Registration u/s 12A granted without applying tests laid down by Apex Court set aside

High Court order upholding direction for Registration u/s 12A without applying determinative tests laid down by Apex Court set aside

In a recent judgment, Hon’ble Supreme Court set aside the judgment of Allahabad High Court in granting registration u/s 12A without applying determinative tests laid down by Apex Court as to when an Institution can be said to serve a charitable purpose.

ABCAUS Case Law Citation:
4797 (2025) (10) abcaus.in SC

In the instant case, two connected cases arising out of separate order(s) of Allahabad High Court whereby appeal(s) of the Revenue under Section 260A of the Income Tax Act, 1961 (the Act) against order(s) qua registration of the respondent assessee regarding its charitable purpose to enable benefit(s) available under the Act were dismissed by holding that the issues raised in the appeal(s) were squarely covered by earlier decision(s) of the High Court.

Before the Hon’ble Supreme Court, the Revenue submitted that now the law in respect of determinative tests to be adopted to determine the issue concerned has been settled by a three-Judge Bench decision of the Apex Court which has been further clarified in a subsequent judgment of the Supreme Court.

It was submitted that High court while passing the impugned order(s) had not considered and examined the facts of the case to ascertain whether the law propounded applied to those facts.

The Hon’ble Supreme Court observed that though both sides agreed that the law has now been settled by the aforesaid decision however they differed on its impact on the instant appeals claiming that the decision supports their cause.

The Hon’ble Supreme Court observed that the law laid down by its Full Bench deals with several issues including as to when an authority can be said to serve a charitable purpose whereas the impugned orders(s) were cryptic without elaborating the admitted factual situation. Therefore, the law cannot be applied in the abstract.

Therefore, the Hon’ble Supreme Court opined that the High Court would have to reconsider the appeal of the Revenue by taking into consideration the said decision of the Full Bench.

Consequently, the Hon’ble Supreme Court set aside the impugned order(s) and restored the Income Tax Appeals on the file of the High Court for a fresh consideration in accordance with law including the law laid down by their Lordships.

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