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Judgment
PER YOGESH KUMAR, U.S. JM:
The present appeal is filed by the Appellant against the order of Ld. Commissioner of Income Tax (Exemption) -Chandigarh (‘Ld. CIT(A)’ for short), New Delhi dated 28/10/2025.
There is a delay of 21 days in filing the Appeal. The Assessee filed an affidavit contending that due to mis-conception, the Appellant had filed Appeal before Chandigarh Bench of the Tribunal, which has been returned by the ITAT, Chandigarh mentioning that jurisdiction falls with ITAT Delhi Bench. Thereafter, Assessee filed the captioned Appeal, therefore, there is a delay of 21 days in filing the captioned Appeal.
For the reason stated in the Affidavit filed by the Assessee the delay of 21 days in filing the present Appeal is hereby condoned.
The Ld. Counsel for the Assessee submitted that the Assessee has been granted with registration under Section 12AB(1)(b) of the Act on 23/02/2026 by the CIT(E), however, the application filed by the Appellant under Section 80G(5)(vi)(B) of the Act has been erroneously rejected vide order impugned. The Ld. Counsel has also relied on the Judgment of Hon’ble High Court of Chhattisgarh dated 28/11/2024 in the case of Commissioner of Income Tax (Exemption) Vs. Dignity Education Society. Thus, sought for allowing the Appeal.
Per contra, the Ld. Departmental Representativevehemently submitted that the grant of Registration under Section 12A and 80G of the Act are entirely different and mere granting of approval under Section 12A of the Act cannot accrue any right to automatically grant Registration under Section 80G of the Act. Thus, sought for dismissal of the Appeal.
We have heard the parties perused the material. It is not in dispute that the Assessee has granted with registration under Section 12AB(1)(b) of the Act by the CIT(E), Chandigarh on 23/02/2026. However, the application filed under Section 80G(5)(iv)(B) of the Act has been rejected subsequently on 28/10/2025. The Hon’ble High Court of Chhattisgarh in the case of Commissioner of Income Tax (Exemption) Vs. Dignity Education Society (supra), held as under:-
‘7. We have heard learned counsel for the parties and considered their rival submissions made herein-above and also went through the record with utmost circumspection.
8.It is not in dispute that the assessee’s application under Section 12AA of the IT Act was granted and is continuing in operation and that is the basis which has persuaded the learned ITAT to accept the appeal of the assessee and direct the CIT(E) to grant approval under Section 80G of the IT Act.
9.The issue involved herein is no longer res integra and stands decided by a decision of the Gujarat High Court in the matter of Hiralal Bhagwati v. Commissioner of Income-Tax (2000) 246 ITR 188 and that has been approved to be the correct law by a decision of the Supreme Court in the matter of Assistant Commissioner of Income Tax v. Surat City Gymkhana (2008) 14 SCC 169.
10.In Hiralal Bhagwati (supra), application of the assessee therein for exemption under Section 80G of the IT Act was rejected and the competent authority refused to grant exemption which the assessee challenged before the Gujarat High Court and the Gujarat High Court, considering the case of the assessee therein, held that once the registration under Section 12A(a) of the IT Act is granted, the grant 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 the registration under section 12A(a) of the Act is granted, the grant of benefit cannot be denied. The Income-tax Officer was not justified in refusing the benefits which would otherwise accrue under the registration. If there was no registration, as contemplated under section 12A(a) read with rule 17A, the Revenue would have been justified in making a submission that the benefit cannot be granted, but where the application for registration is submitted and the registration has been granted, the benefit cannot be denied on the ground that the scheme is not for the benefit of the public at large.”
11.The principle of law laid down by the Gujarat High Court in Hiralal Bhagwati (supra) was considered by the Supreme Court in Surat City Gymkhana’s case (supra) in which two questions of law were framed, (A) whether the objects of the trust restricting benefit to the members of the club would fall within the purview of the act of ‘general public utility’ under Section 2(15) of the Income Tax Act constituting as a section of public and not a body of individuals and (B) whether registration under Section 12-A was a fait accompli to hold that assessing officer back from further probe into the objects of the trust, and it has been held by their Lordships that 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 lis, whether it is for charitable purposes or otherwise, and the two stated questions have been answered in paragraphs 4 and 5 of the report as under: -
“4.This Court, on 22-7-2002, granted leave in respect of Question ‘B’ only. The appeals were not entertained in respect of Question ‘A’ and it was noted that the appeals were rightly dismissed by the High Court insofar as Question ‘A’ is concerned as the appellant did not challenge the correctness of the judgment in Hiralal Bhagwati1.
5.On a perusal of the judgment of the Gujarat High Court in Hiralal Bhagwati1 we now find that Question ‘B’ is also concluded by the said judgment (refer to the 1st paragraph of ITR p. 196). Since the Revenue did not challenge the decision in the said case, the same has attained finality. Question ‘B’, therefore, is to meet the same fate as Question ‘A’ as this Court had declined to grant leave in respect of Question ‘A’ on the ground that the Revenue did not challenge the correctness of the decision in Hiralal Bhagwati1. 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’.”
12.In view of the decision rendered by the Gujarat High Court in Hiralal Bhagwati (supra) approved by the Supreme Court in Surat City Gymkhana’s case (supra), we have no hesitation to hold that since the respondent assessee stands registered as charitable institution under Section 12AA of the IT Act, the only corollary is, its application under Section 80G(5) of the IT Act also deserves to be allowed which the learned ITAT has rightly noticed to be the correct legal position and directed the CIT(E) to grant approval to the assessee under Section 80G(5) of the IT Act. As such, the substantial question of law is answered in favour of the assessee and against the Revenue and accordingly, the tax appeal deserves to be and is hereby dismissed leaving the parties to bear their own cost(s).’
Considering the fact that the Assessee has been granted with registration under Section 12AB(1)(b) of the Act after verifying the details the CIT(E) should have granted approval under Section 80G(5)(iv)(B) of the Act. By respectfully following the Judgment of the Hon’ble High Court of Chhattisgarh in the case of Commissioner of Income Tax (Exemption) Vs. Dignity Education Society (supra), we direct the CIT(E) to grant registration by allowing the application filed by the Assessee under Section 80G(5)(iv)(B) of the Act.
In the result, the appeal of the Assessee is allowed.