Commissioner Of Income Tax (Exemption), Income Tax Office, Ii, Iii &Iv Floors, Metro Walk Building, E v. Dignity Education Society, Lunawat Bhawan, Station Road, Raipur(C.g

(Tax Case No.87/2022) Digitallysigned by 2024:CGHC:46791-DBSISTASISTASOMAYAJULUSOMAYAJULUDate:2024.11.2916:19:37+0530HIGH COURT OF CHHATTISGARH AT BILASPUR 2024:CGHC:46791-DBAFR TAXC No.87 of 2022 (Arising out of order dated 9-6-2022 passed by the Income Tax AppellateTribunal, Raipur Bench, Raipur in ITA No.31/RPR/2019) Commissioner of Income Tax (Exemption), Income Tax Office, II, III &IV Floors, Metro Walk Building, E-5, Arera Colony, Bittan Market,Bhopal (M.P.) 462016 ... Appellant versus Dignity Education Society, Lunawat Bhawan, Station Road, Raipur(C.G.) ... Respondent For Appellant :Mr. Vijay Chawla, Advocate on behalf of Mr. AmitChaudhari, Standing Counsel for the Income TaxDepartment.Chaudhari, Standing Counsel for the Income TaxDepartment. For Respondent:Ms. Smiti Sharma, Advocate. -Division Bench: Hon'ble Shri Sanjay K. Agrawal andHon'ble Shri Radhakishan Agrawal, JJ. Judgment On Board(28/11/2024) Sanjay K. Agrawal, J. 1. This tax appeal under Section 260A of the Income-tax Act, 1961(for short, ‘the IT Act’) has been preferred by the Revenue callingin question legality, validity and correctness of judgment & orderdated 9-6-2022 passed by the Income Tax Appellate Tribunal,(for short, ‘the IT Act’) has been preferred by the Revenue callingin question legality, validity and correctness of judgment & orderdated 9-6-2022 passed by the Income Tax Appellate Tribunal, (Tax Case No.87/2022) Raipur Bench, Raipur (for short, ‘the ITAT’) in ITA No.31/RPR/2019, by which the appeal filed by the assessee / respondent hereinhas been allowed by the ITAT with a direction to the appellantherein to grant approval to the assessee under Section 80G(5) of the IT Act. 2. The appeal was admitted for hearing on 1-3-2023 by formulatingthe following substantial question of law: -the following substantial question of law: - “Whether in the attending facts and circumstances of thecase, the Income Tax Appellate Tribunal (ITAT) was correctin holding that the Commissioner of Income Tax (E) wasnot justified in rejecting the application of the respondentfor grant of benefit of exemption under Section 80G(5) ofthe Act of 1961 and issuing direction to grant of exemptionas sought for by the respondent society?” 3. The aforesaid substantial question of law arises for consideration onthe following factual backdrop: -the following factual backdrop: - 4. The assessee / respondent herein has applied in Form 10G forexemption under Section 80G of the IT Act and thereafter,opportunity letters were issued to the assessee and variousdocuments / details were called for to process the said applicationand to verify the objects and activities of the assessee in response towhich the assessee submitted reply and thereafter, on 4-12-2018,the Joint Commissioner of Income Tax and the Assessing Officervide their report not recommended his case for approval underSection 80G of the IT Act on the ground that the assessee Societyexemption under Section 80G of the IT Act and thereafter,opportunity letters were issued to the assessee and variousdocuments / details were called for to process the said applicationand to verify the objects and activities of the assessee in response towhich the assessee submitted reply and thereafter, on 4-12-2018,the Joint Commissioner of Income Tax and the Assessing Officervide their report not recommended his case for approval underSection 80G of the IT Act on the ground that the assessee Society (Tax Case No.87/2022) (Tax Case No.87/2022) runs a college in the name of Dignity College of Architecture, theSociety is also generating surplus out of fees charged from studentsto provide education and the Society is not involved in any otheractivities as mentioned in the application of Form 10G. Ultimately,on 26-12-2018, the Commissioner of Income-tax (Exemption)passed an order on the application under Section 80G(5)(vi) of theIT Act and rejected the application under Section 80G of the IT Actwhich the respondent herein / assessee challenged before the ITAT.By the impugned order, the learned ITAT reversed the order passedby the CIT(E) and granted application under Section 80G of the ITAct directing the CIT(E) to grant approval to the assessee underSection 80G of the IT Act and thereby allowed the appeal which issought to be challenged by way of this appeal. 