Revenue's Tax Appeal Dismissed: Court Affirms Exemption Under Section 80G(5) for Registered Entities per Section 12AA

The HC of Chhattisgarh dismissed the Revenue's tax appeal under Section 260A of the Income-tax Act, 1961, affirming the ITAT's decision to grant the respondent exemption under Section 80G(5). The Court held that once an entity is registered under Section 12AA, it is entitled to benefits under Section 80G, referencing precedents from the Gujarat HC and SC. No substantial question of law was found, and the appeal was dismissed without notice or costs.

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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.

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