The Commissioner of Income Tax Vs Shri Sadhumargi Shantkranti Jain

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(Tax Case No.191/2024)

Digitally signed by 2024:CGHC:45986-DB SISTA SISTA SOMAYAJULU NAFR SOMAYAJULU Date: 2024.11.29 17:00:18 +0530 HIGH COURT OF CHHATTISGARH AT BILASPUR

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TAXC No.191 of 2024

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(Arising out of order dated 22-1-2024 passed by the Income Tax Appellate Tribunal, Raipur Bench, Raipur in ITA No.233/RPR/2023)

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The Commissioner of Income Tax, Exemption, Bhopal, (M.P.)

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... Appellant

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versus

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Shri Sadhumargi Shantkranti Jain, CG Orisa, C-71, Sector-1, Devendra Nagar, Raipur, (C.G.)

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... Respondent

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For Appellant : Mr. Amit Chaudhari, Standing Counsel. For Respondent : Not noticed.

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Division Bench: - Hon'ble Shri Sanjay K. Agrawal and Hon'ble Shri Radhakishan Agrawal, JJ.

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Judgment On Board (25/11/2024)

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Sanjay K. Agrawal, J.

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Heard on admission and formulation of substantial question of law

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in this tax appeal preferred by the Revenue under Section 260A of the Income-tax Act, 1961 (for short, ‘the IT Act’) calling in question legality, validity and correctness of judgment & order dated 22-12024 passed by the Income Tax Appellate Tribunal, Raipur Bench,

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Page 2 of 5

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(Tax Case No.191/2024)

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Raipur (for short, ‘the ITAT’) in ITA No.233/RPR/2023, by which the appeal filed by the assessee / respondent herein has been allowed by the ITAT with a direction to the appellant herein to grant exemption/approval to the assessee under Section 80G(5) of the IT Act.

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The respondent assessee preferred an application under Section 80G(5) of the IT Act which was considered by the Commissioner of Income Tax (Exemption) and by order dated 21-4-2023, it was rejected finding no merit holding that the assessee is not established only for charitable purposes, but also established for religious purposes. Feeling aggrieved against the order of the CIT(E), the assessee preferred an appeal before the ITAT and by the impugned judgment & order, the ITAT allowed the appeal holding that the respondent assessee was granted registration under Section 12AA of the IT Act by the CIT(E), therefore, the assessee is eligible for grant of approval under Section 80G(5) of the IT Act and directed the CIT (E) to grant exemption/approval to the assessee Society for grant of approval under Section 80G(5) of the IT Act.

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Mr. Amit Chaudhari, learned Standing Counsel for the Income Tax Department appearing for the appellant herein / Revenue, would submit that the learned ITAT is absolutely unjustified in holding that the assessee Society is entitled for grant of exemption/approval

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Page 3 of 5

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(Tax Case No.191/2024)

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under Section 80G(5) of the IT Act in view of the grant of its registration under Section 12AA of the IT Act.

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It is not in dispute that the assessee’s application under Section 12AA of the IT Act was granted and is continuing in operation and that is the basis which has persuaded the learned ITAT to accept the appeal of the assessee and direct the CIT(E) to grant approval under Section 80G of the IT Act.

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The issue involved herein is no longer res integra and stands decided by a decision of the Gujarat High Court in the matter of Hiralal Bhagwati v. Commissioner of Income-Tax 1 and that has been approved to be the correct law by a decision of the Supreme Court in the matter of Assistant Commissioner of Income Tax v. Surat City Gymkhana 2.

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In Hiralal Bhagwati (supra), application of the assessee therein for exemption under Section 80G of the IT 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, considering the case of the assessee therein, held that once the registration under Section 12A(a) of the IT Act is granted, the grant of benefit under Section 80G of the IT Act cannot be denied, and observed as under:-

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1 (2000) 246 ITR 188

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2 (2008) 14 SCC 169

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Page 4 of 5

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(Tax Case No.191/2024)

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“18. It is also required to be noted that once the registration under section 12A(a) of the Act is granted, the grant of benefit cannot be denied. The Income-tax Officer was not justified in refusing the benefits which would otherwise accrue under the registration. If there was no registration, as contemplated under section 12A(a) read with rule 17A, the Revenue would have been justified in making a submission that the benefit cannot be granted, but where the application for registration is submitted and the registration has been granted, the benefit cannot be denied on the ground that the scheme is not for the benefit of the public at large.”

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The principle of law laid down by the Gujarat High Court in Hiralal Bhagwati (supra) was considered by the Supreme Court in Surat City Gymkhana’s case (supra) in which two questions of law were framed, (A) whether the objects of the trust restricting benefit to the members of the club would fall within the purview of the act of ‘general public utility’ under Section 2(15) of the Income Tax Act constituting as a section of public and not a body of individuals and (B) 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 , and it has been held by their Lordships that once application under Section 12A of the IT 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, and the two stated questions have been answered in paragraphs 4 and 5 of the report as under: -

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Page 5 of 5

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(Tax Case No.191/2024)

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“ 4. This Court, on 22-7-2002, granted leave in respect of Question ‘B’ only. The appeals were not entertained in respect of Question ‘A’ and it was noted that the appeals were rightly dismissed by the High Court insofar as Question ‘A’ is concerned as the appellant did not challenge the correctness of the judgment in Hiralal Bhagwati¹ .

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5. On a perusal of the judgment of the Gujarat High Court in Hiralal Bhagwati¹ we now find that Question ‘B’ is also concluded by the said judgment (refer to the 1^st paragraph of ITR p. 196). Since the Revenue did not challenge the decision in the said case, the same has attained finality. Question ‘B’, therefore, is to meet the same fate as Question ‘A’ as this Court had declined to grant leave in respect of Question ‘A’ on the ground that the Revenue did not challenge the correctness of the decision in Hiralal Bhagwati¹ . It appears that the fact, that Question ‘B’ was also covered by the aforementioned judgment, was not brought to the notice of Their Lordships and, therefore, leave granted was restricted to Question ‘B’.”

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In view of the aforesaid legal position, since the respondent herein / assessee Society was registered under Section 12AA of the IT Act, therefore, in view of the aforesaid judgments (supra), no substantial question of law arises for consideration in this tax appeal and the instant appeal deserves to be and is hereby dismissed in limine without issuing notice to the other side finding no substantial question of law involved therein. No order as to cost(s).

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Sd/Sd/(Sanjay K. Agrawal) (Radhakishan Agrawal) JUDGE JUDGE

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Soma

The Commissioner of Income Tax v. Shri Sadhumargi Shantkranti Jain

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The Commissioner of Income Tax v. Shri Sadhumargi Shantkranti Jain

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