The High Court dismissed the Revenue's appeal against an ITAT order directing registration under Section 12AA of the Income Tax Act. Relying on precedent that the CIT cannot examine application of income at the registration stage, the Court held the assessee's activities were charitable in nature.
This page shows the compact analysis of this judgement. The full analysis — procedural history, issue-by-issue holdings with ratio and obiter, advocates, and paragraph-level evidence for every claim — is being added to the record in batches and will appear here when this judgement has been through it.
Page 1 of 7
(Tax Case No.20/2023)
2024:CGHC:47779-DB NAFR
Digitally 2024:CGHC:47779-DB signed by SISTA SISTA SOMAYAJULU SOMAYAJULU Date: 2024.12.06 12:56:39 HIGH COURT OF CHHATTISGARH AT BILASPUR +0530
Tax Case No.20 of 2023
(Arising out of order dated 19-7-2022 passed by the Income Tax Appellate Tribunal, Raipur Bench, Raipur in ITA No.65/RPR/2019)
Commissioner of Income Tax (Exemption), Bhopal, Madhya Pradesh
... Appellant
versus
AIC@36INCE, 3rd Floor, City Centre Mall, Raipur, Chhattisgarh, PANAAGAA0318L
... Respondent For Appellant : Mr. Amit Chaudhari, Standing Counsel for the Income Tax Department and Mr. Vijay Chawla, Advocate. For Respondent : Mr. Shobhit Mishra, Advocate.
Division Bench: - Hon'ble Shri Sanjay K. Agrawal and Hon'ble Shri Radhakishan Agrawal, JJ.
Judgment on Board
(04/12/2024)
Sanjay K. Agrawal, J.
(for short, ‘the IT Act’) was admitted for hearing on 2-8-2023 by formulating the following substantial question of law: -
“Whether on facts & circumstances of the case, ITAT is correct in directing to CIT(E) to grant registration u/s 12AA
Page 2 of 7
(Tax Case No.20/2023)
of the Act irrespective of the findings by the CIT (E) that the activities of the trust is in the nature of trade, commerce or business and covered by proviso to Section 2 (15) of the Act.”
Page 3 of 7
(Tax Case No.20/2023)
the assessee filed appeal before the Income Tax Appellate Tribunal (ITAT) and the learned ITAT by its impugned order, allowed the appeal and set aside the order of CIT(E) and directed the CIT(E) to grant registration under Section 12AA of the IT Act against which this appeal has been preferred by the Revenue.
Page 4 of 7
(Tax Case No.20/2023)
under clause (a) or clause (aa) or clause (ab) of sub-section (1) of section 12A, shall—
(b) after satisfying himself about the objects of the trust or institution and the genuineness of its activities as required under sub-clause (i) of clause (a) and compliance of the requirements under sub-clause (ii) of the said clause, he—
(i) shall pass an order in writing registering the trust or institution;
and a copy of such order shall be sent to the applicant:”
1 TAXC No.159/2017, decided on 17-1-2018
Page 5 of 7
(Tax Case No.20/2023)
stage as to whether the fulfillment of the charitable trust would eventually benefit the members of the society, and observed in paragraphs 10, 11, 12 and 13 as under: -
“10. The provision contained under Section 12A nowhere empowers the CIT to assess the objects vis-a-vis the books of accounts. Even otherwise, it is not to be seen at this stage as to whether the fulfillment of the charitable trust would eventually benefit the members of the society. If the constituent of the trust engage in some genuine charitable activity which may benefit them in some other aspect of their personality which may include their vocation in life, it would not affect the genuineness of the objects of the trust. A person does not engage in charity for not doing anything in the other walks of life. A charity for one particular object is not for destroying the career for an individual which he is otherwise entitled to profess. If this ground is considered to be affecting the genuineness of the trust, people successful in different walks of life would never engage in charitable activity.
2 (2014) 271 CTR 0698 (Raj)
3 (1990) 185 ITR 634 All
Page 6 of 7
(Tax Case No.20/2023)
“12. On careful consideration of the material placed before us by the assessee, we are of the considered view that the reasons placed by CIT(E) while rejecting approval u/s. 12AA of the Act are not sufficient to deny the recognition considering the facts on record. The assessee is Special Purpose Vehicle (SPV) and runs from the grants and support of the state government. Except the points observed by him on all the other sphere the assessee trust is fulfilling all the conditions for registration under section 12AA of the Act. The reasons based on which the recognition denied are not in accordance with the law when this special purpose vehicle created in the name of the society and funded it by way of grant to develop and improve the economic activities by the state government and it helps start-up entrepreneurship. This is an activity of charitable in nature merely the trust activity has scope outside India is and memorandum of the assessee trust does not include the investment and dissolution clause and utilization of fund, when this trust is promoted by the state Government how it can be termed as commercial in nature. The observation of ld. CIT(E) considering the object for which the society is created is not tenable while granting the registration. In our considered view the society fulfill all the condition to grant the registration and in our view the reasons presented while taking the decision ld. CIT(E) is not in accordance with the law and the assessee should be considered for registration u/s. 12AA of the Act.
Page 7 of 7
(Tax Case No.20/2023)
Accordingly, the grounds of appeal raised by the assessee is allowed.”
Sd/Sd/(Sanjay K. Agrawal) (Radhakishan Agrawal) Judge Judge
Soma
1 issue framed by the court
Whether the ITAT was justified in directing the CIT(E) to grant registration u/s 12AA despite finding that activities were in the nature of trade, commerce or business.
Colour shows how this judgement treated each authority
Commissioner of Income Tax v. Chhattisgarh Urology SocietyReferred¶38
TAXC No.159/2017, decided on 17-1-2018
Commissioner of Income Tax vs Vijay Vargiya Vani Charitable TrustReferred¶44
(2014) 271 CTR 0698 (Raj)
Fifth Generation Education vs Commissioner Income TaxReferred¶44
(1990) 185 ITR 634 All
3 provisions across 1 enactments
Commissioner of Income Tax (Exemption), Bhopal
AIC@36INCE
Sanjay K. Agrawal
Radhakishan Agrawal
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court
