09 October 2025 Income Tax >> Tax Laws  

The appeals arose from two separate judgments of the Allahabad High Court dated January 12, 2015 and January 7, 2019 in Income Tax Appeal Defective No. 154 of 2014 and Income Tax Appeal No. 550 of 2008. In those cases, the High Court had dismissed the Revenue’s appeals under Section 260A of the Income Tax Act, 1961, upholding the registration of the assessee for charitable purposes and thereby affirming the benefits available to it under the Act. The High Court had relied on its earlier ruling in Commissioner of Income Tax v. Lucknow Development Authority [(2014) 98 DTR (All) 193] and the corresponding orders of the Income Tax Appellate Tribunal.

Before the Supreme Court, the Revenue contended that the High Court failed to examine the specific facts of the case and their applicability to the legal principle relied upon. The Additional Solicitor General argued that the parameters for determining whether an entity serves a “charitable purpose” have now been conclusively settled by a three-judge bench of the Supreme Court in Ahmedabad Urban Development Authority (supra), as further clarified in [(2023) 7 SCC 249].

While both sides agreed that the decision in Ahmedabad Urban Development Authority governs the field, they differed as to how it affects the instant matter. The bench of Justice Manoj Misra and Justice Nongmeikapam Kotiswar Singh observed that the impugned High Court orders were cryptic and lacked proper analysis of the facts necessary to apply the newly settled law. The Court noted that the principles laid down in Ahmedabad Urban Development Authority cannot be applied in the abstract and that a factual appreciation is essential to determine whether the assessee’s functions qualify as charitable activities.

The Court clarified that it had expressed no opinion on the merits of the claims of either party. All pending applications were disposed of accordingly.

Section 260A, Income Tax Act - 1961  

Income Tax Act, 1961