The fact that the assessee was still to commence the activity of establishing a hospital for imparting medical treatment would not by itself result in the rejection of the claim for recognition and there was nothing on the record before the Commissioner to doubt the charitable nature of the activity which was being conducted-Section 80G(5) requires that the institution must be established in India for a charitable purpose and that requirement was duly fulfilled by assessee

HIGH COURT OF ALLAHABAD

IT Appeal No. 35 of 2013

Commissioner of Income-tax -II...........................................................................Appellant.
v.
Vihangam Yoga Prachar and Social Welfare Trust................................................Respondent

DR. DHANANJAYA YESHWANT CHANDRACHUD, CJ.
AND DEVENDRA KUMAR ARORA, J.

Date :JANUARY 3, 2014

Appearances

Manish Misra for the Appellant.

Section 80G of the Income Tax Act, 1961 — Deduction — Donation — The fact that the assessee was still to commence the activity of establishing a hospital for imparting medical treatment would not by itself result in the rejection of the claim for recognition and there was nothing on the record before the Commissioner to doubt the charitable nature of the activity which was being conducted – Section 80G(5) requires that the institution must be established in India for a charitable purpose and that requirement was duly fulfilled by assessee

FACTS:

The main objective of assessee trust was to establish hospitals and to impart medical treatment. During the year, assessee carried out the activities of organization of yoga camps. Assessee's trust claim for recognition u/s 80G (5)(vi) was rejected by revenue. Commissioner upheld the rejection of application of assessee. On further appeal, Tribunal remanded the proceedings back to Commissioner. Commissioner declined the claim of assessee on the ground that assessee has not carried out the activities as the object clause of trust. On further appeal, Tribunal allowed the claim of assessee on the ground that organization of yoga camps formed part of objects of assessee trust. Being aggrieved, Revenue went on appeal before High Court.

HELD,

that from a reading of the order of the Commissioner of Income Tax, it was clear that an important circumstance which weighed with him was that the assessee was not carrying out all the activities mentioned in the objects clause of the trust. Now, ex facie the statute does not require that the assessee should carry out all the activities which were mentioned in the objects clause. The fact that the assessee was carrying on the activity of conducting Yoga Camps was not in dispute and it consitutes a charitable activity. Moreover, it was not the case of the revenue that any activity which was not of a charitable nature was being conducted. The fact that the assessee was still to commence the activity of establishing a hospital for imparting medical treatment would not by itself result in the rejection of the claim for recognition. There was nothing on the record before the Commissioner to doubt the charitable nature of the activity which was being conducted. Section 80G(5) requires that the institution must be established in India for a charitable purpose. This requirement was duly fulfilled. In the result, appeal was answered in favour of assessee.

ORDER

1. This appeal by the revenue under Section 260-A of the Income Tax Act, 1961 is directed against an order of the Income Tax Appellate Tribunal, Lucknow Bench dated 7 August 2013.

2. The appeal before the Tribunal was filed against an order of the Commissioner of Income Tax-II, Lucknow denying to the assessee recognition under Section 80G(5)(vi) of the Income-tax Act, 1961. The assessee had filed an application on 25 May 2009 against the original rejection of the application. The assessee filed an appeal before the Tribunal which has remanded the proceeding back to the Commissioner for fresh consideration.

3. The Commissioner by his order dated 15 February 2012 declined to grant recognition on the ground that (i) the applicant trust was not carrying out all the charitable activities listed in its objects; (ii) no other activity except for Yoga Camps had been commenced; and (iii) though the dominant object was to establish hospitals and to impart medical treatment, those activities had still not commenced.

4. In appeal, the Tribunal noted that in the proceedings on remand, the assessee placed evidence before the Commissioner in regard to the organizations of Yoga Camps. The Tribunal noted that this formed part of the objects of the assessee and was an activity of a charitable nature. Moreover, the balance sheet and income and expenditure account for the last two years were filed. The Tribunal was of the view that the Commissioner had not brought anything on record to demonstrate that the assessee was carrying on an activity which was not of a charitable nature. In the circumstances, the order of the Commissioner was set aside and a consequential direction to grant recognition under Section 80G(5)(vi) was issued.

5. From a reading of the order of the Commissioner of Income Tax-II, Lucknow, it is clear that an important circumstance which weighed with him was that the assessee was not carrying out all the activities mentioned in the objects clause of the trust. Now, ex facie the statute does not require that the assessee should carry out all the activities which are mentioned in the objects clause. The fact that the assessee was carrying on the activity of conducting Yoga Camps is not in dispute. As the Tribunal observed and, in our view, correctly, this constitutes a charitable activity. Moreover, it is not the case of the revenue that any activity which is not of a charitable nature is being conducted.

6. In this view of the matter, and since no other ground for rejection was made out by the Commissioner, the order of the Tribunal would not justify any interference. The fact that the assessee was still to commence the activity of establishing a hospital for imparting medical treatment would not by itself result in the rejection of the claim for recognition. There is nothing on the record before the Commissioner to doubt the charitable nature of the activity which is being conducted. Section 80G(5) requires that the institution must be established in India for a charitable purpose. This requirement was duly fulfilled.

7. In this view of the matter, the appeal by the revenue will not give rise to any substantial question of law and is, accordingly, dismissed. There shall be no order as to costs.

[2014] 223 TAXMAN 16 (ALL)