Heal A Child Foundation, Hyderabad vs Assessee

This appeal by assessee is directed against the order dated 11/01/2013 passed by ld. DIT(E), Hyderabad granting approval u/s 80G(5)(vi) to assessee subject to the condition that such approval shall be given effect only after the amendment to the trust deed is carried out through civil court.

2. There is a delay of 587 days in filing the aforesaid appeal. Assessee has filed petition seeking condonation of delay. Explaining the cause of delay. Ld. AR submitted before us, after the order was passed, assessee approached civil court. He submitted, in pursuing the matter before the civil court considerable time was spent which resulted in delay in filing the aforesaid appeal. Ld. AR submitted, as the delay is caused due to bonafide reason and not due to inaction, 2 ITA No. 1710 /Hyd/2014 Heal A Child Foundation

negligence or latches on the part of assessee it may be condoned. Ld. DR opposed the condonation of delay.

3. Having considered the submissions of the parties, we are of the view that there is sufficient reason for condoning the delay as assessee in pursuance to the directions of ld. DIT(E) had approached the civil court which resulted in belated filing of the present appeal. Therefore, being satisfied with the bonafide reasons for delay, we condone the same and admit the appeal for hearing.

4. Briefly the facts are, assessee is a trust registered u/s 12Aof the Act. Assessee applied in form No. 10G on 12/11/2012 seeking approval u/s 80G(5)(vi) of the Act. However, approval was not granted to assessee vide order dated 25/05/2011 on the ground that assessee's activities as per its objectives were not confined to within India. Being aggrieved of the said order, assessee preferred appeal before the ITAT. At the time of hearing of the said appeal, it was brought o the notice of the Tribunal that, in the meanwhile, assessee has amended the trust deed by incorporating a clause, which restricted the activities and objects of the trust within India. Considering such amendment to trust deed, ITAT remitted the matter back to the file of ld. DIT(E) for considering assessee's request for granting of approval u/s 80G(5)(vi) of the Act. In pursuance to such direction of ITAT, ld. DIT(E) initiated proceeding again.

5. In course of the proceeding, assessee submitted the amended trust deed and other documents to demonstrate that activities of the trust are confined to within India. Ld. DIT(E), however, was not convinced with the explanation of assessee. He was of the view that any amendment to the trust deed has to be through civil court having 3 ITA No. 1710 /Hyd/2014 Heal A Child Foundation

jurisdiction over the matter. In this context, he relied upon a decision of the Hon'ble Supreme Court in case of CIT Vs. Kamala Town Trust, 217 ITR 699. Thus, ld. DIT(E) held that only after assessee carries out such rectification/amendment through civil court having jurisdiction over the matter, grant of approval u/s 80G(5)(vi) will be effective. Being aggrieved of the aforesaid observation of ld. DIT(E), assessee is before us.

6. Ld. AR submitted before us, there is no dispute to the charitable object of assessee as assessee is not only registered u/s 12AA of the Act, but, ld. DIT(E) has also granted approval u/s 80G(5)(vi) subject to getting the rectification/amendment approved through civil court. Ld. AR submitted, assessee has already carried out amendment, which is very much evident from the earlier order passed by the Tribunal. He submitted, there is no need to approach the civil court for rectification/amending the trust deed as assessee trust is empowered under trust deed to carry out the amendment. In this context, he referred to the judgment of the Hon'ble AP High Court in case of DIT(E) Vs. Ramoji Foundation, 364 ITR 85.

7. Ld. DR, on the other hand, supporting the order of ld. DIT(E) submitted before us, as per the decision of the Hon'ble Supreme Court in case of CIT Vs. Kamala Town Trust (supra), assessee is required to approach civil court to make the amendment to trust deed.

8. We have considered the submissions of the parties and perused the orders of revenue authorities as well as other material on record. We have also applied our mind to the decisions relied upon by the parties. As can be seen, assessee is not only registered u/s 12AA of the Act, but, in the impugned order ld. DIT(E) has, in fact, granted 4 ITA No. 1710 /Hyd/2014 Heal A Child Foundation

approval u/s 80G(5)(vi) to assessee, though, putting a condition that such approval will be effective from the date of amendment to the trust deed is approved by civil court having jurisdiction over the matter. Therefore, there cannot be any dispute to the fact that not only assessee's objects and activities are charitable in nature but it has also fulfilled conditions of section 80G(5). In the aforesaid factual background, it is to be examined, whether ld. DIT(E) was justified in putting a condition on assessee that amendment to the trust deed should be effected through civil court. As can be seen, while disposing assessee's appeal in earlier round, ITAT in ITA No. 1343/Hyd/2011 dated 03/12/2012 not only has given a categorical finding that assessee has made necessary amendment to the trust deed by confining its activities to India but has also observed that assessee has fulfilled all the conditions of sub-clause (i) to (v) of section 80G(5) of the Act. The observations of the coordinate bench in this regard is extracted hereunder for the sake of convenience:

