CIT (Exemption) Vs Dignity Education Society (Chhattisgarh High Court)
Factual Background and Legal Issue
The assessee, Dignity Education Society, applied for exemption under Section 80G of the Income-tax Act, 1961 (IT Act), using Form 10G. The Revenue, through the Joint Commissioner of Income Tax and the Assessing Officer, did not recommend the case for 80G approval in a report dated December 4, 2018.
Read SC Judgment in this case: Section 80G Approval Cannot Be Denied When Section 12AA Registration Exists: SC
The reasons for the non-recommendation were:
1. The assessee Society runs a college called Dignity College of Architecture.
2. The Society generates a surplus from the fees charged to students to provide education.
3. The Society is not involved in any other activities as mentioned in the application of Form 10G.
Subsequently, on December 26, 2018, the Commissioner of Income-tax (Exemption) [CIT(E)] rejected the application under Section 80G(5)(vi) of the IT Act.
The assessee challenged the CIT(E)’s rejection before the Income Tax Appellate Tribunal (ITAT), Raipur. The ITAT reversed the CIT(E)’s order, allowing the assessee’s appeal and directing the CIT(E) to grant approval under Section 80G(5) of the IT Act.
The Revenue preferred a tax appeal to the Chhattisgarh High Court under Section 260A of the IT Act, challenging the legality of the ITAT’s judgment. The High Court admitted the appeal by formulating the following substantial question of law: Whether the ITAT was correct in holding that the CIT(E) was not justified in rejecting the application for grant of exemption under Section 80G(5) and issuing a direction to grant the exemption.
