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2024 (6) TMI 805 - AT - Income TaxDeduction u/s 80G - rejection of an application filed in Form No.10AB - HELD THAT - It is admitted fact that the assessee is a new trust having commenced its activities on 10.07.2020. It could further be noted that the assessee has already received provisional approval u/s 80G(5)(iv) for a period commencing from 26.03.2022 to AY 2024-2025. It sought approval u/s 80G(5)(iii) by filing Form No.10AB on 23.05.2023 which has been rejected by Ld. CIT(E) on the ground that the assessee had violated the mandatory time lines as statutorily provided. The bench thus held that the extended time limit of 30.09.2023 as per CBDT Circular would apply to Form No.10AB as well. The bench also takes note of the latest decision in the case of Sri Nrisimha Priya Charitable Trust 2024 (4) TMI 499 - MADRAS HIGH COURT wherein Hon ble Court has held that clause 5(ii) of Circular No.6 of 2023 dated 24.05.2023 is illegitimate, arbitrary and ultra vires the constitution of India. The clause 5(ii) of Circular No.6 of 2023 bearing F.No.370133/06/2023-TPL, dated 24.05.2023 of the first respondent is declared as illegitimate, arbitrary, and ultra vires the Constitution of India. The respondents are directed to consider the applications submitted by the petitioners as to the recognition/approval in respect of clause (i) of the first proviso to sub-section (5) of section 80G of the Act as within time and consider the same and pass orders thereon on merits, in accordance with law within six months from the date of receipt of a copy of this order.
Issues:
1. Rejection of application for seeking approval under clause (iii) of first proviso to sub-section (5) of Sec. 80G. 2. Interpretation of the timeline for filing Form No.10AB for approval under Sec. 80G. 3. Impact of CBDT circulars on the timeline extension for filing applications. 4. Judicial interpretation of the mandatory nature of the timeline for filing Form No.10AB. 5. Legitimacy of Circular No.6 of 2023 and its impact on applications for approval under Sec. 80G. Analysis: 1. The appellant, a trust, filed an application seeking approval under clause (iii) of the first proviso to sub-section (5) of Sec. 80G in Form No.10AB. The application was rejected by the Ld. CIT(E) due to non-compliance with the mandatory timeline for filing the application as prescribed by law. 2. The timeline for filing Form No.10AB was a crucial issue in this case. The first proviso to Sec. 80G(5) mandated that the application be filed at least six months before the expiry of provisional approval or within six months from the commencement of activities, whichever is earlier. The appellant's application was filed after the prescribed timeline, leading to its rejection. 3. The impact of CBDT circulars on timeline extensions was also considered. While various circulars extended the time limit for filing certain forms, no specific extension was granted for filing Form No.10AB for approval under Sec. 80G. The absence of an extension for Form No.10AB led to the rejection of the appellant's application. 4. A significant aspect of the judgment was the judicial interpretation of the mandatory nature of the timeline for filing Form No.10AB. A co-ordinate bench decision in a similar case recognized the genuine hardship faced by charitable institutions and held that the timeline should be treated as directory rather than mandatory. This interpretation favored the appellant and led to the setting aside of the rejection based on the timeline issue. 5. Furthermore, the legitimacy of Circular No.6 of 2023 was challenged in light of a High Court decision declaring a specific clause of the circular as illegitimate and ultra vires the Constitution. Following this decision, the impugned order rejecting the appellant's application was set aside, directing the Ld. CIT(E) to consider the application on its merits without raising the timeline issue. In conclusion, the judgment highlighted the importance of adhering to statutory timelines, the impact of CBDT circulars on such timelines, and the judicial interpretation regarding the mandatory nature of filing deadlines. The decision ultimately favored the appellant, emphasizing the need to consider genuine hardships faced by charitable institutions in the application process for approval under Sec. 80G.
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