2022 (11) TMI 619 - AT - Income Tax

Approval of Trust u/s.80G(5) - To be effective from the first date of Financial Year or from the date of approval - approval was granted provisionally as on 23.09.2021 - only grievance of the assessee is that the PCIT has erred in approving the Trust u/s. 80G(5) w.e.f. 23.09.2021 only as against it should have been from 01.04.2021 in term of sixth proviso to section 80G(5) - HELD THAT - Relevant proviso (vi) of section 80G(5) which clearly provides that the registration is to be granted from the first of the assessment years for which such institution or fund was provisionally approved i.e., from the assessment year and not from the mid of the year. It means that the assessee is entitled for approval w.e.f. 01.04.2021 and not from 23.09.2021. The provisions of the acts are clear and there is no ambiguity about it. Hence, we direct the PCIT to carry out the required amendment. We direct the PCIT(Exemption) accordingly. Appeal filed by the assessee is allowed.

Summary

Issues:
1. Interpretation of provisions under section 80G(5)(vi) of the Income Tax Act, 1961 regarding approval of a public charitable trust.

Analysis:
The appeal before the Appellate Tribunal ITAT Chennai stemmed from the order passed by the PCIT (Exemption), Chennai concerning the approval of a Trust under section 80G(5)(vi) of the Income Tax Act, 1961. The crux of the matter was the discrepancy in the approval date granted by the PCIT, which the assessee contended should have been from 01.04.2021 as per the sixth proviso to section 80G(5) of the Act, rather than from 23.09.2021 as approved by the PCIT.

Upon examining the facts and contentions, it was revealed that the assessee, a public charitable trust, had applied for re-registration under section 12AB of the Act in August 2021. Subsequently, the PCIT granted provisional approval in September 2021, specifying the approval period from 23.09.2021 to the assessment year 2024-25. The assessee challenged this approval date before the Tribunal, asserting that as per the relevant provisions, the approval should have been effective from 01.04.2021.

The Tribunal delved into the provisions of section 80G(5) of the Act, particularly focusing on the first, second, fourth, fifth, and sixth provisos. The Tribunal emphasized that as per the sixth proviso, approval should be granted from the commencement of the relevant assessment year and not midway through the year. Therefore, the Tribunal concluded that the assessee was indeed entitled to approval from 01.04.2021, in alignment with the statutory provisions, and directed the PCIT to rectify the approval date accordingly.

In light of the above analysis and interpretation of the pertinent provisions, the Tribunal allowed the appeal filed by the assessee, emphasizing the clear and unambiguous nature of the statutory provisions governing the approval of public charitable trusts under section 80G(5) of the Income Tax Act, 1961. The Tribunal's decision was pronounced in an open court session on 19th October 2022 in Chennai.