"13. There is no denial of fact that the assessee institution, in the present case, is registered under section 12AA of the Income-tax Act. Hon'ble Gujarat High Court in the case of N. N. Desai Charitable Trust vs. CIT, 246 ITR 452 held that in respect of registration under section 80G, the scope of enquiry will be confined to finding out if the institution satisfies prescribed condition stated in subclauses (i) to (v) of section 80G. It does not extend to actual assessment of institution. The phrase used in subclause (i) of sub-section (5) of section 80G is that "where the institution or fund derives any income, such income would not be liable to inclusion in its total income". Thus what is to be seen is whether any income would not be liable to inclusion in its total income and not whether because of certain defaults prescribed in section 11 or 13, the trust is not actually held eligible for exemption under sections 11 & 12 of the Act. Once the condition laid down in Rule 11AA as also in sub- clauses (i) to (v) of subsection (5) of section 80G are complied with, the trust is, eligible for registration under section 80G(5)(vi) of the Act.

14. In this case, the approval under section 80G of the Act was denied by the DIT (E) only on the reason that the object clause contains the clause that the activities of the trust and its objects will not be confined to India. To grant approval under section 80G of the Act, the DIT (E) can examine whether or not the conditions set out in section 80G(5) (i) to (v) are satisfied. If the assessee has satisfied the above conditions, there is no reason to deny the approval under section 80G of the Act by the DIT 5 ITA No. 1710 /Hyd/2014 Heal A Child Foundation

(E). More so, in the present case, the assessee has already made amendment to the trust deed whereby the clause 3.2 was amended as follows:-

" the activities of the Trust and its objects will be confined only to India".

Being so, as on date, there cannot be any objection to grant approval under section 80G of the Act as the impugned clause is amended by the Trust. In the circumstances, we direct the DIT (E) to consider the amendment and decide the issue in accordance with law."

Thus, it is clear from the aforesaid finding of the coordinate bench assessee has fulfilled all the conditions of clause (i) to (v) of section 80G(5) and has also made necessary amendment to clause 3.2 of the trust deed confining its activity to India. That being the case, in our view, there is no occasion for the ld. DIT(E) to observe that the approval u/s 80G(5)(vi) would be effective only from the date the amendment to trust is effected through civil court having jurisdiction over the matter. In our view, such observation of ld. DIT(E) is not strictly in compliance to the directions of ITAT in order dated 03/02/2012. It is also relevant to note that ld. DIT(E) is also satisfied that assessee is eligible for approval under section 80G(5). As far as the decision of the Hon'ble Supreme Court in case of CIT Vs. Kamala Town Trust, it is relevant to mention that the Hon'ble AP High Court in case of DIT(E) Vs. Ramoji Foundation (supra) taking note of the said decision has held that in a case where the trust is empowered under the trust deed to make amendment there is no need to approach civil court. In the present case, a perusal of the trust deed, copy of which is at page 61 of assessee's paper book, indicates that the trustees are empowered to make amendment to the trust deed. Therefore, decision of the jurisdictional High Court (supra) squarely applies. In view of the ratio laid down by the Hon'ble Jurisdictional High Court as aforesaid, we are of the opinion that there is no need for assessee to approach civil court for amending the trust deed. In view of the above, we direct ld. DIT(E) to grant approval to assessee u/s 80G(5)(vi) without insisting upon the order of civil court.

6 ITA No. 1710 /Hyd/2014 Heal A Child Foundation

9. In the result, assessee's appeal is allowed.

Pronounced in the open court on 1 st April, 2015.

Sd/- Sd/- (B. RAMAKOTAIAH) (SAKTIJIT DEY) ACCOUNTANT MEMBER JUDICIAL MEMBER

Hyderabad, Dated: 1 st April, 2015 kv

Copy to:-

1) Heal A Child Foundation, C/o Y-Axis Solutions Pvt. Ltd., 6 th Floor, Dega Towers, Raj Bhavan Road, Hyderabad -32.

2) DIT(E), Hyderabad

3) ADIT(E)-I, Hyderabad

4) The Departmental Representative, I.T.A.T., Hyderabad.