THE COMMISSIONER OF INCOME TAX (EXEMPTIONS) vs. URSULA HOSPITAL SOCIETY
What did the High Court hold?
The High Court held that the ITAT's direction to grant approval was justified and that remitting the matter back to the Commissioner was not necessary. The Court reasoned that the Commissioner's denial was based on an extraneous factor (1% charitable activity) that was not germane to the issue of granting approval under Section 80G. The Court noted that the Revenue did not dispute the assessee's registration under Section 12AA, implying compliance with necessary pre-conditions. Since the ITAT had only set aside the Commissioner's order on an irrelevant ground, the High Court found no need for a fresh decision by the Commissioner. The substantial question of law was answered against the Revenue and in favour of the assessee. The operative direction was to dismiss the appeal, implying the ITAT's order stood.
What were the facts?
The assessee, Ursula Hospital Society, a charitable institution registered under Section 12 of the Income Tax Act, 1961, applied for approval under Section 80G(5)(vi) on June 23, 2016, for the assessment year 2017-18. The Commissioner of Income Tax (Exemptions) denied the approval by order dated December 30, 2016, citing that the charitable activity conducted by the assessee during the financial year 2015-2016 was only 1%. The assessee appealed this order to the Income Tax Appellate Tribunal (ITAT). The ITAT found that the Revenue did not dispute the assessee's registration under Section 12AA and that the Commissioner's reason for denial was extraneous to the statutory provisions for Section 80G approval. The ITAT set aside the Commissioner's order.
What were the issues?
1. Whether, on the facts and circumstances of the case and in law, the ITAT was correct in directing the Assessing Officer to grant approval instead of remitting it back to the Commissioner of Income Tax (Exemptions) for re-examination, in light of the Allahabad High Court's decision in CIT, Meerut v. M/s. AR Trust, Meerut, which held that the Tribunal could order setting aside the Registering Authority's order but not direct registration straight away? Assessee's Contentions: The judgment does not record specific contentions made by the assessee before the High Court. However, the ITAT's reasoning, as described in the judgment, suggests the assessee argued that the Commissioner's denial was based on extraneous grounds and that the assessee met the pre-conditions for approval. Revenue's Contentions: The Revenue contended that the ITAT erred by directing the Assessing Officer to grant approval directly. Instead, the ITAT should have remitted the matter back to the Commissioner for a fresh consideration of the approval grant, citing the Allahabad High Court's judgment in CIT, Meerut v. M/s. AR Trust, Meerut.
Which sections of the Income-tax Act were involved?
Section 12,Section 11,Section 13,Section 80G(5)(vi),Section 80G,Section 12AA
AI-generated summary — verify with the full judgment below
Cause title — parties, addresses and appearances
JUDGMENT
Dr. A.K.Jayasankaran Nambiar, J. The Revenue is in appeal before us in this IT. Appeal raising the following substantial question of law:-
Whether on the facts and circumstances of the case and in law, the Hon'ble ITAT is correct in directing the Assessing Officer to grant approval instead of reverting it back to the Commissioner of Income Tax (Exemptions) for re-examination in the light of judgment of the Allahabad High Court in appeal No.112 of 2013 in the case of CIT, Meerut v. M/s.AR Trust, Meerut wherein it was held that the Tribunal could have ordered for setting aside the order of the Registering Authority refusing registration but it could not have directed for registration straight away in as much as there has to be satisfaction recorded by the Registering Authority which was lacking?
The brief facts necessary for the disposal of the IT. Appeal are as follows: The respondent Assessee M/s.Ursula Hospital Society is a charitable institution registered under Section 12 of the Income Tax Act
:3:
(hereinafter referred to as 'the IT Act') and availing the benefit of exemption in respect of its income in accordance with the provisions of Sections 11 to 13 of the IT Act. During the assessment year 2017-2018, with a view to obtaining tax free donations, it had preferred an application in Form 10G for the necessary approval under Section 80G(5)(vi) of the IT Act on 23.06.2016. The application was preferred before the Commissioner of Income Tax (Exemptions) who was the authority authorised to grant approvals in terms of Section 80G of the IT Act. By Annexure-A order dated 30.12.2016, the approval sought for by the respondent society was denied by the Commissioner on the finding that the charitable activity done by the respondent assessee during the Financial year 2015-2016 was only 1 %, and therefore, the assessee was not entitled for the approval under Section 80G(5)(vi) of the IT Act.
