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2025 (4) TMI 1173 - AT - Income TaxDenial of final approval under clause (iii) to the first proviso to Section 80G(5) - scope of registration or approval - technical discrepancies in Form No. 10AC specifically the erroneous mention of provisional approval instead of approval - HELD THAT - Where due to technical glitches Form No. 10AC has been issued during FY 2021- 2022 with the heading Order for provisional registration or Order for provisional approval instead of Order for registration or Order for approval then in all such cases Form No. 10AC shall be considered as an Order for registration or approval as the case may be and in such cases where Form No. 10AC has been issued in the relevant columns wherein the word provisional registration or provisional approval have been mentioned they shall be read as registration or approval as the case may be. The relevant provisions of section 80G(5) provide that institutions which were already approved u/s 80G(5) prior to the amendment were required to apply under clause (i) of the first proviso for fresh approval which was to be granted for five years. The provisions nowhere state that such approval would be provisional. The confusion has arisen only due to technical glitches in Form No. 10AC where such approvals were erroneously mentioned as provisional . CBDT Circular No. 11/2022 has clarified this position beyond any doubt by specifically stating that in such cases the words provisional approval shall be read as approval . This issue has been considered in identical circumstances in the case of Ananda Nagar Development Society 2025 (1) TMI 1546 - ITAT KOLKATA wherein it was held that where an institution was already approved under section 80G(5) prior to the amendment and had applied for fresh approval under clause (i) of the first proviso to section 80G(5) the approval so granted is a regular approval and not provisional notwithstanding the inadvertent mention of the term provisional approval in Form No. 10AC due to technical reasons. Since the approval granted to the assessee under clause (i) of the first proviso to section 80G(5) is a regular approval valid for five years from AY 2022-23 to AY 2026-27 hence there is no requirement to the assessee for applying for final/regular approval under clause (iii) to the first proviso to section 80G(5) of the Act. The present appeal of the assessee thus is infructuous and not maintainable and the same is accordingly dismissed. However it is made clear that the dismissal of the above appeal of the assessee will not in any manner tantamount to affect the approval granted to the assessee vide order dated 28.05.2021 which is valid up to AY 2026-27. Decided against assessee.
1. ISSUES PRESENTED and CONSIDERED
The core legal questions considered by the Appellate Tribunal (AT) in these appeals are:
2. ISSUE-WISE DETAILED ANALYSIS Issue 1: Nature of approval granted under clause (i) of the first proviso to section 80G(5) for institutions approved prior to amendment Legal framework and precedents: Section 80G(5) of the Income Tax Act was amended by the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020. The amendment mandated that institutions already approved under section 80G(5)(vi) before 01.04.2021 must apply afresh for approval under clause (i) of the first proviso to section 80G(5). The approval granted under clause (i) is for a period of five years and is to be considered a regular approval. Institutions applying for the first time or those not approved before 01.04.2021 apply under clause (iv) and receive provisional approval for three years, after which they must apply for final approval under clause (iii). Court's interpretation and reasoning: The Tribunal observed that the statute clearly differentiates between approvals granted under clause (i) and clause (iv). Clause (i) approval is a fresh, regular approval for five years, whereas clause (iv) approval is provisional for three years. The provisions do not contemplate that clause (i) approvals are provisional. The confusion arose due to the erroneous mention of "provisional approval" in Form No. 10AC issued by the CIT (Exemption). Key evidence and findings: The approval order dated 28.05.2021 was issued under clause (i) and valid for five years. However, the Form No. 10AC issued by the CIT (Exemption) incorrectly titled the order as "provisional approval" and contained conditions applicable to provisional approvals. The assessee reasonably believed the approval was provisional and applied for final approval under clause (iii). Application of law to facts: The Tribunal held that the statutory provisions and the nature of the clause (i) approval preclude the need for a subsequent final approval application. The approval granted under clause (i) is final and valid for five years. Treatment of competing arguments: The assessee argued that the approval was provisional based on the wording of Form No. 10AC and hence applied for final approval. The CIT (Exemption) rejected the application as not maintainable, relying on the validity of the clause (i) approval. The Tribunal sided with the CIT, emphasizing the statutory scheme and the CBDT Circular clarifications. Conclusions: The approval granted under clause (i) is a regular approval and not provisional. No further application for final approval under clause (iii) is