Commissioner Of Income Tax, Aayakar Bhawan Civil Lines, Raipurchhattisgarh v. M/S Adharshila Shikshan Sangh, 3[Rd] Floor, Ahirwad Tower, G E Road,Raipur Chhattisgarh., District : Raipur, Chhattisgarh

2025:CGHC:37156-DB AFR Digitallysigned byBABLUBABLURAJENDRARAJENDRABHANARKARHIGH COURT OF CHHATTISGARH AT BILASPURBHANARKARDate:2025.07.3118:29:55+0530 TAXC No. 30 of 2019 Commissioner Of Income Tax, Aayakar Bhawan Civil Lines, RaipurChhattisgarh ... Appellant versus M/s Adharshila Shikshan Sangh, 3[rd] Floor, Ahirwad Tower, G E Road,Raipur Chhattisgarh., District : Raipur, Chhattisgarh ... Respondent For Appellant For Respondent : Mr. Ajay Kumrani, Advocate : Mr. Sumesh Bajaj alongwith Mr. Rishabh Bajaj, Advocates Hon'ble Shri Ramesh Sinha, Chief JusticeHon'ble Shri Bibhu Datta Guru, JudgeJudgment on Board PerRamesh Sinha, Chief Justice30.07.2025 1.Heard Mr. Ajay Kumrani, learned counsel for the appellant. Also heard Mr. Sumesh Bajaj along with Mr. Rishabh Bajaj, learned counsel appearing for the respondent. 2.The substantial question of law involved, formulated and to be answered in this appeal preferred by the appellant is as under:- “Whether on facts & circumstances of the case,ITAT is correct in directing that approval u/s80-G of Act to be allowed only due to existing ofapproval u/s 12 AA, irrespective of the finding ofthe CIT that the society is engaged incommercial activities and cannot be consideredas charitable?” 3.The necessary facts of the case are that the assessee /respondent is a Society who filed an application for grant ofapproval under Section 80G of the Income Tax Act, 1961(hereinafter called as ‘the Act’) before the Commissioner ofIncome Tax, Raipur (hereinafter called as ‘CIT’) on 28.02.2014. Areport in this context was called for from the Assessing Officerabout the genuineness of the Society and its activities. Anopportunity was provided to the respondent Society by issuing theletter dated 18.07.2014 to produce the copies of audited accountsfor last three years and also to produce original documents andproof of charitable activities of the respondent. Shri PawanAgrawal and Shri Dipesh Sancheti attended from time to time andfiled written submissions. On 6.8.2014 the respondent Societywas asked to explain: (i) How vocational training can be considered aseducation within the meaning of Section 2(15) of theAct. (ii) How the activities can be considered charitable asfees is being charged and substantial amount isreceived from Sikkim Manipal University. (iii) How rent received by the society can beconsidered as charitable. The respondent has filed details from time to time. These detailsare basically regarding work done by the Society. However,regarding charitable work done by the respondent, it insists that itis in the field of education. The respondent has further submittedthat if the respondent get registration under Section 80G of theAct, it will be able to get donations for doing charitable work in ameaningful way. 4.The Divisional Commissioner of Income Tax-1(1), Raipur in thereport dated 8.8.2014 stated that the Society is engaged inestablishment of colleges of different spectrum such asEngineering, Dental, Commerce, Management etc. The followingpoints were observed: (i) The nature of work done by the assessee is notstrictly adhering to its object, for example the fact that itreceives a fee for being a center in Chhattisgarh forSikkim Manipal University (SMU) is not adhering to itsobjects and the same is nowhere mentioned in theobjects. (ii) The assessee was asked to explain the charitableactivities carried out by the society for last three years.They explained about a hostel that they run for thepeople from Natal-effected districts. However, it isobserved that the trust is into providing skill-development courses to various governmentorganizations, these Government organizations (i) The nature of work done by the assessee is notstrictly adhering to its object, for example the fact that itreceives a fee for being a center in Chhattisgarh forSikkim Manipal University (SMU) is not adhering to itsobjects and the same is nowhere mentioned in theobjects. (ii) The assessee was asked to explain the charitableactivities carried out by the society for last three years.They explained about a hostel that they run for thepeople from Natal-effected districts. However, it isobserved that the trust is into providing skill-development courses to various governmentorganizations, these Government organizations reimburse these expenses to the society and thesociety also receives a fee for conducting thesecourses. Therefore, this cannot be considered ascharitable work done by them. Hence, the DCIT-1(1),Raipur did not recommend for approval under Section80G of the Act as the society was not doing anycharitable work. 5.The CIT, Raipur vide order dated 25.08.2014 rejected theapplication filed by the assessee / respondent for approval underSection 80G of the Act stating that the respondent Society isrunning its institutes on commercial lines, the Society has takenhuge loans from banks for infrastructure, the Society has let outits building on commercial lines to M/s Poddar Education NetworkPvt. Ltd. and M/s Poddar Education Society, Mumbai. If the trusthas several objects, some of which are charitable and others arenon-charitable and the trustees have unfettered discretion toapply the income to any of the objects, the whole claim forexemption would fail and no part of the income would beexempted from tax. The respondent Society is engaged incommercial activities and cannot be considered as charitable. application filed by the assessee / respondent for approval underSection 80G of the Act stating that the respondent Society isrunning its institutes on commercial lines, the Society has takenhuge loans from banks for infrastructure, the Society has let outits building on commercial lines to M/s Poddar Education NetworkPvt. Ltd. and M/s Poddar Education Society, Mumbai. If the trusthas several objects, some of which are charitable and others arenon-charitable and the trustees have unfettered discretion toapply the income to any of the objects, the whole claim forexemption would fail and no part of the income would beexempted from tax. The respondent Society is engaged incommercial activities and cannot be considered as charitable. 6.Being aggrieved with the order passed by the CIT, the society /respondent filed an appeal before the Income Tax AppellateTribunal, Raipur Bench, Raipur (hereinafter called as ‘ITAT’) andlearned ITAT allowed the appeal filed by the assessee /respondent vide order dated 15.01.2019 and set aside the orderof learned CIT and directed for grant of approval to assessee /respondent filed an appeal before the Income Tax AppellateTribunal, Raipur Bench, Raipur (hereinafter called as ‘ITAT’) andlearned ITAT allowed the appeal filed by the assessee /respondent vide order dated 15.01.2019 and set aside the orderof learned CIT and directed for grant of approval to assessee / respondent under Section 80G of the Act. Hence, this appeal. 6.Being aggrieved with the order passed by the CIT, the society /respondent filed an appeal before the Income Tax AppellateTribunal, Raipur Bench, Raipur (hereinafter called as ‘ITAT’) andlearned ITAT allowed the appeal filed by the assessee /respondent vide order dated 15.01.2019 and set aside the orderof learned CIT and directed for grant of approval to assessee /respondent filed an appeal before the Income Tax AppellateTribunal, Raipur Bench, Raipur (hereinafter called as ‘ITAT’) andlearned ITAT allowed the appeal filed by the assessee /respondent vide order dated 15.01.2019 and set aside the orderof learned CIT and directed for grant of approval to assessee / respondent under Section 80G of the Act. Hence, this appeal. 7.Learned counsel for the appellant submits that the order passedby the ITAT dated 15.01.2019 is bad in law and contrary to thefacts and circumstances of the case and suffers from perversity.Learned ITAT failed to appreciate that the Society is engaged inproviding vocational education for fee. The work done by theSociety cannot be considered as education as it is very differentfrom formal education envisaged in Section 2(15) of the Act. Hefurther submits that learned ITAT failed to appreciate thatdeveloping the knowledge, skill and mind and character of thestudents by normal schooling is considered as education. Theword 'education' has been used in Section 2(15) of the Act in thesense of systematic instruction, schooling or training, and not inthe wide and extended sense according to which every acquisitionof further knowledge constitutes education. Learned ITAT furtherfailed to appreciate that publishing newspapers and magazines isnot 'education'. Establishment of technical, industrial andcommercial concerns, institutions etc. imparting any type oftraining or providing employment to persons cannot be consideredas education. He also submits that learned ITAT also failed toappreciate that following clause of its agreement with SMU clearlyestablishes that it is in the nature of a coaching institute. Hecontended that learned ITAT failed to appreciate that running of aprivate coaching institute for the purpose of training the studentsto appear at some specified examinations upon taking specified sum from the trainees would not bring the assessee running suchinstitute within the provisions of Section 2(15) of the Act. Hefurther contended that learned ITAT did not controvert or negatethe grounds on which the approval was denied by the the CIT. Assuch, the appeal deserves to be allowed and substantial questionof law deserves to be answered in favour of the appellant andagainst the respondent. 