Tribunal Orders Grant of Registrations under Income Tax Act Sections 12AA and 80G

The Tribunal found that the rejection of the applications for registration under section 12AA and approval under section 80G of the Income Tax Act was erroneous. It directed the Commissioner of Income-tax (Exemptions) to grant both registrations to the applicant. The appeals were allowed, and the order was pronounced on November 24, 2021.

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Issues Involved:

1. Rejection of application for registration under section 12AA of the Income Tax Act.
2. Rejection of application for approval under section 80G(5)(vi) of the Income Tax Act.
3. Procedural fairness and natural justice in the rejection of the application under section 80G(5)(vi).
4. Interrelation between section 12A and section 80G approvals.

Issue-wise Detailed Analysis:

1. Rejection of Application for Registration under Section 12AA of the Income Tax Act:

The applicant, a Trust registered under the Societies Registration Act, sought registration under section 12A of the Income-tax Act, 1961. The Commissioner of Income-tax (Exemptions) [CIT(E)] rejected the application on several grounds. Firstly, the CIT(E) held that not all medical research qualifies as 'education' as per the definition provided by the Hon'ble Apex Court in the case of Sole Trustee, Loka Sikshan Sansthan 101 ITR 234. The Tribunal, however, found that the applicant trust's aims and objects were not limited to medical research but included various other charitable activities such as establishing professional colleges and health promotion facilities. Therefore, the Tribunal concluded that the application should not be rejected based on selective aims and objects.

2. Rejection of Application for Approval under Section 80G(5)(vi) of the Income Tax Act:

The CIT(E) also rejected the application for approval under section 80G(5)(vi) on the grounds that the applicant did not have registration under section 12A. The Tribunal noted that sections 12A and 80G operate separately and the rejection of section 12A approval should not automatically lead to the rejection of section 80G approval. The Tribunal directed the CIT(E) to grant approval under section 80G(5)(vi) as well.

3. Procedural Fairness and Natural Justice in the Rejection of the Application under Section 80G(5)(vi):

The applicant argued that the order under section 80G(5)(vi) was passed without any notice of hearing, which is against the principles of natural justice. The Tribunal agreed with this contention and found that the applicant was not given a fair opportunity to present its case. The Tribunal emphasized that procedural fairness is a fundamental aspect of justice and directed the CIT(E) to reconsider the application.

4. Interrelation Between Section 12A and Section 80G Approvals:

The Tribunal clarified that the rejection of registration under section 12A should not automatically result in the rejection of approval under section 80G. The Tribunal observed that the CIT(E) had erred in holding that the absence of registration under section 12A disqualified the applicant from approval under section 80G. The Tribunal directed that the CIT(E) should independently assess the application for section 80G approval.

Conclusion:

The Tribunal concluded that the CIT(E) had erred in rejecting the applications for registration under section 12AA and approval under section 80G. The Tribunal directed the CIT(E) to grant registration under section 12AA and approval under section 80G to the applicant forthwith. The appeals filed by the applicant were allowed, and the order was pronounced in open court on November 24, 2021.

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