required. Issue 2: Effect of technical glitches in Form No. 10AC and CBDT Circular No. 11/2022 Legal framework and precedents: Circular No. 11/2022 issued by the CBDT on 3rd June 2022 clarified that Form No. 10AC issued during FY 2021-22 with the heading "Order for provisional registration" or "Order for provisional approval" due to technical glitches should be read as "Order for registration" or "Order for approval." The conditions mentioned as applicable to provisional approvals must be read as conditions applicable to regular approvals. Court's interpretation and reasoning: The Tribunal relied on this Circular to resolve the confusion caused by the erroneous use of the term "provisional approval" in Form No. 10AC. The Circular explicitly states that such forms shall be treated as orders granting regular approval or registration. Key evidence and findings: The Circular's Table 1 and accompanying clauses clearly substitute the conditions and terminology in the affected Form No. 10AC documents, effectively validating the approvals as regular and final. Application of law to facts: The Tribunal applied the Circular's clarification to the facts of the case, holding that the approval granted to the assessee trust under clause (i) of the first proviso to section 80G(5) is a regular approval notwithstanding the Form No. 10AC's erroneous terminology. Treatment of competing arguments: The assessee's reliance on the provisional language was negated by the Circular, which the Tribunal found authoritative and binding. Conclusions: The technical glitches in Form No. 10AC do not affect the validity or nature of the approval granted. The approval must be treated as final and regular. Issue 3: Maintainability of application for final approval under clause (iii) when clause (i) approval is valid Legal framework and precedents: The statute requires institutions granted provisional approval under clause (iv) to apply for final approval under clause (iii). However, institutions granted approval under clause (i) receive a five-year regular approval and are not required to apply again under clause (iii). Court's interpretation and reasoning: The Tribunal found that since the assessee trust was granted approval under clause (i), the application for final approval under clause (iii) was not maintainable. The CIT (Exemption) correctly rejected the application on this ground. Key evidence and findings: The approval under clause (i) was valid until AY 2026-27, and no statutory provision mandates a subsequent application for final approval under clause (iii) in such cases. Application of law to facts: The Tribunal applied the statutory scheme and the CBDT Circular to conclude that the application for final approval was unnecessary and hence not maintainable. Treatment of competing arguments: The assessee's argument based on the provisional language in Form No. 10AC was rejected in light of the Circular and statutory provisions. Conclusions: The application for final approval under clause (iii) was rightly rejected as not maintainable. Issue 4: Precedential value of Tribunal's decision in identical circumstances Legal framework and precedents: The Tribunal referred to its earlier decision in Ananda Nagar Development Society vs. CIT(Exemptions), where it was held that approvals granted under clause (i) are regular approvals notwithstanding the erroneous use of "provisional approval" in Form No. 10AC. Court's interpretation and reasoning: The Tribunal found the earlier decision directly applicable and consistent with the CBDT Circular, reinforcing the conclusions reached in the present appeals. Key evidence and findings: The factual matrix and legal issues were identical, and the earlier decision was authored by the same Judicial Member. Application of law to facts: The Tribunal applied the ratio of the earlier decision to the present cases. Treatment of competing arguments: No new competing arguments were found to distinguish the present cases from the precedent. Conclusions: The earlier decision supports dismissal of the appeals. 3. SIGNIFICANT HOLDINGS "The relevant provisions of section 80G(5) provide that institutions which were already approved under section 80G(5) prior to the amendment were required to apply under clause (i) of the first proviso for fresh approval, which was to be granted for five years. The provisions nowhere state that such approval would be provisional. The confusion has arisen only due to technical glitches in Form No. 10AC where such approvals were erroneously mentioned as 'provisional'. The CBDT Circular No. 11/2022 has clarified this position beyond any doubt by specifically stating that in such cases, the words 'provisional approval' shall be read as 'approval'." "Since the approval granted to the assessee under clause (i) of the first proviso to section 80G(5) is a regular approval valid for five years from AY 2022-23 to AY 2026-27, hence, there is no requirement to the assessee for applying for final/regular approval under clause (iii) to the first proviso to section 80G(5) of the Act." "The application for final approval under clause (iii) of the first proviso to section 80G(5) is not maintainable when the institution has already been granted approval under clause (i) valid for five years." Core principles established include:
Final determinations on each issue are:
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