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Judgment
PER RAJ KUMAR CHAUHAN , J.M. :
The appeal is directed against the order dated 21.12.2024 by Learned Commissioner of Income Tax (Exemption), Delhi [hereinafter referred to as the “CIT(A)”], wherein the application in Form 10AB for regular approval under section 80G(5)(iii) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) has been rejected on the ground that the applicant is not a charitable or non-profit organization as required u/s 80G(5)(v) of the Act. Further, the provisional approval granted vide order dated 28.05.2021 for A.Y. 2024-25 was also cancelled.
Aggrieved by the impugned order, the assessee is in appeal before us and raised following grounds:
“1. Constitution of the Applicant and Eligibility under Section 80G(5)(v).
The order cites that the Applicant does not qualify under Section 80G(5)(v) of the Income Tax Act, 1961, as it is not a charitable or non-profit organization. However, it is important to clarify that the Applicant is an Artificial Juridical Person (AJP) formed for charitable and humanitarian purposes. The activities of the Applicant are aligned with promoting health, education, and well-being, which are consistent with the objectives of public charitable purposes under Section 80G. Moreover, the Applicant has obtained the necessary permissions from the Reserve Bank of India to upgrade its liaison office to a branch office, allowing us to carry out permitted activities for nonprofit purposes in India. We have consistently operated with the objective of serving the public interest and have strictly adhered to regulations governing not-for-profit organizations. While the activities and objectives clearly align with the spirit of Section 80G(5)(v), which is to support organizations undertaking activities in the public interest, especially those related to health and social welfare.
2. Provision of Additional Information
The Applicant has cooperated with the authorities throughout the process by responding promptly to all requests for additional details, documents, and clarifications. On several occasions, the Applicant has submitted comprehensive replies and provided all requested information, including on 17/12/2024, in which we detailed our structure and operational model. In light of this, we submit that the rejection based on our not being classified under Section 80G(5)(v) should be reconsidered, especially given that our core activities contribute significantly to public health and societal welfare, and the provisions under the Act should be interpreted with a view to the broader objectives of charity and public service.
3.The cancellation of our provisional approval granted on 28/05/2021 is another area of concern. Given that the application under Section 80G(5)(iii) was filed in good faith and the Applicant has consistently acted in line with regulatory requirements, we respectfully request the reconsideration of the provisional approval status, as the final decision on the application under Section 80G(5)(iii) is still under review. The premature cancellation of our provisional approval may impede our ongoing charitable activities, which directly benefit public health and the fight against tuberculosis and lung disease.
In light of the above points, we request that your office re-evaluate the status of the Applicant under Section 80G of the Income Tax Act, 1961. We are prepared to provide any additional documentation, including more comprehensive clarifications, to demonstrate our eligibility for the regular approval under Section 80G(5)(iii).”
The facts in brief as culled out from the impugned order are that the applicant is an Artificial Juridical Person (AJP) formed for charitable purposes who is engaged in carrying out activities promoting health, education and well-being which are inconsistent with the objectives of power charitable purposes u/s 80G of the Act. The applicant has obtained the necessary permission from Reserve Bank of India to upgrade its liaison office to a Branch Office, allowing it to carry out its permitted activities for non-profit purposes in India.
We have heard Ld. AR for the Assessee and Ld. DR for the Revenue and examined the impugned order and the record. It has been contended before us that the applicant has been granted registration u/s 12AB of the Act and therefore refusal to grant regular approval u/s 80G of the Act and cancellation of provisional approval granted u/s 80G(5)(iii) has resulted into miscarriage of justice. It is therefore argued that the impugned order be set aside and the matter be restored to the file of Ld. CIT(E) for considering the submission afresh and affording an opportunity of submitting necessary document if any required.
Ld. DR on the other hand opposed the submissions stating that the impugned order has been passed legally and thus supported the order of the Ld. The CIT(E).
We have considered the submission and examined the record. The para No. 4 of the impugned order shows that the reply of the applicant submitted on 17.12.2024 has been considered in part and nothing is coming out from the impugned order if all the submissions made and the documents submitted has been considered while passing the impugned order. Therefore, the impugned order suffers from the illegality as having been passed without following principle of natural justice into the letter and spirit. More over the approval granted by R.B.I to the assessee has also not been considered in right perspective and for these reasons the impugned order is set aside and the matter is restored to the file of the Ld. CIT(E) for deciding the same afresh by affording effective opportunity of hearing to the applicant who is also directed to file all necessary requisite documents before the Ld. CIT(E) within the period of 30 days from this order. The Ld. CIT(E) shall expedite the decision on the application for registration of the applicant u/s 80G of the Act. The appeal of assessee is accordingly allowed in above terms for statistical purposes.
In the result, the appeal of the assessee is allowed in above terms for statistical purposes.