STAR EDUCTIONAL & CHARITABLE TRUST,VELLORE vs. CIT EXEMPTIONS, CHENNAI

आयकर अपीलीय अधिकरण ’डी’ न्यायपीठ, चेन्नई। IN THE INCOME TAX APPELLATE TRIBUNAL ‘D’ BENCH: CHENNAI माननीय श्री गगन गोयल लेखा सदस्य के समक्ष एवं श्री मनु कुमार धगरर, न्याययक सदस्य BEFORE HONOURABLE SHRI GAGAN GOYAL, ACCOUNTANT MEMBER AND SHRI MANU KUMAR GIRI, JUDICIAL MEMBER आयकर अपील सं./ITA No.3139/Chny/2026 यनिाारण वर्ा /Assessment Years: - Star Educational & Charitable Trust, v. Commissioner of Income Tax No.35, Nattamkara Saibansa, (Exemptions), Kollai 2nd Street, Ambur, Vellore, Chennai. Tamil Nadu-635 802. [PAN: ABCTS0881N] (अपीलार्थी/Appellant) (प्रत्यर्थी/Respondent) अपीलार्थी की ओर से/ Assessee by : Ms. K. Subhash Anbarasu, Advocate, प्रत्यर्थी की ओर से /Revenue by : Ms. Sita Krishnamoorthy, JCIT, Ld. DR सुनवाईकीतारीख/Date of Hearing : 23.07.2026 घोषणाकीतारीख /Date of Pronouncement : 07.08.2026 आदेश / O R D E R PER GAGAN GOYAL, AM: This is an appeal preferred by the assessee against the order of Ld. Commissioner of Income Tax (E), (hereinafter referred as the ‘Ld. CIT(E)’), Chennai dated 23.03.2026.

GROUDS OF APPEAL

ITA No.3139/Chny/2026 (-) Star Educational & Charitable Trust 3. The CIT (E) failed to consider that the Appellant had already been granted provisional approval under section 80G in Form 10AC for the period from 24-05-2022 to A.Υ 2025-26 and had substantially complied with statutory requirements. 4. The CIT (E) failed to examine the objects of the trust and genuineness of activities as mandated under section 80G (5) of the Act, and rejected the application purely on limitation without conducting proper inquiry. 5. The CIT (E) erred in concluding that no response was filed to the show cause notice, without granting adequate and effective opportunity of being heard and without considering possible reasonable cause for non-compliance. 6. The CIT (E) failed to appreciate that the timelines under section 80G (5) are directory in nature and he ought to have condoned the delay and heard the application on merits. The CIT (E) failed to take note of several judicial precedents including judgements of this Hon'ble Tribunal on the same issue. 7. The CIT (E) erred in holding that delay in filing Form 10AB cannot be condoned, without appreciating that procedural provisions should be interpreted liberally in case of charitable institutions and that substantive benefits cannot be denied on technical grounds.

80G. (1) In computing the total income of an assessee, there shall be deducted, in accordance with and subject to the provisions of this section, — (ii) in any other case, an amount equal to fifty per cent of the aggregate of the sums specified in sub-section (2).]

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ITA No.3139/Chny/2026 (-) Star Educational & Charitable Trust (2) The sums referred to in sub-section (1) shall be the following, namely: — (a) any sums paid by the assessee in the previous year as donations to— (iv) any other fund or any institution to which this section applies; or (5) This section applies to donations to any institution or fund referred to in sub-clause (iv) of clause (a) of sub-section (2), only if it is established in India for a charitable purpose and if it fulfils the following conditions, namely: — (i) where the institution or fund derives any income, such income would not be liable to inclusion in its total income under the provisions of sections 11 and 12 or clause (23AA) or clause (23C)] of section 10: Provided that where an institution or fund derives any income, being profits and gains of business, the condition that such income would not be liable to inclusion in its total income under the provisions of section 11 shall not apply in relation to such income, if— (a) the institution or fund maintains separate books of account in respect of such business; (b) the donations made to the institution or fund are not used by it, directly or indirectly, for the purposes of such business; and (c) the institution or fund issues to a person making the donation a certificate to the effect that it maintains separate books of account in respect of such business and that the donations received by it will not be used, directly or indirectly, for the purposes of such business; (ii) the instrument under which the institution or fund is constituted does not, or the rules governing the institution or fund do not, contain any provision for the transfer or application at any time of the whole or any part of the income or assets of the institution or fund for any purpose other than a charitable purpose; (iii) the institution or fund is not expressed to be for the benefit of any particular religious community or caste; (iv) the institution or fund maintains regular accounts of its receipts and expenditure; (v) the institution or fund is either constituted as a public charitable trust or is registered under the Societies Registration Act, 1860 (21 of 1860), or under any law corresponding to that Act in force in any part of India or under section 25 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;