5. Mr. Vijay Chawla, Advocate, appearing on behalf of Mr. AmitChaudhari, learned Standing Counsel for the Income TaxDepartment / Revenue, would submit that the ITAT is absolutelyunjustified in granting the appeal and directing the CIT(E) to grantapproval to the assessee under Section 80G of the IT Act byrecording a finding perverse to the record.Chaudhari, learned Standing Counsel for the Income TaxDepartment / Revenue, would submit that the ITAT is absolutelyunjustified in granting the appeal and directing the CIT(E) to grantapproval to the assessee under Section 80G of the IT Act byrecording a finding perverse to the record. 6. Ms. Smiti Sharma, learned counsel appearing for the assessee /respondent herein, would submit that since the assessee has alreadybeen granted the application under Section 12AA of the IT Act,which is operational at present, the learned ITAT is absolutelyrespondent herein, would submit that since the assessee has alreadybeen granted the application under Section 12AA of the IT Act,which is operational at present, the learned ITAT is absolutely (Tax Case No.87/2022) justified in setting aside the order of the CIT(E) and directing theCIT(E) to grant approval to the assessee under Section 80G of theIT Act, as such, the instant appeal deserves to be dismissed. 7. We have heard learned counsel for the parties and considered theirrival submissions made herein-above and also went through therecord with utmost circumspection.rival submissions made herein-above and also went through therecord with utmost circumspection. 8. It is not in dispute that the assessee’s application under Section12AA of the IT Act was granted and is continuing in operation andthat is the basis which has persuaded the learned ITAT to accept theappeal of the assessee and direct the CIT(E) to grant approval underSection 80G of the IT Act. 12AA of the IT Act was granted and is continuing in operation andthat is the basis which has persuaded the learned ITAT to accept theappeal of the assessee and direct the CIT(E) to grant approval underSection 80G of the IT Act. 9. The issue involved herein is no longer res integra and standsdecided by a decision of the Gujarat High Court in the matter of1decided by a decision of the Gujarat High Court in the matter of1-Hiralal Bhagwati v. Commissioner of IncomeTax and that hasbeen approved to be the correct law by a decision of the SupremeCourt in the matter of Assistant Commissioner of Income Tax v.2. been approved to be the correct law by a decision of the SupremeCourt in the matter of Assistant Commissioner of Income Tax v.2. Surat City Gymkhana 10. InHiralal Bhagwati(supra), application of the assessee therein forexemption under Section 80G of the IT Act was rejected and thecompetent authority refused to grant exemption which the assesseechallenged before the Gujarat High Court and the Gujarat Highexemption under Section 80G of the IT Act was rejected and thecompetent authority refused to grant exemption which the assesseechallenged before the Gujarat High Court and the Gujarat High 1(2000) 246 ITR 188 2(2008) 14 SCC 169 (Tax Case No.87/2022) 10. InHiralal Bhagwati(supra), application of the assessee therein forexemption under Section 80G of the IT Act was rejected and thecompetent authority refused to grant exemption which the assesseechallenged before the Gujarat High Court and the Gujarat Highexemption under Section 80G of the IT Act was rejected and thecompetent authority refused to grant exemption which the assesseechallenged before the Gujarat High Court and the Gujarat High 1(2000) 246 ITR 188 2(2008) 14 SCC 169 (Tax Case No.87/2022) Court, considering the case of the assessee therein, held that oncethe registration under Section 12A(a) of the IT Act is granted, thegrant of benefit