2019 (8) TMI 466 - HC - Income Tax

Approval u/s.80G - charitable activity u/s 2(15) - registration u/s 80G(5) was granted right from the year 1993 to the year 31st March 2006 on the same kind of activities - rule of consistency - HELD THAT - The appellate tribunal committed no error not to speak of any error of law in passing the impugned order. The issue is now squarely covered by a decision of the Supreme Court in the case of CIT Vs. Lok Sewa Sansthan Samiti Sonebhadra 2018 (8) TMI 1814 - SUPREME COURT OF INDIA . It is not in dispute that the respondent assessee stands registered as a Charitable Institution under Section 12A. In such circumstances, as a natural corollary, the application under Section 80G(5) would also be liable to be allowed.

Summary

Issues:
1. Appeal under Section 260A of the Income Tax Act, 1961 challenging the order of the Income Tax Appellate Tribunal regarding approval under section 80G of the Act.
2. Interpretation of Explanation 3 to section 80G(5) of the Act regarding charitable purpose and religious nature of activities.
3. Application of the rule of consistency in granting registration under section 80G(5) based on past approvals.
4. Consideration of the Supreme Court decision in Commissioner of Incometax, Allahabad Vs. Lok Sewa Sansthan Samiti Sonebhadra in a similar context.

Analysis:
1. The High Court heard an appeal under Section 260A of the Income Tax Act, 1961, filed by the Revenue against the order of the Income Tax Appellate Tribunal. The main issue raised was whether the Tribunal was justified in allowing approval under section 80G of the Act without considering if the trust fulfilled the conditions specified in Explanation 3 to section 80G(5) of the Act. The Tribunal's decision was challenged based on this ground.

2. The appellate tribunal, in its order, referred to Explanation 3 to section 80G(5) of the Act, which states that a charitable purpose does not include any purpose that is wholly or substantially of a religious nature. The Tribunal noted that the Commissioner of Income Tax (CIT) did not provide specific instances to suggest that the activities of the assessee were religious in nature. Additionally, the tribunal observed that the trust had received registration under section 80G(5) of the Act consistently from 1993 to 2006 without any change in its objects or activities. Citing the rule of consistency and the judgment of the Supreme Court in Radhasoami Satsang case, the tribunal held that the assessee deserved registration under section 80G(5) of the Act.

3. The High Court upheld the tribunal's decision, stating that there was no error in the tribunal's order. The court emphasized the application of the rule of consistency and referred to the Supreme Court decision in Commissioner of Incometax, Allahabad Vs. Lok Sewa Sansthan Samiti Sonebhadra, where a similar situation was considered. The court noted that since the assessee was registered as a Charitable Institution under Section 12A of the Act, the application under Section 80G(5) of the Act should also be allowed as a natural corollary. Consequently, the court dismissed the appeal filed by the Revenue.

4. In conclusion, the High Court's judgment affirmed the tribunal's decision to grant registration under section 80G(5) of the Act to the assessee based on the rule of consistency and previous approvals. The court also relied on the Supreme Court's decision in a similar case to support its decision. The judgment serves as a precedent for cases where the activities of a trust are questioned concerning their charitable or religious nature for the purpose of availing tax benefits under the Income Tax Act, 1961.