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2025 (1) TMI 1546 - AT - Income TaxRejecting application for final approval as per the provisions of section 80G(5)(iii) - HELD THAT - The present appeal of the assessee is not maintainable as the assessee has already been granted final/regular registration (not provisional) which is valid from 2022-23 to AY 2026-27. Therefore there is no requirement of applying for final registration. The present appeal of the assessee thus is infructuous and not maintainable and the same is accordingly dismissed. However it is made clear that the dismissal of the above appeal of the assessee will not in any manner tantamount to effect the registration granted to the assessee vide order dated 28.05.2021 which is valid up to AY 2026-27. Appeal filed by the assessee is dismissed.
Issues Presented and Considered
The core legal questions considered by the Tribunal in this appeal include:
Issue-wise Detailed Analysis Issue 1: Nature of Approval Granted under Section 80G(5) - Provisional or Final/Regular Legal Framework and Precedents: Section 80G(5) of the Income Tax Act, 1961, governs the approval of charitable institutions for the purpose of tax deductions to donors. The first proviso to this section contains various clauses under which provisional or final approvals can be granted. Clause (i) pertains to regular approval, while clause (iii) relates to final approval following provisional registration. Court's Interpretation and Reasoning: The Tribunal noted that the assessee was granted approval under clause (i) of the first proviso to section 80G(5) on 31.05.2021. However, both the assessee and the Commissioner of Income Tax (Exemption) misconstrued this approval as provisional, leading the assessee to apply for final approval under clause (iii). The Tribunal observed that the certificate issued (Form 10AC) bore the title "Order for provisional approval" and contained language indicating provisional status, which created confusion. Key Evidence and Findings: The Form 10AC issued on 31.05.2021 explicitly mentioned "provisional approval" in the title and relevant columns, though the underlying approval was in fact final/regular. The Tribunal found that this was a technical or clerical error causing misunderstanding. Application of Law to Facts: The Tribunal examined the facts in light of the statutory provisions and the documentation. The confusion arose from the language used in Form 10AC rather than substantive legal status. The assessee's belief that it needed to apply for final approval was based on this erroneous indication. Treatment of Competing Arguments: The Department contended that the approval was indeed provisional and the application for final approval was premature. The assessee argued that it had been granted regular approval and thus no further application was necessary. The Tribunal initially directed reconsideration of the application for final approval due to the ambiguity. Conclusion: The Tribunal recognized the confusion but noted that the approval was intended to be final/regular, not provisional. Issue 2: Effect of CBDT Circular No. 11 of 2022 on the Nature of Approval and Validity of Applications Legal Framework and Precedents: Circular No. 11 of 2022 issued by the CBDT clarified that all Form No. 10AC orders issued between 01.04.2021 and the date of the Circular bearing the heading "Order for provisional registration" or "Order for provisional approval" should be read as if they were "Order for registration" or "Order for approval." The Circular also provided detailed instructions on how to interpret various entries in the Form 10AC to treat these approvals as final/regular despite the provisional language. Court's Interpretation and Reasoning: The Tribunal accepted the Department's submission that the confusion caused by the wording in Form 10AC was resolved by the Circular. The Circular effectively re-characterized all such provisional approvals issued due to technical glitches as final/regular registrations or approvals. Key Evidence and Findings: The Circular's explicit instructions to read provisional approvals as final approvals were crucial. The Tribunal relied on this authoritative clarification to correct the earlier misunderstanding. Application of Law to Facts: Applying the Circular retroactively to the assessee's case, the order dated 31.05.2021 was to be treated as final/regular approval valid through AY 2026-27. Therefore, the subsequent application for final approval was unnecessary and premature. Treatment of Competing Arguments: The assessee's argument that the original approval was final was supported by the Circular. The Department's initial stance that the approval was provisional was superseded by the Circular's clarification. Conclusion: The Circular resolved the confusion and established that the assessee's approval was final/regular, negating the need for a further application. Issue 3: Maintainability of the Assessee's Appeal Against the Rejection of Final Approval Application Legal Framework and Precedents: The appeal was filed challenging the rejection of the application for final approval under section 80G(5)(iii). The maintainability of such an appeal depends on whether the application itself was necessary and whether the rejection caused any legal prejudice. Court's Interpretation and Reasoning: Given the clarified position that the earlier approval was final and valid, the Tribunal held that the application for final approval was redundant. Consequently, the rejection of this application did not adversely affect the assessee's legal position. Key Evidence and Findings: The Tribunal relied on the Circular and the fact that the original approval was valid until AY 2026-27. Application of Law to Facts: Since the assessee was already duly registered and approved, the appeal challenging the rejection of the subsequent application was infructuous. Treatment of Competing Arguments: The Department's Miscellaneous Application pointed out that the Tribunal's earlier order was based on an incorrect assumption of facts. The Tribunal accepted this submission and recalled its previous order. Conclusion: The appeal was dismissed as not maintainable and infructuous, with a clear statement that dismissal would not affect the validity of the original registration. Significant Holdings "The approval granted to the assessee earlier vide order dated 31.05.2021 was a regular/final approval and not provisional, which is valid from AY 2022-23 to AY 2026-27." "Where due to technical glitches, Form No. 10AC has been issued with the heading 'Order for provisional registration' or 'Order for provisional approval' instead of 'Order for registration' or 'Order for approval,' all such Form No. 10AC shall be considered as an 'Order for registration or approval'." "The appeal filed by the assessee against the rejection of the application for final approval is infructuous and not maintainable since the assessee has already been granted final/regular registration valid up to AY 2026-27." Core principles established include:
Final determinations on each issue are:
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