(vii) where any institution or fund had been approved under clause (vi) for the previous year beginning on the 1st day of April, 2007 and ending on the 31st day of March, 2008, such institution or fund shall, for the purposes of this section and notwithstanding anything contained in the proviso to clause (15) of section 2, be deemed to have been, — (a) established for charitable purposes for the previous year beginning on the 1st day of April, 2008 and ending on the 31st day of March, 2009; and (b) approved under the said clause (vi) for the previous year beginning on the 1st day of April, 2008 and ending on the 31st day of March, 2009; (viii) the institution or fund prepares such statement for such period as may be prescribed and deliver or cause to be delivered to the prescribed income-tax authority or the person authorised by such authority such statement in such form and verified in such manner and setting forth such particulars and within such time as may be prescribed: Provided that the institution or fund may also deliver to the said prescribed authority, a correction statement for rectification of any mistake or to add, delete or update the information furnished in the statement delivered under this sub-section in such form and verified in such manner as may be prescribed; and

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ITA No.3139/Chny/2026 (-) Star Educational & Charitable Trust (ix) the institution or fund furnishes to the donor, a certificate specifying the amount of donation in such manner, containing such particulars and within such time from the date of receipt of donation, as may be prescribed: 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; (iii) where the institution or fund has been provisionally approved, at least six months prior to expiry of the period of the provisional approval or within six months of commencement of its activities, whichever is earlier; or (iv) where activities of the institution or fund have–– (A) not commenced, at least one month prior to the commencement of the previous year relevant to the assessment year from which the said approval is sought; (B) commenced at any time after the commencement of such activities:] Provided further that the Principal Commissioner or Commissioner, on receipt of an application made under the first proviso, shall, — (i) where the application is made under clause (i) of the said proviso, pass an order in writing granting it approval for a period of five years; (ii) where the application is made under clause (ii) or clause (iii) or sub-clause (B) of clause (iv) of the said proviso, — (a) call for such documents or information from it or make such inquiries as he thinks necessary in order to satisfy himself about— (A) the genuineness of activities of such institution or fund; and (B) the fulfilment of all the conditions laid down in clauses (i) to (v); (b) after satisfying himself about the genuineness of activities under item (A), and the fulfilment of all the conditions under item (B), of sub-clause (a), — (A) pass an order in writing granting it approval for a period of five years; or (B) if he is not so satisfied, pass an order in writing, rejecting such application and cancelling its approval, if any, after affording it a reasonable opportunity of being heard;] (iii) where the application is made under sub-clause (A) of clause (iv) of the said proviso or the application is made under clause (iv) of the said proviso as it stood immediately before its amendment vide the Finance Act, 2023, pass an order in writing granting it approval provisionally for a period of three years from the assessment year from which the approval is sought, and send a copy of such order to the institution or fund: Provided also that the order under clause (i) and clause (iii) of the second proviso shall be passed in such form and manner as may be prescribed, before expiry of the period of three months and one month, as the case may be, calculated from the end of the month in which the application was received: Provided also that the order under sub-clause (b) of clause (ii) of the second proviso shall be passed in such form and manner as may be prescribed, before expiry of the period of six months from the end of the quarter in which the application was received: Provided also that the approval granted under the second proviso shall apply to an institution or fund, where the application is made under— (a) clause (i) of the first proviso, from the assessment year from which approval was earlier

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ITA No.3139/Chny/2026 (-) Star Educational & Charitable Trust granted to such institution or fund; (b) clause (iii) of the first proviso, from the first of the assessment years for which such institution or fund was provisionally approved; (c) in any other case, from the assessment year immediately following the financial year in which such application is made. 4. In view of the above provisions, i.e. 1st proviso, clause (ii) and (iii), clause (ii) of the1st proviso applies to the trust already approved, i.e. already crossed the stage of getting provision approval and also final approval by following the provisions of clause (iii) of the 1st proviso. Here in this case, factually it looks like and falls in clause (ii) of the 1st proviso, but in the order of the Ld. CIT (E), Chennai, he applied the provisions of clause (iii) of the 1st proviso. Because as mentioned in the order itself that the assessee trust was already provisionally registered for the period 24.05.2022, A.Y. 2023-24 to A.Y. 2025-26, means must have completed the formality relating to final approval, then how provisions of clause (iii) of the 1st proviso can be applied in the case of the assessee. It confirms non-application of mind while passing the order in the matter before us.

