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Facts
The assessee, a trust incorporated in 1959, filed an application for registration under Section 80G of the Income Tax Act. Having been granted provisional approval earlier, the assessee filed for renewal under Form 10AB, but the CIT(E) rejected the application citing it was filed under the wrong section.
Held
The Tribunal held that the assessee had correctly filed the application for renewal under clause (ii) of the first proviso to Section 80G(5), as it was already an approved trust. The provisional approval was not a sole basis for rejection.
Key Issues
Whether the assessee filed the application for renewal of registration under the correct clause of the first proviso to Section 80G(5) of the Act.
Sections Cited
80G, 80G(5)
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Income Tax Appellate Tribunal, “F” BENCH, MUMBAI
Before: SHRI SANDEEP SINGH KARHAILSHRI GIRISH AGRAWAL
Date of Hearing – 25/02/2025 Date of Order – 28/02/2025
O R D E R PER SANDEEP SINGH KARHAIL, J.M. The assessee has filed the present appeal against the impugned order dated 24/10/2024, passed by the learned Commissioner of Income Tax (Exemption), Mumbai, [“learned CIT(E)”], rejecting the application filed by the assessee seeking registration under section 80G of the Income Tax Act, 1961 (“the Act”).
2 Sheth Vijilal Laxmidas Tribvondas Kesar Bai Jijilal Poona Convalcent Home.
In this appeal, the assessee has raised the following grounds: -
2. “1. The Commissioner of Income Tax (Exemptions), Mumbai, erred in rejecting the Appellant Trust's application for revalidation under Section 80G of the Income Tax Act, 1961;
2. The Commissioner of Income Tax (Exemptions), Mumbai, failed to appreciate that the Appellant Trust had received a letter dated 16.09.2024 in respect of proceedings under Section 80G(5)ii) vide DIN: ITBA/EXM/F/EXM43/2024-25/1068717388(1), seeking documentary evidence of 10AC in the case of 80G as well as 12A on or before 01.10.2024;
3. The Appellant Trust had submitted copy of 10AC [Order for Provisional Registration] for 80G validation and also copy of Form10AC [Order for Provisional Registration] for 12A on 20.09.2024 as per Income Tax Department's letter dated 16.09.2024, acknowledged by the Office of the Commissioner of Income Tax [Exemptions] H.Q. on 20.09.2024;
4. The Appellant Trust had received Rejection Order dated 24.10.2024 stating that Appellant Trust is not qualified to make the application under Section 80G(5)(ii), since the application filed is non-maintainable and stands rejected;
5. The Commissioner of Income Tax (Exemptions), Mumbai, failed to give the Appellant Trust reasonable opportunity to validate the 80G Certificate;
6. The Appellant Trust had made an enquiry personally and was informed that the Section in which the Application vide Serial No. 14-Clause of First Proviso to Sub-Section (5) of Section 80G. The Appellant Trust owing to inadvertence had mentioned in Clause-2 of First Proviso to Sub-Section(5) of Section 80G
7. The Appellant Trust was deprived out of natural justice since no opportunity was given to rectify the error occurred in selecting the clause for revalidation;
8. The Appellant Trust is a Charitable Trust, which is rendering meritorious services and providing marvelous services for which it is established;
9. The Appellant Trust should get the benefit of 80G since the Trust is fully depending on Donations to meet the benevolent cause;”
We have considered the submissions of both sides and perused the material available on record. The brief facts of the case are that the assessee is a trust incorporated on 23/11/1959, with an object of relief to the poor, education, medical relief and advancement of any other objects of general public utility. From the record, we find that on 14/03/2022, the assessee filed an application in Form 10A for seeking provisional registration under sub-
3 Sheth Vijilal Laxmidas Tribvondas Kesar Bai Jijilal Poona Convalcent Home. clause (A) of clause (iv) of first proviso to section 80G of the Act, which was granted to the assessee, vide order dated 21/03/2022 passed in Form No.10AC, from 21/03/2022 to assessment year 2024-25. Subsequently, on 08/05/2024, the assessee filed an application in Form No.10AB under clause (ii) of first proviso to section 80G(5) of the Act. However, the learned CIT(E), vide impugned order dated 24/10/2014 passed in Form No.10AD, rejected the application filed by the assessee on the basis that the application is filed under wrong section. The relevant findings of the learned CIT(E), vide impugned order, are reproduced as follows: - “1. M/s Sheth Vijlal Laxmidas Tribvovandaskesar Bai Vijlal Poona Convalecent Home [hereafter 'the applicant' or 'the assessee'] filed application in Form 10AB under clause (ii) of 1st proviso to 80G(5) seeking approval under section 80G of the Act. It is found that the applicant has been granted Provisional Approval under Section 80G of the Act in Form 10AC valid from 21.03.2022 to AY 2024-25.