8.On the other hand, learned counsel appearing for the respondent /assessee supports the order passed by learned ITAT and submitsthat the donee was duly registered under Section 12A(a) of theAct and yet the benefit under Section 80G(5) was rejected holdingthat the activities cannot be considered to be charitable. Hefurther submits that benefits under Section 80G of the Act cannotbe denied if registration under Section 12AA is intact. He alsosubmits that as long as the registration under Section 12AA isintact there appears to be no logic denying approval underSection 80G(5)(vi) of the Act and as long as the registration underSection 12AA is in existence, further enquiry about thegenuineness of the activities and the purpose being charitablecannot be gone into by the Department. He also contended thatthe registration has been renewed till Assessment Year 2026-27.As such, the appeal deserves to be dismissed. He relied upon thejudgment of the Gujarat High Court in the matter of HiralalBhagwati v. Commissioner of Income Tax, 2000 SCC OnLineGuj 441, the judgment of the Punjab and Haryana High Court in the matter of Commissioner of Income-Tax (Exemptions) v.Sant Girdhar Anand Parmhans Sant Ashram, 2018 SCCOnLine P&H 7109, the judgment of the Supreme Court in thematter of Assistant Commissioner of Income Tax v. Surat CityGymkhana, (2008) 14 SCC 169 and the judgment of the GujaratHigh Court in the matter of Ahmedabad Urban DevelopmentAuthority v. Deputy Director of Income-Tax (Exemption),(2011) 335 ITR 575. 9.We have heard learned counsel appearing for the parties,perused the impugned order and other documents appended withappeal. perused the impugned order and other documents appended withappeal. 10.In Hiralal Bhagwati (supra), the Gujarat High Court has held asunder:-under:- “18. It is also required to be noted that once theregistration under section 12A(a) of the Act isgranted, the grant of benefit cannot be denied. TheIncome-tax Officer was not justified in refusing thebenefits which would otherwise accrue under theregistration. If there was no registration, ascontemplated under section 12A(a) read with rule17A, the Revenue would have been justified inmaking a submission that the benefit cannot begranted, but where the application for registration issubmitted and the registration has been granted, thebenefit cannot be denied on the ground that thescheme is not for the benefit of public at large. 25. Learned counsel submitted that as it is meant for a restricted class, the provisions will not apply and,therefore, the special civil application should berejected. In our opinion, considering the decisions ofthe apex Court, referred to hereinabove, andconsidering the provisions of the Act, thesubmissions made on behalf of the Revenue haveno merits. It must be held that the respondent No. 2has erred in denying the benefits under the Act. Sofar as the penalty proceedings are concerned, as anecessary corollary, the same must be quashed andset aside.” 11.In Sant Girdhar Anand Parmhans Sant Ashram (supra), thePunjab and Haryana High Court has held as under:- “6…...Accordingly, it was recorded by the Tribunalthat since the assessee had been grantedexemption under section 12AA of the Act which wasin existence and in case of any violation, the samewas subject to variation/withdrawal by the CIT(E),there was no logic in denying approval under section80G(5)(vi) of the Act. We do not find any reason todiffer with the view taken by the Tribunal. Needlessto say, in case, in subsequent years, the revenue issatisfied that the activities of the respondent-assessee are not qualified for charitable purposes, itshall be open for the department to initiate action forcancellation of registration under section 12AA of theAct and also for passing appropriate ordersregarding approval granted under section 80G(5)(vi)of the Act in accordance with law. ” 12.In Surat City Gymkhana (supra), the Supreme Court has held as under:- “5. On a perusal of the judgment of the Gujarat HighCourt in the case of Hiralal Bhagwati (supra), wenow find that Question 'B' is also concluded by thesaid judgment (refer to 1[st] paragraph of page ITRp.196). Since the Revenue did not challenge thedecision in the said case, the same has attainedfinality. Question 'B', therefore, is to meet the samefate as Question 'A' as this Court had declined togrant leave in respect of Question 'A' on the groundthat the Revenue did not challenge the correctnessof the decision in the case of Hiralal Bhagwati(supra). 