CIRCULAR NO. 6 OF 2023 [F. NO.370133/06/2023-TPL], DATED 24-5-2023 1. Income of any fund or institution or trust or any university or other educational institution or any hospital or other medical institution referred to in sub-clause (iv) or sub-clause (v) or sub-clause (vi) or sub-clause (via) of clause (23C) of section 10 of the Income-tax Act, 1961 ("the Act") or any trust or institution registered under section 12AA or section 12AB of the Act (hereinafter referred to as "the trust") is exempt subject to the fulfilment of the conditions provided under relevant sections of the Act. Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 amended the provisions related to application by a trust for registration or approval by amending the first and second proviso to clause (23C) of section 10, clause (ac) of sub-section (1) of section 12A of the Act, inserting section 12AB of the Act and amending the first and second proviso to sub-section (5) of section 80G of the Act. The amended provisions provide for the following: (a) All the existing trusts were required to apply for registration/approval on or before 30.06.2021. However, on consideration of difficulties in the electronic filing of Form No. 10A, the Central Board of Direct Taxes (the Board) in exercise of the powers conferred upon it under Section 119 of the Act extended the due date for filing Form No. 10A in such cases to 31.08.2021 vide Circular No. 12 of 2021, dated 25-6-2021, to 31-3- 2022 vide Circular No. 16 of 2021, dated 29-8-2021 and further till 25-11- Page 5 of 7

ITA No.3139/Chny/2026 (-) Star Educational & Charitable Trust 2022 vide Circular No. 22 of 2022, dated 1-11-2022. Such registration/approval shall be valid for a period of 5 years. Thus, existing trusts are required to apply for fresh registration/approval and once the registration/approval is granted it is valid for five years. (b) New trusts are required to apply for provisional registration/approval at least one month prior to the commencement of the previous year relevant to the assessment year from which the said registration/approval is sought. Such provisional registration/approval is valid for a maximum period of three years. (c) Provisionally registered/approved trusts will again need to apply for regular registration/approval in Form No. 10AB at least six months prior to the expiry of the period of provisional registration/approval or within six months of the commencement of activities, whichever is earlier. This registration/approval is valid for a period of five years. On consideration of difficulties in electronic filing of Form No. 10AB, the Board in exercise of its powers under section 119 of Act extended the due date for electronic filing of Form No. I0AB to 30-9-2022 vide Circular No. 8 of 2022, dated 31-3-2022. (d) The trusts once approved/registered for five years are required to apply at least six months prior to the expiry of the period of five years. (e) The deduction under section 80G of the Act in respect of a donation made by a donor to a fund or institution referred to in sub-clause (iv) of clause (a) of sub-section (2) of section 80G, shall be allowed to the donor only if a statement of such donations is furnished by the donee in Form 10BD. The certificate of such donation is required to be provided in Form No. 10BE. Further, Form No. 10BD and Form No. 10BE are required to be furnished on or before the 31st May, immediately following the financial year in which the donation is received. 6. In view of above, once the trust is falling under the provisions of provisions of clause (ii) of the 1st proviso to section 80G (5) of the Act, then it has to be for a period of 5 years, as looks so from the facts of the case as there is no reference/order/record of converting provisional approval into final approval before us. Because it is found that there are lot of confusions in this matter at the end of the Ld. CIT (E), Chennai, he is directed to consider the applications of the petitioners as to the recognition/approval in respect of sub-section (5) of section 80G as within time and consider the same and pass orders thereon on merits as per law.

ITA No.3139/Chny/2026 (-) Star Educational & Charitable Trust the conditions encapsulated in clauses (i) to (v) of section 80G (5) of the Act. Neither the Ld. CIT (E), Chennai has recorded any finding nor the revenue has brought to fore, any breach of the conditions enumerated in clauses (i) to (v) of section 80G (5) of the Act; which is a precursor for refusal of the approval under section 80G of the Act. In view of the above observation, matter is restored back to the file of the Ld. CIT (E), Chennai for reconsideration, treating the application well in time and decide the matter on merits as per the requirements of provisions of section 80G other than the issue of time limit. Grounds raised by the assessee are allowed for statistical purposes with observations and directions above. 8. In the result, the appeal of the assessee is allowed for statistical purposes only. Order pronounced on the 7th day of August, 2026 in Chennai.

Sd/- Sd/- (मनु कुमार गिरर) (गगन गोयल) (MANU KUMAR GIRI) (GAGAN GOYAL) न्याययक सदस्य/JUDICIAL MEMBER लेखा सदस्य/ACCOUNTANT MEMBER चेन्नई/Chennai, ददनाांक/Dated: 7th August, 2026. KB आदेश की प्रयतललपप अग्रेपषत/Copy to: 1. अपीलार्थी/Appellant 2. प्रत्यर्थी/Respondent 3. आयकर आयुक्त/CIT, Chennai /Madurai/Coimbatore/Salem 4. पवभागीय प्रयतयनधि/DR 5. गार्ड फाईल/GF Digitally signed K BABU by K BABU Date: 2026.08.12 09:08:10 +05'30'

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