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Mere Fulfillment of Conditions u/s 10(23)(c) of IT Act would not make Assessee Eligible for benefit of S. 80G

In CIT v. M/S Rama Educational Society, the division bench of the Allahabad High Court held that benefit of section 80G of the Income Tax Act cannot be granted to assessee merely on ground that it satisfies all the conditions prescribed under section 10(23)(c) of the Income Tax Act. While quashing the ITAT order, the bench confirmed the order of the CIT denying exemption to the assessee for want of regular maintenance of Books of Accounts. Respondent-assessee, a society running a Dental College and Research Centre had availed exemption under s. 80 G of the IT Act. On expiry of the exemption, they made an application for renewal of the same. However, the Commissioner rejected the application on grounds that the department recovered and seized unaccounted cash amount belongs to the assessee during a search and the assessee was not properly maintaining its books of accounts. He was of the opinion that the exemption is not available to the assessee as they does not satisfies condition (iv) of Section 80 G (5) of the Income Tax Act. Before the Tribunal, assessee contended that they are entitled for approval of exemption since it satisfies all conditions under Section 10 (23 C) of the Income Tax Act. The Tribunal allowed the appeal and held in favour of the assessee. Aggrieved by the order, the department approached the High Court. The bench opined that in order to have the advantage of approval under Section 80 G of the Act it is mandatory for it to fulfill the other essential conditions prescribed under Sub-section (5) of Section 80 G of the Act which inter alia vide clause (iv) mandates for the maintenance of regular accounts of receipts and expenditure by such institution or the funds. It was therefore, held that in addition to fulfilment of the conditions as referred to above the approval for registration under Section 80 G of the Act cannot be granted until and unless the institution or the fund is found to be regularly maintaining the accounts of its receipts and expenditure. Comparing both the provisions of section 10(23)(c) and 80G, the bench pointed out that Section 10 (23 C) of the Act operate in a totally different field and the conditions contained in the section are not identical to the conditions as laid down in Section 80 G (5) of the Act. It was also noted that “Section 80 G (iv) contemplates maintenance of regular receipts and expenditure by the concerned institution. It does not talk about the maintenance of separate books of accounts. Therefore, the conditions provide in the two provisions are not identical but at variance as has been illustrated above by the comparison of one of the relevant conditions of the two provisions.” “The fulfilment of conditions under Section 10 (23 C) of the Act is only one of the conditions prescribed under Section 80 G of the Act but besides the said condition other conditions are also necessary to be satisfied for claiming benefit of Section 80 G of the Act. The respondent assessee failed to satisfy one of those conditions as mentioned earlier.”

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