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'” 13.In Ahmedabad Urban Development Authority (supra), the Gujarat High Court has held as under:- 13.In Ahmedabad Urban Development Authority (supra), the Gujarat High Court has held as under:- “11. Applying the ratio enunciated as aforestated tothe facts of the present case, it is apparent that whileframing Assessment Order on 30-12-2009 it was notopen to the Assessing Officer to ignore Certificate ofRegistration dated 23-10-2003 granted underSection 12-AA of the Act by Director of Income Tax(Exemption), Ahmedabad. Therefore, on this limitedcount the Assessment Order appears to be withoutjurisdiction and the demand in pursuance theretocould not have been sought to be recovered. Therespondent was therefore duty bound to stay recovery of the demand raised pursuant toAssessment Order dated 30-12-2009 forAssessment Year 2007-2008 till disposal of the FirstAppeal which is already pending before FirstAppellate Authority.” 14.In the present case, learned ITAT while allowing the appeal andsetting aside the order of learned CIT has held as under:- “6. We have heard the rival submissions andperused the material available on record. The issuein present grounds is with respect to rejection ofapplication u/s. 80G of the Act. Before us, the Ld.A.R. has submitted that assessee has been grantedregistration u/s. 12AA of the Act and the registrationcontinues till date and the aforesaid registration hasnot been cancelled by the Commissioner of IncomeTax. The aforesaid contention of the Ld. A.R. hasnot been controverted by the Revenue. We find thatthe Agra Bench of the Tribunal in the case of Dr.Gyanendra Goel Foundation Vs. Commissioner ofIncome Tax (supra) after relying on the decision ofHon'ble Gujarat High Court in the case of HiralalBhagwati Vs. Commissioner of Income Tax (supra)in similar circumstance has held that when theCommissioner of Income Tax has grantedregistration u/s. 12AA after examining genuinenessof activities of Trust, and the registration granted hasnot been revoked or cancelled then it is not properfor Commissioner of Income Tax to reject applicationof Trust for benefit of exemption u/s. 80G by holdingthat the activities of the Trust were not genuine. 7. Before us, the Revenue has not pointed out any contrary binding decision nor has placed anymaterial on record to demonstrate that the aforesaiddecision of Agra Bench of Tribunal has been setaside by the higher judicial forum. We are therefore,following the decision of Agra Bench of Tribunal andfor similar reasons hold that in the present case theCommissioner of Income Tax was not justified inrejecting the application of assessee. We thereforeset aside the order of LD. CIT and direct thegranting of approval to assessee u/s. 80G of the Act.Thus the grounds of the assessee are allowed. 8. In the result, the appeal of the assessee isallowed.” 15.From perusal of the impugned order, it appears that learned ITAThas held that Revenue / appellant herein has not pointed out anycontrary binding decision nor has placed any material on record todemonstrate that the aforesaid decision of Agra Bench of Tribunalhas been set aside by the higher judicial forum and following thedecision of Agra Bench of Tribunal learned ITAT held that in thepresent case the Commissioner of Income Tax was not justified inrejecting the application of assessee / respondent herein and setaside the order of learned CIT and directed for grant of approvalto assessee under Section 80G of the Act.has held that Revenue / appellant herein has not pointed out anycontrary binding decision nor has placed any material on record todemonstrate that the aforesaid decision of Agra Bench of Tribunalhas been set aside by the higher judicial forum and following thedecision of Agra Bench of Tribunal learned ITAT held that in thepresent case the Commissioner of Income Tax was not justified inrejecting the application of assessee / respondent herein and setaside the order of learned CIT and directed for grant of approvalto assessee under Section 80G of the Act. 16.Considering the submissions advanced by learned counselappearing for the parties, perusing the order passed by learnedITAT as also the order passed by learned CIT and in view of lawlaid down the Supreme Court, High Court of Gujarat and Highappearing for the parties, perusing the order passed by learnedITAT as also the order passed by learned CIT and in view of lawlaid down the Supreme Court, High Court of Gujarat and High Court of Punjab and Haryana in the above-stated judgments(supra), we are of the considered opinion that learned ITAT whileallowing the appeal of the assessee / respondent herein andsetting aside the order of learned CIT has not committed anyillegality or irregularity. As such, the substantial question of law isanswered in favour of the respondent and against the appellant. 17.For the foregoing reasons, the appeal being devoid of merit isliable to be and is hereby dismissed. liable to be and is hereby dismissed. Sd/- Sd/- Sd/- Sd/- (Bibhu Datta Guru)(Ramesh Sinha) Judge Chief Justice Bablu/Amit Head-Note As long as the registration under Section 12AA of theIncome Tax Act, 1961 is in existence, further enquiry about thegenuineness of the activities and the purpose being charitablecannot be gone into by the Income Tax Department.