLY APPROVAL U/S. 80G(5) OF THE ACT ALREADY GRANTED TO THE ASSESSEE SHALL CONTINUE UNLESS AND U NTIL THE CONCERNED AUTHORITY TAKES APPROPRIATE ACTION IN ACCORDANCE WITH LAW. 14. IN THE RESULT APPEAL IS ALLOWED. (ORDER PRONOUNCED IN THE OPEN COURT ON 28.2.2011) SD/- SD/- [H. L. KARWA] [ N. K. SAINI] VICE PRESIDENT ACCOUNTANT MEMBER DATED:28.2.2011 JJ:2502 :-10-: COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR ASSISTANT REGISTRAR FIT FOR PUBLICATION