2024 (3) TMI 1319 - AT - Income Tax

Final approval u/s 80G(5)(iii) to charitable institution - Time for final registration after grant of provisional registration under Clause (iv) to First Proviso to section 80G(5) - application rejected observing that the time limit prescribed for making an application for final approval u/s 80G was at least six months prior to the expiry of the period of the provisional approval or within six months of the commencement of its activities, whichever is earlier - HELD THAT - Tribunal in the case of Tomorrow s Foundation 2024 (3) TMI 941 - ITAT KOLKATA it is held that after grant of provisional approval, the application cannot be rejected on the ground that the institution had already commenced its activities even prior to grant of provisional registration. Under such circumstances, the date of commencement of activity will be counted when an activity is undertaken after the grant of provisional registration either under Clause (i) or Clause (iv) to First Proviso to section 80G(5) of the Act. The appeal of the assessee is allowed accordingly and the CIT(Exemption) is directed to grant provisional approval to the assessee under Clause (iii) to First Proviso to section 80G(5) of the Act, if the assessee is otherwise found eligible. CIT(A) will decide the application for final registration within three months of the receipt of copy of this order. Appeal of the assessee is treated as allowed for statistical purposes.

Summary

Issues Involved:
1. Whether the assessee's application for final approval under Section 80G(5)(iii) of the Income Tax Act was valid and within the prescribed time limits.
2. Whether the assessee, who had commenced activities prior to provisional approval, was eligible for final registration under Section 80G(5)(iii).

Summary:

1. Validity and Timeliness of Application for Final Approval:
The assessee, already registered under Section 80G(5) since 2021, was required to re-apply for approval due to the Amendment Act of 2020. The assessee mistakenly applied for provisional approval under Clause (iv) instead of revalidating the existing approval under Clause (i). The CIT(Exemption) rejected the application for final approval, stating that it was filed after the extended deadline of 30.09.2022 and beyond the prescribed period of six months prior to the expiry of the provisional approval. The Tribunal noted that the relevant provisions required institutions to apply for final registration under Clause (iii) at least six months before the expiry of the provisional approval or within six months of commencing activities, whichever is earlier.

2. Eligibility for Final Registration Despite Prior Activities:
The Tribunal referred to the case of "Tomorrow's Foundation vs. CIT(Exemption)" and similar cases, highlighting that institutions granted provisional approval can apply for final registration regardless of prior activities. The Tribunal emphasized that the CIT(Exemption) misconstrued the CBDT Circulars, which extended deadlines for institutions already registered before the amendment but did not apply to institutions seeking fresh provisional registration under Clause (iv). The Tribunal clarified that institutions granted provisional approval under Clause (iv) are entitled to apply for final registration under Clause (iii) and that the date of activity commencement should be considered post-provisional registration.

Conclusion:
The Tribunal directed the CIT(Exemption) to grant provisional approval under Clause (iii) to the assessee, provided it meets eligibility criteria, and to decide the application for final registration within three months. The appeal was allowed for statistical purposes.