2024 (11) TMI 1425 - HC - Income Tax

Grant of exemption/approval to the assessee u/s 80G(5) - assessee is not established only for charitable purposes but also established for religious purposes - ITAT allowed the appeal holding that the respondent assessee was granted registration under Section 12AA - HELD THAT - It is not in dispute that the assessee s application u/s 12AA of the IT Act was granted and is continuing in operation and that is the basis which has persuaded the ITAT to accept the appeal of the assessee and direct the CIT(E) to grant approval u/s 80G of the IT Act. The issue involved herein is no longer res integra and stands decided in the matter of Hiralal Bhagwati 2000 (4) TMI 14 - GUJARAT HIGH COURT and that has been approved to be the correct law by a decision of Surat City Gymkhana 2008 (4) TMI 16 - SUPREME COURT In Hiralal Bhagwati 2000 (4) TMI 14 - GUJARAT HIGH COURT application of the assessee therein for exemption under Section 80G of the IT Act was rejected and the competent authority refused to grant exemption which the assessee challenged before the Gujarat High Court and the Gujarat High Court considering the case of the assessee therein held that once the registration u/s 12A(a) of the IT Act is granted the grant of benefit under Section 80G cannot be denied. Decided in favour of assessee.

Summary

The High Court of Chhattisgarh considered a tax appeal brought by the Revenue under Section 260A of the Income-tax Act, 1961. The appeal challenged the judgment of the Income Tax Appellate Tribunal (ITAT) in which the ITAT allowed the appeal of the respondent, directing the appellant to grant exemption/approval to the respondent under Section 80G(5) of the IT Act.The core issue in the case was whether the respondent, a society, was entitled to exemption/approval under Section 80G(5) of the IT Act despite being established for both charitable and religious purposes. The Commissioner of Income Tax (Exemption) had initially rejected the respondent's application under Section 80G(5), but the ITAT reversed this decision based on the respondent's registration under Section 12AA of the IT Act.The Court referred to the decision of the Gujarat High Court in Hiralal Bhagwati v. Commissioner of Income-Tax (2000) 246 ITR 188 and the subsequent approval of this decision by the Supreme Court in Assistant Commissioner of Income Tax v. Surat City Gymkhana (2008) 14 SCC 169. These cases established that once registration under Section 12AA of the IT Act is granted, the benefit under Section 80G cannot be denied.In the Hiralal Bhagwati case, the Gujarat High Court held that the grant of benefit under Section 80G cannot be denied once registration under Section 12AA is obtained. The Supreme Court in the Surat City Gymkhana case further clarified that once registration under Section 12AA is granted, there is no need for further inquiry into the charitable purposes of the trust.Based on the legal precedents and the registration of the respondent under Section 12AA, the Court concluded that no substantial question of law arose in the tax appeal. Therefore, the appeal was dismissed without issuing notice to the other side, and no costs were awarded.In summary, the Court held that once an entity is registered under Section 12AA of the IT Act, it is entitled to benefits under Section 80G, and further inquiry into charitable purposes is not required.