2019 (5) TMI 1200 - HC - Income Tax

Grant of approval u/s 80G rejected - registration u/s 12AA which still continues - benefit u/s 11 of the Act was allowed to the assessee - HELD THAT - Assessment of the assessee for the A.Y. 2012-13 was completed u/s 143(3) wherein the benefit u/s 11 was allowed by AO. The assessee had filed its return of income for the A.Y. 2016-17 on 8.10.2016 declaring its income as 'Nil' by claiming exemption u/s 11 for whole of the income. There was no violation on the part of the assessee which could lead to the withdrawal of registration u/s 12AA. Once the assessee was established as charitable institution by the revenue authorities at the time of granting registration u/s 80G, it cannot be denied registration u/s 80G. It was recorded by the Tribunal that as per Circular dated 27.10.2010, the registration was deemed to have been extended in perpetuity had the registration expired on or after 1.10.2009, but due to technical reason, the registration u/s 80G of the Act was not deemed to have been extended. Accordingly, the Tribunal vide order dated 26.9.2017 (Annexure A-2) directed the CIT(E) to allow the assessee registration u/s 80G from the date of application. No illegality or perversity could be pointed out by learned counsel for the revenue in the findings recorded by the Tribunal which may warrant interference by this Court. No question of law - Decided against revenue

Summary

Issues:
1. Interpretation of provisions under Section 260A of the Income Tax Act, 1961 regarding registration and approval under Sections 12AA and 80G.
2. Validity of the Tribunal's decision directing registration under Section 80G.
3. Compliance with statutory conditions for eligibility under Section 80G.
4. Alleged misinterpretation of the term 'approval' under Section 80G(5).
5. Allegations of the order being contrary to evidence and record, leading to perversity.

Analysis:
1. The appeal was filed by the revenue challenging the order of the Income Tax Appellate Tribunal (ITAT) directing registration under Section 80G of the Income Tax Act. The issues raised included the interpretation of provisions related to registration and approval under Sections 12AA and 80G, citing judgments by different High Courts. The Tribunal's decision was questioned based on the spirit of previous judgments and the powers of the ITAT in such matters.

2. The facts of the case revealed that the assessee, a registered society under Section 12AA, had applied for approval under Section 80G, which was initially granted but had lapsed. The Commissioner of Income Tax rejected the application, leading to an appeal before the Tribunal. The Tribunal, in its order, directed the grant of registration under Section 80G to the assessee from the date of application, prompting the revenue's appeal.

3. The High Court found no merit in the revenue's appeal, emphasizing that the assessee's charitable status was established during the registration process under Section 80G. It was noted that there was no violation warranting the withdrawal of registration under Section 12AA. The Court highlighted the circular deeming registrations to be extended in perpetuity, except for technical reasons in this case. The Tribunal's decision to grant registration was upheld based on these grounds.

4. The Court rejected claims of illegality or perversity in the Tribunal's findings, stating that no substantial question of law arose from the appeal. The judgment emphasized the continuity of the assessee's charitable status and the technicality regarding the extension of registration under Section 80G. The Court dismissed the appeal, affirming the Tribunal's decision to allow registration under Section 80G.

5. In conclusion, the High Court upheld the Tribunal's decision, emphasizing the established charitable nature of the assessee and the technicality surrounding the extension of registration under Section 80G. The appeal by the revenue was dismissed, with the Court finding no legal basis for interference in the Tribunal's order.