As the trust is provisionally registered, clause (ili) of 1st Proviso to section 80G(5) are applicable to it, which is reproduced as under: "i) where the institution or fund has been provisionally approved, at least six months prior to expiry of period of the provisional approval or within six months of commencement of its activities, whichever is earlier;"
3. On perusal of the Form 10AB filed by the assessee it was observed that the assessee has applied under Clauseii) of first proviso to sub-section (5) of section 80G which is valid only for trusts already having regular approval for five years and is seeking renewal of regular approval which is due to expire. The assessee, having provisional approval for three years, does not qualify to make the application Clauseii) of first proviso to sub-section (5) of section 80G of the act. Thus, the application for registration in Form 10AB filed by the assessee is not allowable on the ground of application filed under wrong section.
4. In conclusion this application for approval stands rejected.”
During the hearing, the learned Authorised Representative (“learned AR”) submitted that the assessee trust was registered under section 80G of the Act since its incorporation, and its registration was continuing. However,
4 Sheth Vijilal Laxmidas Tribvondas Kesar Bai Jijilal Poona Convalcent Home. under the new regime of registration under section 80G of the Act, the assessee wrongly applied for provisional registration under sub-clause (A) of clause (iv) of first proviso to section 80G of the Act instead of straight away applying for renewal of registration under clause (ii) of first proviso to section 80G(5) of the Act. The learned AR submitted that Form No.10AB filed by the assessee for seeking renewal of registration was correctly filed under clause (ii) of first proviso to section 80G(5) of the Act. However, the learned CIT(E), vide impugned order, rejected the application merely considering the fact that the assessee was granted provisional registration under section 80G of the Act and the same was valid from 21/03/2022 to assessment year 2024-25.
On the other hand, the learned Departmental Representative vehemently relied upon the impugned order.
Having considered the submissions of both sides and perused the material available on record, we find merits in the submissions of the assessee, as the application filed by the assessee in Form No.10AB under clause (ii) of first proviso to section 80G(5) of the Act was for renewal of the registration already available with the assessee. In this regard, it is pertinent to note the following relevant provisions of first proviso to section 80G(5) of the Act: -
“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;
5 Sheth Vijilal Laxmidas Tribvondas Kesar Bai Jijilal Poona Convalcent Home. ITA No. 6184/M/2024
(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; (iv) in any other case, 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 and where no income or part thereof of the said institution or fund has been excluded from the total income on account of applicability of sub-clause (iv) or sub-clause (v) or sub-clause (vi) or sub-clause (via) of clause (23C) of section 10 or section 11 or section 12 for any previous year ending on or before the date of such application, at any time after the commencement of such activities:”
Therefore, from the perusal of the aforesaid provisions of first proviso to section 80G(5) of the Act, it is evident that clause (ii) is applicable to the trusts which already have regular approval and the application is made for the renewal of the same, while in case the trust has been provisionally approved and such approval is expiring, clause (iii) of first proviso to section 80G(5) is applicable. In the present case, since the assessee was already an approved trust, we are of the considered view that the application was rightly made by the assessee under clause (ii) of first proviso to section 80G(5) of the Act, and grant of provisional approval cannot be sole basis for rejecting the same. Accordingly, in the interest of justice and fair play, we restore the application filed by the assessee for renewal of regular approval under section 80G(5) of the Act to the file of the learned CIT(E) for de novo adjudication in accordance with law and after consideration of the facts in entirety. With 6 Sheth Vijilal Laxmidas Tribvondas Kesar Bai Jijilal Poona Convalcent Home. the above directions, the impugned order is set aside and grounds raised by the assessee are allowed for statistical purposes.
In the result, the appeal by the assessee is allowed for statistical purpose. Order pronounced in the open Court on 28/02/2025.