2024 (9) TMI 424 - AT - Income Tax

Rejection of final registration u/s 80(G)(5)(iii) - form 10AB was filed beyond time limits prescribed under Clause (iii) of first proviso to sub-section (5) - HELD THAT - Admittedly the application seeking final registration under Section 80G has been moved by the assessee on 04/09/2023 after getting the provisional registration on 24/08/2023 - find merit in the contention advanced by the AR that the application seeking final registration has been moved well within the prescribed time period i.e, before expiry of six months of provisional registration and is thus not barred by limitation. As far as requirement of second limb of moving such application within six months of commencement of its activities, the same doesn t apply in the facts of the present case as the assessee has already commenced its activities well before seeking the provisional registration and the period of six months of its activities had already expired well before applying the provisional registration thus, making the said requirement as not applicable. Scope of Circular no. 07/2024 dated 25/04/2024 - It has been provided in the said circular that where the Principal Commissioner or Commissioner has passed an order rejecting such application, on or before the issuance of the Circular, solely on account of the fact that the application was furnished after the due date or that the application has been furnished under the wrong section code, it may furnish afresh application in Form No. 10AB within the extended time provided in paragraph 3(H) i.e. 30/06/2024. In the instant case, we find that the application of the assessee has been rejected vide order dated 19/03/2024 before the issuance of the aforesaid circular dated 25/04/2024 and though the time limits prescribed therein have expired, going by intent and spirit of the circular so issued by the CBDT and submissions so made by the ld AR and ld CIT/DR, the assessee application deserve to be examined on merits and cannot be dismissed as barred by limitation. we remit the matter to the file of the CIT(E) to admit the application of the assessee as filed within the stipulated period and examine the same on merits - Appeal of the assessee is allowed for statistical purposes.

Issues Involved:
1. Rejection of the application for final registration under Section 80G(5)(iii) due to filing beyond the prescribed time limits.
2. Interpretation and application of the provisions of Section 80G(5) of the Act regarding the timing of filing for final registration.
3. Consideration of the Central Board of Direct Taxes (CBDT) Circular No. 07/2024 and its implications on the case.

Issue-wise Detailed Analysis:

1. Rejection of the Application for Final Registration under Section 80G(5)(iii):
The assessee's application for final registration under Section 80G(5)(iii) was rejected by the CIT(E) on the grounds that it was filed beyond the prescribed time limits. The application was filed on 04/09/2023, following the provisional registration granted on 24/08/2023. The CIT(E) did not consider the merits of the application due to this perceived delay.

2. Interpretation and Application of Section 80G(5):
The assessee argued that the application for final registration was filed within the prescribed limitation period, as the relevant provisions state that the application must be made at least six months prior to the expiry of the provisional registration or within six months of the commencement of its activities, whichever is earlier. The assessee contended that it could not have applied for final registration before receiving provisional registration and thus complied with the requirement by applying soon after obtaining provisional registration. The Tribunal found merit in this argument, noting that the application was indeed filed within the prescribed period.

3. Consideration of CBDT Circular No. 07/2024:
The CIT/DR submitted that the CBDT Circular No. 07/2024, dated 25-Apr-2024, provided an extended time limit for charitable trusts and societies to file fresh applications in Form 10AB. The Circular allowed for fresh applications to be submitted by 30.06.2024 if previous applications were rejected solely due to late filing or wrong section code. The Tribunal noted that the assessee's application was rejected before the issuance of this Circular, and although the extended time had expired, the intent and spirit of the Circular should allow the application to be examined on its merits.

Tribunal's Decision:
The Tribunal held that the application for final registration was filed within the prescribed time period and was not barred by limitation. The Tribunal also referenced similar cases where the interpretation of Section 80G(5) supported the assessee's position. The Tribunal directed the CIT(E) to admit the application as filed within the stipulated period and to examine it on its merits as per the law, providing a reasonable opportunity to the assessee. The matter was remitted to the CIT(E) for a decision within two months of receiving the Tribunal's order.

Conclusion:
The Tribunal allowed the appeal for statistical purposes, directing the CIT(E) to reconsider the application for final registration under Section 80G(5)(iii) on its merits and in accordance with the law, considering the provisions and the CBDT Circular. The order was pronounced in open Court on 30/08/2024.

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