Hon'ble Vedpal, J.
Heard learned counsel for the petitioner Sri J.N. Mathur, learned Senior Advocate and Sri D.D. Chopra for the respondents.
Counter affidavit has been filed on behalf respondents 2 and 3, but the petitioner has not chosen to file any rejoinder affidavit, as according to him it is not needed.
In short, the petitioner felt aggrieved by the order dated 30.12.2010 passed by the Income Tax Appellate Tribunal, Lucknow Bench, "B", Lucknow, by means of which, the Tribunal has remanded the matter regarding the renewal of the exemption certificate issued under Section 80-G of the Income Tax Act, 1961 for being decided afresh after setting aside the order passed by the Commissioner, Income Tax-I, Lucknow, by means of which, the application for renewal was rejected.
The petitioner though initially made an effort to point out the illegality in the order passed by the Income Tax Appellate Tribunal in remanding the matter and saying that the Tribunal ought to have decided the issue itself, but later on, during the course of arguments, in view of the Circular dated 3.6.2010 issued by the Central Board of Direct Taxes, submitted that the recognition under Section 80-G (exemption) having been already granted on 8.6.09, which was valid upto 30.3.2010, therefore, no renewal was required in terms of the aforesaid Circular, as the said exemption (recognition) under Section 80-G would continue in perpetuity unless withdrawn.
Sri D.D. Chopra, appearing for respondents 2 and 3, does agree with the aforesaid factual and legal position.
We have gone through the record and we find that the petitioner was granted exemption under Section 80-G on 8.6.09 and the same was valid upto 31.3.2010, but in the meantime, in view of the Circular aforesaid, the amendment was made providing therein that such exemption would continue in perpetuity unless withdrawn.
The aforesaid Circular, in Para 28.4 itself says that the amendment aforesaid has been made applicable w.e.f. 1st April, 2010 and will accordingly apply in relation to assessment year 2010-11 and subsequent years.
In Clause 29.5, the Circular says as under:
"Therefore, the proviso to clause (vi) of sub-section (5) of section 80G has been omitted to provide that the approval once granted shall continue to be valid in perpetuity."
Clause 29.7 of the Circular aforesaid, reads as under:
"Applicability - This amendment has been made applicable with effect from 1st October, 2009. Accordingly, existing approvals expiring on or after 1st October, 2009 will be deemed to have been extended in perpetuity unless specifically withdrawn. However, in case of approvals expiring before 1st October, 2009, these will have to be renewed and once renewed these shall continue to be valid in perpetuity, unless specifically withdrawn."
Since proviso to Clause (vi) of sub-section (5) of Section 80-G has been omitted, there remains no requirement to seek renewal in every assessment year. This stands clarified in Clause 29.7 of the Circular aforesaid.
It being admitted that the exemption was expiring in the instant case after 1.10.09, the deeming provision of perpetuity clause stood attracted. That being so, the exemption granted under Section 8-G would remain operative unless withdrawn.
It appears that the petitioner since has moved an application for renewal of the exemption on 31.3.2010, the Commissioner of Income Tax without taking cognizance of the said Circular/amendment, rejected the application as well as renewal, as the petitioner did not turn up after notice being issued.
Sri D.D. Chopra says that since the petitioner moved the application on 31.3.2010 i.e. before the Circular was issued on 3.6.2010, therefore, the Commissioner proceeded with the application ignoring the said Circular.
The Appellate Tribunal also did not take into account the effect of the Circular aforesaid and remanded the matter for affording opportunity to the petitioner and passing fresh orders by the Commissioner of Income Tax, in accordance with law.
May be that at the time of moving the application, Circular aforesaid was not in vogue and in the absence of any such Circular having been issued, the application would have been decided in the manner as required under the Act. But once a Circular was issued, even during the pendency of the application for renewing the exemption already granted which was in force in perpetuity as a consequence of amending the proviso to Clause (vi) of sub-section (5) of Section 80-G, even on remand, the Commissioner of Income Tax has no authority to refuse renewal but to declare the exemption in force till it is actually withdrawn.
Even otherwise, Clause 29.7 of the Circular makes it very clear that the amendment in question has been made applicable w.e.f. 1.10.09 and accordingly existing approvals, which were to expire on or after 1.10.09 will be deemed to have been extended in perpetuity unless specifically withdrawn. This itself means that the petitioner's approval/exemption granted under Section 80-G, which was to expire on 31.3.2010, would be deemed to have been extended in perpetuity unless specifically withdrawn. Once the exemption granted stands extended in perpetuity by operation of law, merely moving an application by the petitioner would not divest it of the aforesaid right, which has accrued to it, in view of the Circular aforesaid and the amendment made in the Act.
In these circumstances, there is no requirement of maintaining the direction issued by the Tribunal to the Commissioner, Income Tax for deciding the application for renewal afresh, in accordance with law, as by virtue of operation of law, the exemption shall be deemed to be continued in perpetuity and it will continue, so long it is not withdrawn, as per the provisions of the Act.
The writ petition is disposed of accordingly.
Dated: 07.2.2011 Sachin