Against the said order of the Commissioner, the assessee preferred an appeal before the Appellate Tribunal. The Appellate Tribunal found that the Department did not have a case that the registration granted to the respondent assessee under Section 12AA of the IT Act merited cancellation, and hence it had to be presumed that the assessee complied with all the necessary pre-conditions for the continued registration under Section 12AA of the IT Act. As regards the compliance with the conditions stipulated in Section 80G for the :4:
purposes of grant of approval, the Tribunal found that it was not the case of the Commissioner at first instance that any of those conditions had not been fulfilled by the assessee. The Tribunal, therefore, found that the reason cited by the Commissioner for denying the approval was extraneous to the statutory provisions and could not have formed the basis for a rejection of the approval that was sought for. This was more so because the assessee continued to enjoy the exemption under Section 11 of the IT Act consequent to its registration under Section 12AA of the IT Act.
In the appeal before us, the ground urged by the revenue is essentially with regard to the directions given by the Tribunal while setting aside the impugned order of the Commissioner. It is the stand of the revenue that by allowing the appeal preferred by the assessee the order of the Commissioner has been set aside and the Tribunal ought to have remitted the matter to the Commissioner for a fresh consideration of the issue with regard to grant of approval. In our view, such an exercise is not called for, on the facts of the instant case because even the commissioner at first instance did not have a case that the assessee had not satisfied any of the conditions prescribed under Section 80G for the grant of the necessary approval under Section 80G(5)(vi) of the IT Act. Inasmuch as the Appellate Tribunal had only set aside the finding of the Commissioner on an extraneous factor that was not germane to :5:
the issue of grant of approval under Section 80G of the IT Act, we do not deem it necessary to remand the matter to the Commissioner for a fresh decision with regard to the grant of approval under Section 80G. We, therefore, dismiss this IT Appeal by answering the substantial question of law raised therein against the revenue and in favour of the assessee.
DR. A.K.JAYASANKARAN NAMBIAR JUDGE SYAM KUMAR V.M. JUDGE mns
:6:
Appendix — schedule of exhibits
More judgments on Section 12
- Shiva Shiksha Samiti, Deendayal Puram, Up… vs Income-Tax Officer, Ward-Exemption, Agra…ITA 415/AGR/2026[2017-18]Status: Disposed15 Oct 2026AY 2017-18
- Shree Harikrushna Velfare Trust, Bhachau vs The ITO Exemption Ward 1, Rjakot, RajkotITA 677/RJT/2026[2016-17]Status: Disposed9 Oct 2026AY 2016-17
- Credit Agricole Corporate and Investment… vs The Assistant Commissioner of Income-Tax…ITA 3453/MUM/2026[2022-23]Status: Disposed8 Oct 2026AY 2022-23
- Credit Agricole Corporate and Investment… vs The Assistant Commissioner of Income Tax…ITA 6805/MUM/2024[2021-22]Status: Disposed8 Oct 2026AY 2021-22
- M/S. Development Education & Welfare Trust… vs I.T.O., Ward - 2(3), AlipurduarITA 2367/KOL/2026[2020-2021]Status: Disposed7 Oct 2026AY 2020-2021
Recent GST High Court judgments
Search GST case law →- Basant Kumar Gupta vs. Union Of INDIAPatna · 2 Nov 2026
- M/S Swapnashiyana Homes Developers Private Limited vs. The Union Of INDIAPatna · 2 Nov 2026
- M/S B.K. Agency Under The Proprietor Of Bhola Prasad vs. The Chief Commissioner, CGSTPatna · 2 Nov 2026
- Shree Hanumant Steel Traders vs. Assistant CommissionerChhattisgarh · 1 Nov 2026
- R.K.Service Station, Balasore vs. Commissioner CT And GST Odisha, CuttackOrissa · 31 Oct 2026
