In a landmark ruling, the Chhattisgarh High Court has upheld the Income Tax Appellate Tribunal (ITAT) order granting Section 80G approval to a Raipur-based charitable society, emphasizing that valid registration under Section 12AA of the Income Tax Act, 1961 is sufficient for eligibility under Section 80G.
Background of the Case
The society had applied for 80G certification on 28 February 2014, which allows donors to claim tax deductions on donations made to charitable institutions. However, the Commissioner of Income Tax (CIT), Raipur, rejected the application on 25 August 2014, claiming that the society was involved in commercial activities. According to the CIT, the society was running educational institutions on commercial lines, had taken large loans for infrastructure development, and was renting out buildings for revenue — activities deemed incompatible with charitable purposes.
ITAT’s Decision
Challenging the CIT’s rejection, the society approached the ITAT Raipur Bench, which ruled in its favour on 15 January 2019. The tribunal set aside the CIT’s order and directed that the society be granted Section 80G approval, highlighting that it already held valid registration under Section 12AA, which certifies its charitable status.
Income Tax Department’s Appeal
The Income Tax Department subsequently filed an appeal before the Chhattisgarh High Court, contending that the ITAT had erred in treating the society’s fee-based vocational education programs as “charitable.” The department argued that these activities did not fall within the definition of “education” under Section 2(15) of the Act and were primarily commercial.
Society’s Defence
Representing the society, Advocates Sumesh Bajaj and Rishabh Bajaj argued that the society’s registration under Section 12AA had been valid and renewed up to the Assessment Year 2026–27. They contended that unless the registration was revoked, the Income Tax Department could not deny 80G benefits. Citing precedents from the Supreme Court, Gujarat High Court, and Punjab and Haryana High Court, they maintained that further scrutiny into the genuineness of activities was unwarranted.
High Court’s Ruling
A division bench comprising Chief Justice Ramesh Sinha and Justice Bibhu Datta Guru ruled in favour of the society. The court noted that the ITAT had rightly relied on judicial precedents and that no material evidence was presented by the department to disprove the tribunal’s reliance on earlier judgments.
The bench clarified that as long as registration under Section 12AA is valid, the department cannot conduct a re-assessment into the charitable nature of a society’s activities. The court concluded that the ITAT committed no illegality or irregularity, and accordingly, the department’s appeal was dismissed.
Key Legal Takeaways
- Section 80G offers tax deductions for donations made to approved charitable organizations.
- Section 12AA registration is a prerequisite for availing income tax exemptions and confirms the charitable status of a trust or society.
- Once 12AA registration is valid and in force, authorities cannot deny 80G approval on grounds related to the genuineness of activities unless the registration is first cancelled.
Conclusion
This judgment reinforces the principle that valid 12AA registration is sufficient for a charitable society to be eligible for 80G approval under the Income Tax Act. The Chhattisgarh High Court’s decision not only upholds the ITAT’s order but also sets a strong precedent for similar cases across India, safeguarding the interests of genuine charitable institutions.