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TMI Blog2024 (1) TMI 848X X X X Extracts X X X X X X X X Extracts X X X X ..... sub clause (iii) of the Proviso to Section 80G(5) of the Act. This will be the harmonious interpretation. If we agree with the interpretation of the CIT(E), then say a trust which was formed in the year 2000, performed charitable activities since 2000, but did not apply for registration u/s.80G, the said trust will never be able to apply for registration now. This in our opinion is not the intention of the legislation. This interpretation leads to absurd situation. We are of the opinion that the words, within six months of commencement of its activities has to be interpreted that it applies for those trusts/institutions which have not started charitable activities at the time of obtaining Provisional registration, and not for those trust/institutions which have already started charitable activities before obtaining Provisional Registration. We derive the strength from the Speech of the Hon ble Finance Minister and the Memorandum of Finance Bill. 2020. Therefore, in these facts and circumstances of the case, we hold that the Assessee Trust had applied for registration within the time allowed under the Act. Hence, the application of the assessee is valid and maintainable. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hence held it as time barred. The Commissioner of income Tax(Exemption) held as under : 5. It is seen that the date of provisional approval under section 80G(5)(vi) of the Act in this case is 19/08/2022. As per the provisions of clause (iii) of first proviso to section 80G(5) OF THE Act, where a trust or institution has been provisionally approved under section 80G(5)(vi) of the Act, the application for regular approval under section 80G(5)(vi) is required to be filed, at least six months prior to expiry of period of the provisional approval or within six months from the date of commencement of activities, whichever is earlier. 2.1 The Commissioner of Income tax (Exemption) has not discussed the merits of the case. He held that the application is not maintainable. 3. In this case the Assessee had received the Provisional Approval u/s 80G(5) of the Act vide order dated 19/08/2022 for period from 19/08/2022 to A.Y.2025-2026. 4. Thus, the only limited question before us is whether the application of the assessee was time barred or not? To decide this question, we have to first understand the relevant statutory provisions of the Income Tax Act. 4.1 The relevant pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... part of India or under section 2571 of the Companies Act, 1956 (1 of 1956), or is a University established by law, or is any other educational institution recognised by the Government or by a University established by law, or affiliated to any University established by law, or is an institution financed wholly or in part by the Government or a local authority; (vi) in relation to donations made after the 31st day of March, 1992, the institution or fund is for the time being approved by the Principal Commissioner or Commissioner; (emphasis supplied) (vii) (viii) . (ix) .. Provided that the institution or fund referred to in clause (vi) shall make an application in the prescribed form and manner to the Principal Commissioner or Commissioner, for grant of approval, (i) where the institution or fund is approved under clause (vi) [as it stood immediately before its amendment by the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020], within three months from the 1st day of April, 2021; (ii) where the institution or fund is approved and the period of such approval is due to expire, at least six months prior to expiry of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 974, hence the assessee was liable to make application for Approval u/s 80G of the Act to file the present application within six months from the date of provisional approval i.e. on or before 18.02.2023 whereas the present application filed by the assessee on 27.03.2023 i.e. beyond the time limit allowed under clause (iii) of first proviso to section 80G(5) of the Income Tax Act, 1961, the ld.CIT(E) held it to be time barred. New Procedure for registration: 6. The new provision for Registration was introduced by Finance Act, 2020. There was amendment in the registration procedure by Finance Act, 2020. For the first time the Finance Act, 2020 introduced the concept of Provisional Approval . Also due to the amendment, all the existing Trust/Institutions which were already having registration u/s12AA or 80G(5) were asked to reapply for registration as per the amendment brought in 2020 and a date was specified before which all those Trust/Institutions already having Registration was required to make a fresh application as per the amendment procedure. The said date was repeatedly extended due to covid pandemic. 7. In this background we have to interpret the relevant provi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (vi) an entity making fresh application for approval under clause (23C) of section 10, for registration under section 12AA, for approval under section 80G shall be provisionally approved or registered for three years on the basis of application without detailed enquiry even in the cases where activities of the entity are yet to begin and then it has to apply again for approval or registration which, if granted, shall be valid from the date of such provisional registration. The application of registration subsequent to provisional registration should be at least six months prior to expiry of provisional registration or within six months of start of activities, whichever is earlier 9. Thus, these amendments were introduced to simply the procedure of registration of Charitable Trusts/Institutions. The amendment made to simplify a procedure cannot be interpreted in a way that it causes prejudice to the Trust/institutions. 10. Thus, when we read the Budget Speech of the Hon ble Finance Minister 2020 and the Memorandum of Finance Bill, 2020 together, it becomes clear that the concept of Provisional registration was mainly to facilitate the registration of newly formed Trust/I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it for applying for Regular Registration is within six months of expiry of Provisional registration if they are applying under sub clause (iii) of the Proviso to Section 80G(5) of the Act. This will be the harmonious interpretation. 11. If we agree with the interpretation of the ld.CIT(E), then say a trust which was formed in the year 2000, performed charitable activities since 2000, but did not apply for registration u/s.80G, the said trust will never be able to apply for registration now. This in our opinion is not the intention of the legislation. This interpretation leads to absurd situation. 11.1 In this context, we will like to refer to observations of the Hon ble Supreme Court in the case of K P Varghase(supra), where in Hon ble SC observed as under : Quote, It is a well-recognised rule of construction that a statutory provision must be so construed, if possible, that absurdity and mischief may be avoided. There are many situations where the construction suggested on behalf of the revenue would lead to a wholly unreasonable result which could never have been intended by the Legislature. Take, for example, a case where A agrees to sell his property to B for a certa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... than 15 per cent. Many other similar situations can be contemplated where it would be absurd and unreasonable to apply section 52(2) according to its strict literal construction. We must, therefore, eschew literalness in the interpretation of section 52(2) and try to arrive at an interpretation which avoids this absurdity and mischief and makes the provision rational and sensible, unless of course, our hands are tied and we cannot find any escape from the tyranny of the literal interpretation. It is now a well-settled rule of construction that where the plain literal interpretation of a statutory provision produces a manifestly absurd and unjust result which could never have been intended by the Legislature, the Court may modify the language used by the Legislature or even 'do some violence to it, so as to achieve the obvious intention of the Legislature and produce a rational construction - Unquote. 11.2 Thus, as observed by the Hon ble Supreme Court, that the statutory provision shall be interpreted in such a way to avoid absurdity. In this case to avoid the absurdity as discussed by us in earlier paragraph, we are of the opinion that the words, within six months of c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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