2024 (5) TMI 700 - AT - Income Tax

Rejection of application for registration u/s 12AA(1)(ac)(iii) - provisional registration date - Period of limitation - CIT(Exemptions) observed that the assessee earlier was granted provisional registration in Form 10AC which was valid for 5 years i.e. from A.Y 2022-23 to 2026-27, therefore, held that the present application of the assessee being premature was not maintainable and rejected the same - HELD THAT - Provisions of section 12A(1)(ac)(iii) of the Act would reveal that where the trust or the institution was provisionally registered u/s 12AB of the Act, the application for final registration can be made at least six months prior to the expiry of the period of provisional registration or within six months of the commencement of its activity, whichever is earlier, which means that the application for final registration has to be made at the earliest possible event i.e. either within six months of the commencement of the activities or at least six months prior to the expiry of the provisional registration. The aforesaid provision does not mean that there is any bar on the applicant to move an application before the period of six months from the expiry of the provisional registration. What has been provided is that the application must be made before the expiry of six months from the date of expiry of final registration. There is no bar in moving the application at the earliest possible event, rather, it is expected from the assessee-trust to do so. In view of this, the impugned order of the ld. CIT(Exemptions) is set aside and the matter is restored to the ld. CIT(Exemptions) to consider the application of the assessee for final registration and grant the same if the same is otherwise so admissible to the assessee. Final approval as per the provisions of section 80G(5)(iii) - CIT (Exemption) rejected the application of the assessee 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 - As decided in TOMORROW S FOUNDATION VERSUS CIT (EXEMPTION) , KOLKATA 2024 (3) TMI 941 - ITAT KOLKATA the assessee admittedly has applied for final registration after grant of provisional registration under Clause (iv) to First Proviso to section 80G(5) of the Act and therefore, the application filed by the assessee is within limitation period. The issue is otherwise squarely covered by the decision of Vivekananda Mission Asram 2023 (12) TMI 1298 - ITAT KOLKATA and in the case of West Bengal Welfare Society 2023 (9) TMI 1422 - ITAT KOLKATA and further Sri Aurobindo Bhawan Trust, Krishnagar 2024 (3) TMI 839 - ITAT KOLKATA . Therefore, the impugned order of the CIT(Exemption) is set aside and the ld. 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. The ld. CIT(A) will decide the application for final registration within three months of the receipt of copy of this order. Thus the appeal of the assessee is allowed accordingly and the ld. 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. As directed that the ld. CIT(E) will decide the application of the assessee for final approval as expeditiously as possible but not later than two months from the receipt of this order. It is further directed that, if the assessee is granted final approval by the ld. CIT(E) then, the benefit of approval u/s 80G of the Act, available to the assessee prior to the Amendment brought vide Amending Act of 2020, will be deemed to be continued without any break. The assessee will not be deprived of the benefit during the time period falling between 31/03/2021 and the date of grant of provisional approval under clause (iv) i.e., 02/10/2021, due to technical errors occurred in making the application under the relevant provisions of the Act because of the confusion and misunderstanding on part of the assessee as well as on part of the ld. CIT(E) in properly interpreting the relevant provisions. Appeals of the assessee are treated as allowed for statistical purposes.

Summary

Issues Involved:
1. Rejection of application for registration u/s 12AA(1)(ac)(iii) of the Income Tax Act.
2. Rejection of application for final approval u/s 80G(5)(iii) of the Income Tax Act.

Summary:

Issue 1: Rejection of application for registration u/s 12AA(1)(ac)(iii) of the Income Tax Act (ITA No. 25/Kol/2024)

The Commissioner of Income Tax (Exemptions) [CIT(Exemptions)] rejected the application for registration u/s 12AA(1)(ac)(iii) on the grounds of being premature, as the assessee had already been granted provisional registration in Form 10AC valid from A.Y 2022-23 to 2026-27. The Tribunal observed that the provisions of section 12A(1)(ac)(iii) allow for the application for final registration to be made at least six months prior to the expiry of the provisional registration or within six months of the commencement of activities, whichever is earlier. The Tribunal held that there is no bar on moving the application before the six-month period and set aside the CIT(Exemptions)'s order, restoring the matter for reconsideration.

Issue 2: Rejection of application for final approval u/s 80G(5)(iii) of the Income Tax Act (ITA No. 26/Kol/2024)

The CIT(Exemptions) rejected the application for final approval u/s 80G(5)(iii) because the assessee had already commenced its activities before the grant of provisional registration and the application was filed after the extended date of 30.09.2022. The Tribunal referred to the decision in "Tomorrow's Foundation vs. CIT(Exemption)" and other similar cases, emphasizing that institutions granted provisional approval can apply for final registration irrespective of prior commencement of activities. The Tribunal noted that the assessee's application for final registration was within the limitation period and directed the CIT(Exemptions) to grant provisional approval if the assessee is otherwise eligible, and to decide the application for final registration within three months.

The Tribunal also stated that if the final approval is granted, the benefit of approval u/s 80G should be deemed continuous without any break due to technical errors in the application process.

Conclusion:

Both appeals of the assessee were allowed for statistical purposes, and the CIT(Exemptions) was directed to reconsider the applications for final registration and approval.