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TMI Blog2024 (6) TMI 1219X X X X Extracts X X X X X X X X Extracts X X X X ..... be the harmonious interpretation. As decided by K P Varghase [ 1981 (9) TMI 1 - SUPREME COURT] 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 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, 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. Even otherwise, assessee had received provisional approval under section 80G(5) on 27.05.2021 and it was valid upto A.Y. 2023-24. The assessee had applied for registration under section 80G on 24.05.2023, which was before A.Y. 2023-24. Thus, assessee had applied for permanen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to encourage Marathi Literature and to encourage Literature of other languages. It has been carrying out conferences, lectures, discussions, competitions to fulfill the purpose of encouraging literature. It is running a library. One can avail the library facility by paying the fees. It is observed that assessee had received 80G Certificate on 04.09.2013 from CIT-II, Nashik. The assessee had also received registration under section 12AA of the Act on 04.09.2013 from CIT-II, Nashik. As per the written submission of the assessee, the assessee was found as a Public Charitable Trust on 01.07.1877. Since then, it is running District Public Library which was subsequently named as Central Library. The building in which it is situated in, is now a heritage building. The library has more than 1.5 lakh books and it has more than 1700 members. The library facility is available at a fee of Rs. 330/- per year. The trust arranges free public meetings for lectures delivered by renowned writers, poets and thinkers. The library was awarded prestigious Dr.Baba Saheb Ambedkar Award in 1992. 4. The question before us is whether the application of the assessee was time barred or not? To decide this ques ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act in force in any 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 said period; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... G of the Act to file the present application within six months from the date of provisional approval (Date of Provisional Approval 27.05.2021), whereas the present application filed by the assessee on 24.05.2023 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 amended, all the existing Trust/Institutions which were already having registration u/s12AA or 80G(5) were asked to re-apply 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-19 Pandemic. 7. In this background we have to interpret the relevant provisions. To interpret the provisions, we shall refer to the Budget Speech o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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/Institutions which have not yet begun the activities. The parliament in its wisdom has decided to differentiate between the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Proviso to Section 80G(5) of the Act. This will be the harmonious interpretation. 11 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 the Hon ble Supreme Court 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 certain price and before the sale is completed pursuant to the agreement and it is quite well known that sometimes the completion of the sale may take place even a couple of years after the date of the agreement - the market price shoots up with the result that the market price prevailing on the date of the sale exceeds the agreed price at which the property is sold by more than 15 per cent of such agreed price. This is not at all an uncommon case in an economy of rising prices and in fact we would find in a lar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ell-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. 11.1 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 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. 11.3 Therefore, in these facts and circumstances of the case, we hold that the Asses ..... X X X X Extracts X X X X X X X X Extracts X X X X
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