Director of Income Tax vs Neel Gagan Charitable Trust

The Revenue has preferred this appeal u/s 260A of the income tax Act, 1961, challenging the order dated January 28, 2011, passed by the income tax Appellate Tribunal setting aside the order of the Director of income tax (Exemptions) refusing to grant registration to the respondent-assessee u/s 80G. The Tribunal, in the impugned order, while allowing the appeal, has mentioned that the appellant had granted registration to the respondent-assessee u/s 12AA and the said registration subsists and has not been withdrawn or revoked. Learned counsel for the appellant accepts the said position and does not dispute that the registration u/s 12AA has been granted to the respondent-assessee and still continues. Learned counsel for the appellant has, however, submitted that there is violation of section 80G(5)(iv) as by the said provision the respondent-assessee is required to maintain regular accounts of its receipts and expenditure but in fact the respondent-assessee has failed to maintain the regular accounts of its receipts and expenditure.

Section 80G(5)(iv) requires an institution or fund to maintain accounts of its receipts and expenditure but we find that the Director of income tax (Exemption), in his order dated September 24, 2010, has not alleged or stated that there was any such violation. The said order records that for the period ending March 31, 2008, and March 31, 2009, hardly any expenditure had been incurred and no charitable activities were performed. It is noticeable that for the financial year ending March 31, 2008, the corpus of the respondent-society was merely Rs. 11,000. It went up to Rs. 35,41,000 in the year ending March 31, 2009. When the corpus amount was received, is not stated or mentioned. On the other hand, the case of the respondent-assessee was/is that they had spent Rs. 25,000 on 20 operations of disabled patients. Further, they had collected the corpus to establish a dharamshala. We do not find any discussion in the order dated September 24, 2010, which establishes that there was violation of clause (iv) of section 80G(5). The contention, therefore, has no merit. in view of the aforesaid, we do not find any merit in the present appeal and the same is dismissed with costs of Rs. 10,000.