2024 (9) TMI 275 - AT - Income Tax

Approval u/s 80G(5)(iii) - Assessee had violated the mandatory time lines as statutorily provided - HELD THAT - It is admitted fact that the assessee is a old trust having commenced its activities year 2010. It sought approval u/s 80G(5)(iii) by filing Form No.10AB on 25.09.2023 which has been rejected by CIT(E) on the ground that the assessee had violated the mandatory time lines as statutorily provided. However, we find that this issue has been decided by co-ordinate bench in bunch of appeals titled as M/s CIT-1982 Charitable Trust Ors. 2024 (3) TMI 1201 - ITAT CHENNAI wherein held we agree with the argument of ld. counsel for the assessee that the 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. Decided in favour of assessee.

Summary

Issues:
1. Rejection of application for seeking approval under clause (iii) of first proviso to subsection (5) of Sec.80G of the Income Tax Act, 1961.
2. Interpretation of the timeline for filing Form No.10AB for renewal of recognition under clause (iii) of first proviso to section 80G(5) of the Act.
3. Legitimacy and impact of CBDT Circulars extending time limits for filing applications.

Analysis:
1. The appellant trust sought approval under clause (iii) of first proviso to subsection (5) of Sec.80G but faced rejection due to filing the application after the statutory timeline. The application was considered time-barred and rejected by the Ld. CIT(E).
2. The co-ordinate bench decision in M/s CIT-1982 Charitable Trust & Ors clarified that the timeline for filing Form No.10AB was extended up to 30.09.2023 by CBDT Circulars, including Circular No.6/2023. The bench held that the timeline should be treated as directory, not mandatory, considering the transitional nature of the amendment.
3. The Hon'ble High Court of Madras declared a clause in Circular No.6 of 2023 as illegitimate and ultra vires the Constitution. Subsequently, CBDT issued Circular No.7/2024 extending the due date for filing Form No.10AB until 30.06.2024, allowing fresh applications for trusts facing rejection due to late filing.
4. The appellant filed a fresh application in Form 10AB in compliance with Circular No.7/2024. The appeal was deemed infructuous, and the Tribunal directed the CIT(E) to treat the fresh application as originally filed and expedite the process.

This detailed analysis highlights the legal nuances surrounding the rejection of the application, the interpretation of statutory timelines, the impact of CBDT Circulars, and the subsequent compliance with the extended due dates.