under Section 80G of the IT Act cannot be denied,and observed as under:- “18. It is also required to be noted that once theregistration under section 12A(a) of the Act is granted, thegrant of benefit cannot be denied. The Income-tax Officerwas not justified in refusing the benefits which wouldotherwise accrue under the registration. If there was noregistration, as contemplated under section 12A(a) readwith rule 17A, the Revenue would have been justified inmaking a submission that the benefit cannot be granted, butwhere the application for registration is submitted and theregistration has been granted, the benefit cannot be deniedon the ground that the scheme is not for the benefit of thepublic at large.” 11. The principle of law laid down by the Gujarat High Court inHiralal Bhagwati(supra) was considered by the Supreme Court in’sSurat City Gymkhanacase (supra) in which two questions oflaw were framed, (A) whether the objects of the trust restrictingbenefit to the members of the club would fall within the purview ofthe act of ‘general public utility’ under Section 2(15) of the IncomeTax Act constituting as a section of public and not a body ofindividuals and (B) whether registration under Section 12-A was afait accompli to hold that assessing officer back from further probeinto the objects of the trust, and it has been held by their Lordshipsthat 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 (Tax Case No.87/2022) lis, whether it is for charitable purposes or otherwise, and the two stated questions have been answered in paragraphs 4 and 5 of thereport as under: - “4.This Court, on 22-7-2002, granted leave in respect ofQuestion ‘B’ only. The appeals were not entertained inrespect of Question ‘A’ and it was noted that the appealswere rightly dismissed by the High Court insofar asQuestion ‘A’ is concerned as the appellant did not challengethe correctness of the judgment in Hiralal Bhagwati[1]. 5.On a perusal of the judgment of the Gujarat HighCourt in Hiralal Bhagwati[1 ]we now find that Question ‘B’ isalso concluded by the said judgment (refer to the 1[st]paragraph of ITR p. 196). Since the Revenue did notchallenge the decision in the said case, the same hasattained finality. Question ‘B’, therefore, is to meet thesame fate as Question ‘A’ as this Court had declined togrant leave in respect of Question ‘A’ on the ground that theRevenue did not challenge the correctness of the decision inHiralal Bhagwati[1]. It appears that the fact, that Question‘B’ was also covered by the aforementioned judgment, wasnot brought to the notice of Their Lordships and, therefore,leave granted was restricted to Question ‘B’.” 12. In view of the decision rendered by the Gujarat High Court in Hiralal Bhagwati(supra) approved by the Supreme Court in Surat ’sCity Gymkhanacase (supra), we have no hesitation to hold thatsince the respondent assessee stands registered as charitableinstitution under Section 12AA of the IT Act, the only corollary is,its application under Section 80G(5) of the IT Act also deserves tobe allowed which the learned ITAT has rightly noticed to be thecorrect legal position and directed the CIT(E) to grant approval tothe assessee under Section 80G(5) of the IT Act. As such, the Soma (Tax Case No.87/2022) 12. In view of the decision rendered by the Gujarat High Court in Hiralal Bhagwati(supra) approved by the Supreme Court in Surat ’sCity Gymkhanacase (supra), we have no hesitation to hold thatsince the respondent assessee stands registered as charitableinstitution under Section 12AA of the IT Act, the only corollary is,its application under Section 80G(5) of the IT Act also deserves tobe allowed which the learned ITAT has rightly noticed to be thecorrect legal position and directed the CIT(E) to grant approval tothe assessee under Section 80G(5) of the IT Act. As such, the Soma (Tax Case No.87/2022) substantial question of law is answered in favour of the assessee and against the Revenue and accordingly, the tax appeal deserves to beand is hereby dismissed leaving the parties to bear their own cost(s). Sd/-(Sanjay K. Agrawal)JUDGE Sd/- (Radhakishan Agrawal)JUDGE