THE COMMISSIONER OF INCOME TAX (EXCEMPTIONS) vs. SHREE TAPESHWAR HANUMAJI BAJRANG CHARITY TRUST

Facts

The Revenue (Commissioner of Income Tax) filed a Tax Appeal before the Gujarat High Court challenging an order of the Income Tax Appellate Tribunal (ITAT). The ITAT had directed the Commissioner to grant approval under Section 80G to the assessee, Shree Tapeshwar Hanumanji Bajrang Charity Trust, for Assessment Year 2014-15. The Commissioner had previously rejected the assessee's application for 80G approval, citing non-fulfillment of conditions, specifically the lack of registration under Section 12A of the Income Tax Act, 1961. The assessee, despite being served, did not appear before the High Court.

Held

The High Court held that the order of the Appellate Tribunal was not sustainable in law. The Court found that registration under Section 12AA is a prerequisite for obtaining approval under Section 80G. The Court reasoned that Section 12AA deals with the genuineness of the trust's activities, which is a foundational requirement before considering benefits like income exclusion under Sections 11, 12, or 10(23C), and consequently, before granting approval under Section 80G. The Court referred to the Delhi High Court's decision in M.K. Nambyar Saarf Law Charitable Trust v. Union of India, emphasizing that the Commissioner must be satisfied about the genuineness of the trust's activities before registering it under Section 12AA. The Tax Appeal was allowed, and the ITAT's order was quashed. The Court clarified that the assessee could still apply for registration under Section 12AA and, if successful, then apply for 80G approval.

Key Issues

1. Whether the Appellate Tribunal erred in setting aside the order of the CIT and directing approval under Section 80G, despite the assessee not fulfilling the conditions laid down in Section 80G(5) read with Rule 11AA(2)(i) of the Income Tax Rules, 1962? (Question of law) 2. Whether the Appellate Tribunal erred in granting approval under Section 80G when the assessee was not registered under Section 12AA of the Act, which is a prerequisite for 80G approval? (Question of law) Assessee's Contentions (as per ITAT order): The assessee contended that its objects, as per the Trust Deed, were charitable and aimed at imparting education and human well-being, thus justifying the 80G certification. The assessee argued that the Commissioner was not justified in refusing the certification. Revenue's Contentions (as per High Court order): The Revenue relied on the order of the Commissioner of Income Tax.