Commissioner Of Income Tax vs Rajkot Jilla Gayatri Parivar Trust

J.B. Pardiwala, J

This tax appeal under Section 260A of the Income Tax Act, 1961 [for short 'the Act, 1961'] is at the instance of the Revenue and is directed against the order passed by the Income Tax Appellate Tribunal, Rajkot Bench, Rajkot dated 11/03/2019 in the ITA No. 52/RJT/2016.

The Revenue has proposed the following substantial questions of law for the consideration of this Court:-

[A] Whether on the facts and in the circumstances of the case and in law, the Appellate Tribunal was justified in allowing the approval u/s.80G of the Act without appreciating that the assessee-trust has not fulfilled the condition laid down in Explanation 3 to section 80G(5) of the Act?

[B] Whether on the facts and in the circumstances of the case and in law, instead of restoring the matter to the CIT for examining the activities of the assessee, was Appellate Tribunal justified in allowing the appeal of assessee by observing that Ld. CIT has not brought any specific instances suggesting that the activities of the assessee are religious in nature particularly when most of the objects are apparently religious?

The appellate tribunal while passing the impugned order observed as under:-

We have heard the rival contentions and perused the materials available on record. At this juncture we find important to refer the provisions as contained under explanation 3 to section 80G(5) of the Act which is reproduced as under:

"Charitable purpose" does not include any purpose the whole or substantially the whole of which is of a religious nature."

8.1. As per the above provision, the assessee cannot get the benefit of registration under section 80G(5) of the Act if it's activities wholly or substantially the wholly are of religious nature. However, in this regard, we note that the Ld. CIT has not brought any specific instances suggesting that the activities of the assessee are religious in nature.

8.2. Besides the above, we also note that the assessee has been getting the registration under section 80G(5) of the Act right from the year 1993 to the year 31st March 2006 on the same kind of activities. It is also an undisputed fact that there was no change in the objects and the activities of the trust. Therefore, we are of the opinion that the assessee deserves the registration under section 80G(5) of the Act as per the rule of consistency in view of the judgment of Hon'ble Supreme Court in the case of Radhasoami Satsang reported in 193 ITR 321 wherein it was held as under:

"13. We are aware of the fact that strictly speaking res judicata does not apply to income-tax proceedings. Again, each assessment year being a unit, what is decided in one year may not apply in the following year but where a fundamental aspect permeating through the different assessment years has been found as a fact one way or the other and parties have allowed that position to be sustained by not challenging the order, it would not be at all appropriate to allow the position to be changed in a subsequent year.

On these reasonings in the absence of any material change justifying the revenue to take a different view of the matter - and if there was no change it was in support of the assessee - we do not think the question should have been reopened and contrary to what has been decided by the Commissioner in the earlier proceedings, a different and contradictory stand should have been taken. We are, therefore, of the view that these appeals should be allowed and the question should be answered in the affirmative, namely, that the Tribunal was justified in holding that the income derived by the Radhasoami Satsang was entitled to exemption under sections 11 and 12."

In view of the above, we reverse the order of Ld. CIT and direct him to grant the registration certificate under section 80G of the Act. Hence, the ground of appeal of the assessee is allowed.

We are of the view that the appellate tribunal committed no error not to speak of any error of law in passing the impugned order. The issue is now squarely covered by a decision of the Supreme Court in the case of Commissioner of Income-tax, Allahabad v. Lok Sewa Sansthan Samiti Sonebhadra reported in [2019] 105 taxmann.com 203 (SC). It is not in dispute that the respondent - assessee stands registered as a Charitable Institution under Section 12-A of the Act. In such circumstances, as a natural corollary, the application under Section 80G(5) of the Act would also be liable to be allowed.

In view of the aforesaid, this appeal fails and is hereby dismissed.