T.M.A. Pai Foundation Vs CIT (Exemptions) (ITAT Bangalore)
Assessee trust registered u/s 12A(1)(ac)(i) vide Registration dated 05.04.2022 from the AY 22-23 to 26-27 & has been granted the provisional approval vide URN dated 07/04/2022 under clause (iv) of first proviso to section 80G(5) from 07.04.2022 to assessment year 2024-25 in Form No.10AC by PCIT/CIT. Assessee trust thereafter applied for permanent approval as per clause (iii) of first proviso to 80G(5) in Form No.10AB on 10.08.2024.
CIT(E) rejected the approval u/s 80G vide Order in Form 10AD dated 17/01/2025 on the following grounds:
- Trust reported surplus every year which is not utilized towards charitable purposes & they had been accumulated in FDs & received interest income.
- The private institution which is well funded by high fee receipts & management fee, which undergoes an increase every year does not commensurately passed on in terms of tangible or intangible facilities.
- It is the government aided school / colleges / institution & other institutions operating in remote areas with little or no infrastructure deserve the benefit of 80G.
- The fee receipts which are forming part of the total receipts do not fall under the purview of donation u/s. 80G.
Before the Tribunal Trust argued that the CIT(E) erred in rejecting the grant of approval u/s 80G especially having satisfied with the genuineness of the Trust & also having satisfied with the activity of the trust & granted registration u/s 12AB. For grant of approval u/s 80G, CIT(E) should only be satisfied about the genuineness of the activity of the trust & fulfillment of the conditions laid down in clause (i) to (v) of section 80G(5). The fee receipts are the revenue generated out of the regular activities carried on by the institution & they have not been issued any certificate u/s. 80G like any other donations. CIT(E) grossly erred in ignoring the Capital expenditure applied during the year as application as well as accumulation u/s. 11(1)(a).
