COMMISSIONER OF INCOME TAX I LDH V. BHOLA BHANDARI CHARITABLE TRUST

ITA/238/2012

AI Insights

The case revolves around the dispute concerning the withdrawal of tax exemption under Section 80G of the Income Tax Act, 1960, by the Commissioner of Income Tax from the Bhhola Bhandari Charitable Trust. Initially, the trust was granted an exemption which was valid until the financial year 2010-11. Following amendments to the Act and relevant CBDT Circulars, which stipulated that such exemptions would continue in perpetuity from October 1, 2010, the Commissioner still withdrew the exemption in December 2011. The Tribunal's decision to set aside this withdrawal was based on the interpretation of the amended law and the Circulars, which the High Court upheld, dismissing the Revenue's appeal.

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 718687 (HC-MISC)
• Appeal Type: Others
• Pronouncement Date: 30-01-2013
• Assessment Year: misc
• Laws Referred To: Income Tax Act, 1960
• Result in Favour of: Respondent
• Court: HIGH COURT
• Assessee Lawyers: RAJESH KATOCH
• Keywords: CBDT circulars; Charitable Trust; Exemption; Income Tax; Perpetuity
• Section: 260A; 80G(5)

Judgement Text

"ITA No. 238 of 2012 (O&M) -1- IN THE HIGH COURT OF PUNJAB & HARYANA AT CHANDIGARH ITA No. 238 of 2012 (O&M) Date of decision: 30.01.2013 Commissioner of Income Tax-I, Ludhiana ...Appellant versus Bhhola Bhandari Charitable Trust, Ludhiana ..Respondent CORAM: HON'BLE MR. JUSTICE HEMANT GUPTA HON'BLE MS. JUSTICE RITU BAHRI Present:- Mr. Rajesh Katoch, Advocate for the appellant. HEMANT GUPTA, J. (Oral) The Revenue is in appeal under Section 260A of the Income Tax Act, 1960 (for short 'the Act') against the order dated 17.05.2012 passed by the Income Tax Appellate Tribunal, Chandigarh Bench 'A', Chandigarh (for short 'the Tribunal) in ITA No. 140/CHD/2012 holding that the approval once granted to the assessee under Section 80G(5) of the Act shall continue in perpetuity as per circular No. 5 dated 03.06.2010 issued by Central Board of Direct Taxes (for short 'CBDT'). Our attention has been drawn to circular No. 7 of 2010 issued by CBDT wherein the circular issued earlier has been clarified and reiterated. The Revenue has claimed the following substantial questions of law:- “(i) Whether on the facts and circumstances of the case, Hon'ble the ITAT was justified in setting aside the order of CIT relying upon the assessee's version that the approval once granted u/s 80(G)(5) of I.T Act shall continue in perpetuity as per Circular No. 5/2010? ITA No. 238 of 2012 (O&M) -2- (ii) Whether on the facts and circumstances of the case, Hon'ble the ITAT was justified in not appreciating that the CIT was well within his right to withdrawn the exemption on finding that the activities of the trust were not charitable even though the petition of the assessee could not be rejected keeping in view the guidelines as mentioned in para 5 of Circular No. 7/2010 dated 27.10.2010?” The assessee was granted exemption under Section 80(G) of the Act being the charitable trust. Such exemption was valid up to the financial year 2010-11 ending 31st March 2011. The assesee filed an application for renewal of exemption on 25.04.2011 which was withdrawn on 31.05.2011. It appears such request was withdrawn as by Finance Act No. 02 of 2009 and the Circular No. 5 of 2010, it was made explicit that the existing exemptions granted Section 80(G) of the Act as on 1.10.2010 would continue till perpetuity. But still the Commissioner of Income Tax withdrew the exemption vide order dated 05.12.2011. It is said order which has since been set aside by the Tribunal. We find that the order of the Tribunal setting aside the order of Commissioner of Income tax is based on sound reasoning. The asseesse had valid exemption on 1.10.2010 when the provisions of Section 80G of the Act were amended so as to dispense the periodic renewal of the exemptions. Such statutory provisions were clarified by Circular No. 5 of 2010 and Circular No.7 of 2010 issued by CBDT. Once the statute has given perpetuity to the exemptions granted under Section 80(G)(5) of the Act, the same could not be withdrawn without issuing show cause notice in terms of the statutory provisions in the manner prescribed by law. ITA No. 238 of 2012 (O&M) -3- In view of the said fact, we do not find that any substantial question of law arises for consideration. Dismissed. (HEMANT GUPTA) JUDGE ( RITU BAHRI ) JUDGE January 30, 2013 G.Arora/Vimal "