ORDER
R. Gururajan, J.
1. The petitioner, Ganjarn Nagappa & Son, is challenging the order passed by R-1, Director of Income-tax (Exemption), dt. 29th May, 2002, Annex.-‘F’.
2. The petitioner is a charitable trust registered under Section 12A of the IT Act by
the CIT, Karnataka, The CIT by an order dt. 26th Nov., 1999 renewed the
recognition of trust under Section 80G of IT Act, 1961, upto 31st March, 2001, The-
trust applied for renewal of recognition under Section 80G(5) to the Director of
Income-tax (Exemption) and the Director of Income-tax has rejected the renewal
sought for by the petitioner. The same is challenged in this petition.
3. Respondents have entered appearance. Sri Javali, learned counsel, invites my attention to the material facts to contend that the CIT has committed an error in not noticing the facts and the law in the case on hand. He says that the object of the trust was not in any way diluted by the petitioner warranting “no renewal” on the facts of this case. He relies on the judgment of the Gujarat High Court in N.N. Desai Charitable Trust v. CIT , CIT v. Sri Thyaga Brahma Gana Sabha , CIT v. Trustees of Visha Nima Charity Trust (1982) 138 ITR 564 (Bom), CIT v. Trustees of H.E.H. The Nizam’s Charitable Trust and CIT v. Sarladevi Sarabhai Trust .
4. Per contra, learned counsel appearing for the respondent supports the order. He relies on Orpat Charitable Trust v. CIT .
5. Admitted facts reveal of a renewal application and rejection of the same. Before considering the matter, let me see the law on the point.
6. Section 80G of the IT Act provides for deduction in respect of donations to certain funds, charitable institutions, etc. Large number of institutions, firms and body corporate are reflected in the said provision. Sub-section (5) provides for certain exemption in the matter of payment of tax subject to certain conditions. Sub-section (5) provides for an approval in the matter of exemption in terms of Section 80G of the Act. In the case on hand, as I mentioned earlier, the petitioner has obtained exemption for several years. Renewal was sought.
7. Rule 11AA provides for consideration of approval of an institution or fund under Section 80G, Sub-rule (1). Rule 11AA provides for an application being made in terms of Form No. 10G. The said application is to be accompanied by copy of registration granted under Section 12A, notes of activities of institution, copies of accounts of the institution and funds since its institution or during the last year, whichever is sought. Rule 3 (sic), Sub-rule (3) provides for calling for such further documents or information from the institution and it further provides for such enquiries to be made as he may deem necessary as to satisfy himself about the genuineness of the activities of the institution. After satisfaction, approval can be granted in the matter. Sub-rule (5) provides for rejection after recording these notes. The authority in para 2 notices the financial results for the last 3 years. The authority noticed various facts such as withdrawal of substantial amount and using them thereafter/usage of logo on the basic concert/withdrawal of Rs. 9 lakhs for purchasing a site in cash/non-availability of the signature on the sponsorship agreement/availability of programmes to a certain few persons. It further noticed that the facts would show that the company is furthering its interest by way of displaying its logo, its name and advertisement obtaining a mileage out of such activities.
8. After noticing all these factual aspects of the matter, the authority was not satisfied of any charitable activities being carried on by the petitioner. Satisfaction is necessary in terms of Section 80G r/w Rule 11AA of the Act. The facts of the case would show that the petitioner-trust has done several acts warranting no renewal. Satisfaction is necessary on the part of the authority for renewal purposes. The reason given by the authority cannot said to require my interference in the case on hand. In my view, a trust cannot be a tool for furtherence of trade interest of another commercial organisation. The purpose of Section 80G is not for further promoting commercial activities. Order is based on the material available on record. No contra material is placed before this Court to dislodge this factual finding arrived by the CIT.
9. At this stage, I must notice a few judgments cited by Sri Javali, learned counsel appearing for the petitioner. It is no doubt true that the money spent towards development or furtherence of music performance by itself would not be a cause for rejection. The question is how the same is to be spent or how the mileage has been drawn by sponsoring the performance is the real question involved in the case on hand.
10. M.N. Desai Charitable Trust v. CIT (Guj) (supra) is a case relied on by the petitioner. A reading of the said judgment would show that in the said case, the CIT has rejected the application after noticing these facts. The Court noticed the order of the CIT refusing approval is founded on wholly irrelevant considerations by trenching upon the field of the AO by pronouncing on the taxability or non-taxability of any income in respect of the assessments for the past year which are yet to be completed. In those circumstances this Court interfered in that case. Desai Charitable Trust judgment of the Gujarat High Court is factually distinguishable.
11. The CIT v. Thyaga Brahma Gana Sabha (supra) is another judgment relied on by the petitioner. There, the Court was considering the object of the assessee. In that case, the object was to impart education in several branches of the fine arts. The Court noticed the object to come to a conclusion that promoting the advancement of music and other fine arts is acceptable on the facts of this case. Music is part of the trust objects of the trust. In the light of the object of the Sabha, the Court ruled that there is charitable character in the said case. This judgment is distinguishable on facts. In the case on hand, the authority has not rejected the case of the petitioner on the ground that music performance as held by the trust is not in any way opposed to the objects of the trust. What was objected to was the way in which things were conducted by the trust by using concerts to further its business interests. This judgment is equally not applicable to the facts of this case.
12. The 3rd case is CIT v. Trustees of Visha Nima Chanty Trust (supra). In that case, the Court noticed the receipt of voluntary contributions from institutions to hold in favour of the trust. The Court noticed that the contribution received could never be recorded as income derived by the assessee-trust from property and neither counsel has advanced any argument to that effect before the Court. This judgment is not applicable to the facts of this case.
13. The next judgment of the Supreme Court is the case of Fifth Generation Education Society v. CIT. This again is a case with regard to exemption in the matter.
14. The Andhra Pradesh High Court in the case of CIT v. Trustees of H.E.H. The Nizam’s Charitable Trust (supra) considered various provisions of the Act. On facts, the Court ruled that the assessee was entitled to benefits under exemption.
15. The judgment of the ITO v. H.P. Vishweswaraiah , is a judgment in the light of the order passed by the Tribunal. The Court ruled that equitable interpretation is preferred to the literal construction.
16. The respondent has relied on a judgment of the Supreme Court in Upper Ganges Sugar Mills Ltd and Ors. v. CIT . The Court in the said judgment considered the scope of Section 80G and noticed the charitable character of the institution. The Court noticed that donation in that case falls outside the scope of Section 80G.
17. The second judgment relied on by the respondent is The Mundakapadum Mandirams Society v. CIT (2003) 258 ITR 395 (Ker). In the said case, registration was declined in the light of an admitted receipt of Rs. 25,000. Therefore, what is clear to this Court is that grant of exemption or renewal is not automatic in character. It is subject to the satisfaction of the authority with regard to the renewal or registration. It stands to logic because Section 80G provides for exemption from payment of income-tax. The revenue to the Government is denied on account of exemption in terms of laws. Therefore, the authority has to look into the object of the institution and also the facts and circumstances of each case to satisfy itself with regard to the charitable character and with regard to its activities in terms of Section 80G r/w Rule 11AA of the Rules. Only on being satisfied with the objects, registration of renewal is permissible in terms of the facts available on record under Section 80G of the Act. In the case on hand, as I have already ruled that the authority is correct on facts and it cannot be said that any case as such is made out by the petitioner. In these circumstances, I do not find any justifiable grounds to interfere with a well reasoned order of the authority on facts,
18. Petition stands rejected/ No costs.