CIT (Exemptions) Vs Rajkot Jilla Gayatri Parivar Trust (Gujarat High Court)
Gujarat High Court, in CIT (Exemptions) v. Rajkot Jilla Gayatri Parivar Trust, dismissed a tax appeal filed by the Revenue under Section 260A of the Income Tax Act, 1961. The case arose from an order of the Income Tax Appellate Tribunal (ITAT), Rajkot Bench, which had granted approval to the assessee trust under Section 80G. The Revenue questioned whether the Tribunal was justified in granting such approval without fully examining whether the trust’s activities were substantially religious in nature, as restricted by Explanation 3 to Section 80G(5).
The Tribunal, in its order, noted that the Commissioner of Income Tax (CIT) had not produced any concrete evidence to demonstrate that the assessee’s activities were wholly or substantially religious. It further observed that the trust had been granted approval under Section 80G from 1993 until 2006 based on the same activities and objects, with no subsequent material changes. Applying the “rule of consistency,” and relying on the Supreme Court’s decision in Radhasoami Satsang v. CIT (193 ITR 321), the Tribunal held that in the absence of material change, the Revenue could not take a contradictory stand in later years.
The High Court agreed with this reasoning and emphasized that the issue was squarely covered by the Supreme Court judgment in CIT v. Lok Sewa Sansthan Samiti Sonebhadra [2019] 105 taxmann.com 203 (SC). In that case, the Supreme Court held that once an assessee is registered as a charitable institution under Section 12A, approval under Section 80G should follow as a corollary unless the Revenue can demonstrate that activities are religious in nature. Since the trust was already registered under Section 12A and no evidence was produced to establish a religious character, the High Court upheld the Tribunal’s decision.
