2024 (5) TMI 184 - AT - Income Tax

Application for approval u/s. 80G(5)(iii) - application filed in Form No. 10AB rejected - time limit to convert provisional approval to regular registration - HELD THAT - The assessee has commenced its activities on 27.05.2021 and applied for provisional approval u/s. 80G on 30.08.2021 and this provisional approval needs to be regularized within six months of commencement of activities u/s. 80G(5)(iii) of the Act. Considering genuine hardship, the CBDT extended this date further by 30.09.2022 and assessee trust was having sufficient time to convert provisional approval to regular registration and there was no necessity for this trust to apply both provisional and regular approval simultaneously. Even this amendment of 2023 by the Finance Act, 2023 is not retrospective, it is prospective. This issue is fully covered now, as the Tribunal in the case of M/s. Shri Ramajayam Charitable Trust 2024 (3) TMI 1201 - ITAT CHENNAI timeline prescribed under clause (iii) of first proviso to section 80G(5) of the Act should be treated as directory and not mandatory especially considering the transitional nature of the amendment as brought out by the taxation of other laws (relaxation and amendment of certain provisions) act 2020 for bringing new regime. Hence, in our view, the CIT(Exemptions) should not have rejected the assessee s application in Form No. 10AB only for this technical reason. We are of the view that the intention of CBDT in its circular clearly reflects their mind that once the timeline prescribed for filing Form No. 10AB for recognition u/s. 12A of the Act has been extended up to 30.09.2023, the same may be treated as extended for forms namely Form No. 10AB for renewal of approval/recognition/registration under clause (iii) of first proviso to section 80G of the Act also. Hence, we accept the plea of assessee and agree with the arguments of assessee and remand the matter back to the file of the CIT(Exemption) to decide the issue on merits. The order of CIT(Exemption) on this issue is set aside and matter is remanded back to the file of the CIT(Exemption) for re-deciding the issue on merits as per law. Appeal of the assessee is allowed for statistical purposes. We set aside the order of CIT(Exemption) dated 30.08.2023 and direct him to re-consider the assessee s application for approval u/s. 80G(5)(iii) of the Act, on merits. Hence, this appeal of the assessee is allowed for statistical purposes

Summary

Issues involved:
The rejection of Form No. 10AB under clause (iii) of first proviso to section 80G(5) of the Income Tax Act, 1961 and the appeal against the provisional approval granted u/s. 80G(5)(iv) of the Act.

Issue 1: Rejection of Form No. 10AB under clause (iii) of first proviso to section 80G(5) of the Act

The appeal arose from the rejection of the assessee's application in Form No. 10AB under clause (iii) of first proviso to section 80G(5) of the Act by the Commissioner of Income Tax (Exemption). The assessee, a charitable trust, had filed necessary applications for registration and approval under relevant sections of the Act. The Commissioner rejected the application as not maintainable due to being filed beyond the stipulated timeline. The Tribunal considered the extension of the filing deadline by the CBDT and held that the rejection based on a technical reason was not justified. The Tribunal found that the intention of the CBDT, as reflected in its circular, was to provide relief in genuine hardship cases. Therefore, the Tribunal set aside the Commissioner's order and remanded the matter for reconsideration on merits.

Issue 2: Appeal against provisional approval granted u/s. 80G(5)(iv) of the Act

Since the first issue regarding the rejection of Form No. 10AB was adjudicated in favor of the assessee, the appeal against the provisional approval granted u/s. 80G(5)(iv) of the Act became academic and was dismissed. The Tribunal directed the Commissioner to re-consider the assessee's application for approval u/s. 80G(5)(iii) of the Act on merits. Consequently, the appeal in this regard was allowed for statistical purposes.

Conclusion:
The Tribunal allowed the appeal against the rejection of Form No. 10AB under clause (iii) of first proviso to section 80G(5) of the Act, setting aside the Commissioner's order and remanding the matter for re-consideration on merits. The appeal against the provisional approval granted u/s. 80G(5)(iv) of the Act was dismissed as it became academic post the decision on the first issue.