CIT Exemption Vs Sattavis Kadva Patidar Pragati Mandal (Gujarat High Court)
The Gujarat High Court dismissed the Tax Appeal filed by the CIT (Exemption) against the order dated 08.05.2024 passed by the Income Tax Appellate Tribunal in ITA No. 414 of 2023 concerning the assessee’s application under Section 80G of the Income-tax Act, 1961. The Revenue had proposed three substantial questions of law concerning the applicability of Section 80G(5B), the religious and charitable objects contained in the trust deed, and the interaction between Section 80G(5B), Section 80G(5) and Section 2(15) of the Act.
The substantial questions proposed by the Revenue proceeded on the premise that the assessee trust had religious objects as well as charitable objects. The Revenue contended that Section 80G(5B) was applicable to trusts which were charitable in nature and not to trusts which were purely religious or religious-cum-charitable in nature. It further contended that certain object clauses under the head “Religious purpose” were religious in nature and that Section 80G(5B) could not override the substantive requirements of Section 80G(5), read with Section 2(15). Reliance was also sought to be placed upon the Supreme Court decision in Upper Ganges Sugar Mills Ltd.
During the hearing before the High Court, however, the learned Senior Standing Counsel appearing for the Revenue was unable to dispute the factual finding recorded by the Tribunal that no notice had been issued to the assessee by the CIT (Exemption) before rejecting the application for registration under Section 80G(5B). The Tribunal had specifically observed that no show cause notice was issued before the application under Section 80G was rejected. It regarded the show cause notice as significant to procedural fairness and the protection of the taxpayer’s rights.
