Kurunji Education Trust Vs CIT (Exemptions) (ITAT Bangalore)
The assessee educational trust applied for permanent approval u/s 80G(5) after already having registration u/s 12AB and provisional 80G approval. The CIT(Exemptions) rejected the application mainly on the grounds that the trust had substantial surplus, that private institutions are funded through fee collections, and that fee receipts are not donations and hence not eligible for 80G benefit.
The ITAT held that the CIT(E) misdirected himself by examining the issue from the perspective of donors claiming deduction u/s 80G(1)/(2) instead of examining the conditions applicable to the trust u/s 80G(5). For granting approval, the authority only needs to verify the genuineness of activities and compliance with conditions in clauses (i) to (v) of section 80G(5).
The Tribunal further observed that existence of fee receipts or surplus cannot be a ground to deny approval, and examination of application of income under sections 11, 12 and 13 is a matter for assessment proceedings, not for grant of 80G approval. Since the trust was already registered u/s 12AB and no activity was found non-genuine, the rejection was unjustified.
Accordingly, ITAT allowed the appeal and directed CIT(E) to grant approval u/s 80G to the trust
FULL TEXT OF THE ORDER OF ITAT BANGALORE
