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2013 (2) TMI 293 - HC - Income TaxExemption granted u/s 80(G)(5) withdrawn - Whether approval once granted shall continue in perpetuity as per Circular No. 5/2010? - ITAT set aside the withdrawal orders - Held that - The order of the Tribunal setting aside the order of CIT is based on sound reasoning as asseesse had valid exemption on 1.10.2010 when the provisions of Section 80G were amended so as to dispense the periodic renewal of the exemptions. Such statutory provisions were clarified by Circular No. 5 of 2010 and Circular No.7 of 2010 issued by CBDT. Once the statute has given perpetuity to the exemptions granted under Section 80(G)(5) the same could not be withdrawn without issuing show cause notice in terms of the statutory provisions in the manner prescribed by law.
Issues:
- Appeal under Section 260A of the Income Tax Act against the order of the Income Tax Appellate Tribunal regarding the continuation of approval under Section 80G(5) of the Act. - Validity of exemption granted to the assessee under Section 80(G) of the Act and the withdrawal of such exemption by the Commissioner of Income Tax. - Interpretation of Circular No. 5 of 2010 and Circular No. 7 of 2010 issued by CBDT regarding the perpetuity of exemptions under Section 80(G)(5) of the Act. Analysis: The High Court was presented with an appeal by the Revenue against the order of the Income Tax Appellate Tribunal, Chandigarh Bench, regarding the continuation of approval under Section 80G(5) of the Income Tax Act. The Tribunal had held that the approval granted to the assessee under Section 80G(5) of the Act shall continue in perpetuity as per Circular No. 5 dated 03.06.2010 issued by CBDT. The Revenue raised substantial questions of law challenging the Tribunal's decision. The Court analyzed the facts and circumstances of the case, emphasizing that the assessee, a charitable trust, had valid exemption under Section 80(G) of the Act until 31st March 2011. The Court noted that amendments to the Act clarified that existing exemptions granted under Section 80(G) as of 1.10.2010 would continue indefinitely, as per Circular No. 5 of 2010 and Circular No. 7 of 2010 issued by CBDT. The Court further observed that the Commissioner of Income Tax had withdrawn the exemption granted to the assessee, leading to the Tribunal setting aside this withdrawal order. The Court supported the Tribunal's decision, stating that once the statute provided for perpetuity to exemptions under Section 80(G)(5) of the Act, such exemptions could not be revoked without following the prescribed legal procedures. The Court highlighted that no substantial question of law arose for consideration in this case, ultimately dismissing the appeal. In conclusion, the High Court upheld the Tribunal's decision, emphasizing the statutory provisions and circulars issued by CBDT that established the perpetuity of exemptions under Section 80(G)(5) of the Income Tax Act. The Court's analysis focused on the legal validity of the exemption granted to the assessee and the Commissioner of Income Tax's withdrawal of such exemption, ultimately ruling in favor of the assessee based on the sound reasoning provided by the Tribunal.
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