Once registration u/s 12A of Income Tax Act is granted, the grant of registration under Section 80G of the Act cannot be refused
In a recent judgment, Hon’ble Supreme Court declined to interfere with the view taken by Chhattisgarh High Court that when a institution stands registered as charitable institution under Section 12AA of the Income Tax Act, 1961 (the Act), its application under Section 80G(5) also deserves to be allowed
ABCAUS Case Law Citation:
4794 (2025) (10) abcaus.in SC
In the instant case, the CIT(Exemption) had challenged the order passed by the High Court in holding that once assessee stood registered as charitable institution under Section 12AA of the Act, the only corollary was, its application under Section 80G(5) of the Act also deserves to be allowed.
The respondent assessee was a society and had applied to CIT(Exemption) in Form 10G for exemption under Section 80G of the Act. Letters were issued to the assessee and various documents / details were called for to process the said application and to verify the objects and activities of the assessee in response to which the assessee submitted reply.
Thereafter, the Joint Commissioner of Income Tax and the Assessing Officer vide their report not recommended his case for approval under Section 80G of the Act on the ground that the assessee Society ran a college and was also generating surplus out of fees charged from students to provide education and the Society was not involved in any other activities as mentioned in the application of Form 10G.
Ultimately, the Commissioner of Income-tax (Exemption) passed an order on the application under Section 80G(5)(vi) of the Act and rejected the application under Section 80G of the Act.
The assessee challenged the rejection by CIT(E) before the ITAT. The ITAT reversed the order passed by the CIT(E) and granted application under Section 80G of the Act directing the CIT(E) to grant approval to the assessee under Section 80G of the Act and thereby allowed the appeal.
The CIT(E) challeneged the order of ITAT before the Hon’ble High Court.
Before the Hon’ble High Court, the Revenue contended that ITAT was unjustified in granting the appeal and directing the CIT(E) to grant approval to the assessee under Section 80G of the Act by recording a finding perverse to the record.
The High Court observed that it was not in dispute that the assessee’s application under Section 12AA of the Act was granted and is continuing in operation and that was the basis which had persuaded the ITAT to accept the appeal of the assessee and direct the CIT(E) to grant approval under Section 80G of the Act.
The Hon’ble High Court noted that the issue involved in the case was no longer res integra and stood decided by a decision of the Gujarat High Court that had been approved to be the correct law by a decision of the Supreme Court.
The High Court further observed that in the said case, the application of the assessee for exemption under Section 80G of the 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 held that once the registration under Section 12A(a) of the Act is granted, the grant of benefit under Section 80G of the Act cannot be denied.
The Hon’ble High Court further observed that the principle of law laid down by the Gujarat High Court was considered by the Supreme Court in which one of the questions of law were framed was as to whether registration under Section 12-A was a fait accompli to hold that assessing officer back from further probe into the objects of the trust? It was held by their Lordships that once application under Section 12A of the Act is granted, there is no need of further enquiry with regard to the parties to the lis, whether it is for charitable purposes or otherwise.
In view of the above judgments, the Hon’ble High Court held that since the respondent assessee stood registered as charitable institution under Section 12AA of the Act, the only corollary was, its application under Section 80G(5) of the Act also deserves to be allowed which the ITAT had rightly noticed to be the correct legal position and directed the CIT(E) to grant approval to the assessee under Section 80G(5) of the Act. Accordingly, the question of law was answered in favour of the assessee and against the Revenue.
Not satisfied, the Revenue challenged the order of the High Court before the Apex Court by way of filing a Special Leave Petition (SLP).
However, the SLP was dismissed by Hon’ble Supreme Court with following obervations,
“In the peculiar facts and circumstances of the case, we are not inclined to interfere with the well reasoned order passed by the High Court. Hence, the Special Leave Petition is dismissed.”
Download Full Judgment Click Here >>
- GST Act requires personal hearing either on request, or when adverse order is contemplated
- Once registration u/s 12A granted, registration u/s 80G cannot be refused – SLP dismissed
- NFAC dismissed appeal despite part reply filed and further time sought – case remanded
- In DBFOT contract assessee entitled to depreciation on “Right to Collect Toll” as intangible asset
- Appellate remedy is created to rest dispute, not to accelerate it – ITAT remands the case
