Loading judgment…
Facts
The assessee, a charitable trust, applied for registration under Section 80G. They had previously obtained provisional approval. While applying for renewal/revalidation, they inadvertently selected the wrong clause in Form 10AB, leading to the rejection of their application by the CIT(E).
Held
The Tribunal held that the error in selecting the clause was inadvertent and clerical. It noted that the assessee had met the timeline requirements for filing the application under the correct clause. The impugned order was set aside, and the matter was restored to the CIT(E).
Key Issues
Whether the rejection of the application for registration under Section 80G due to a clerical error in selecting the wrong clause, without granting an opportunity to rectify, is justified.
Sections Cited
80G, 80G(5), 80G(5)(ii), 80G(5)(iii)
AI-generated summary — verify with the full judgment below
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 19/10/2024, 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 Subharma Charitable Trust.
2. In this appeal, the assessee has raised the following grounds: - “
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/EXM43/2024-25/1069792365(1), seeking documentary evidence of 10AC in the case of 80G as well as 12A on or before 16.10.2024;
3. The Appellant Trust had submitted copy of 10AC [Order for Provisional Registration] for 80G validation on 17.09.2024 as per Income Tax Department's letter dated 17.09.2024, 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 19.10.2024 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; 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 29/05/2021, 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 16/03/2022, the assessee filed an application in Form 10A for seeking provisional registration under sub- clause (A) of clause (iv) of first proviso to section 80G of the Act, which was 3 Subharma Charitable Trust. granted to the assessee, vide order dated 23/03/2022 passed in Form No.10AC, from 23/03/2022 to assessment year 2024-25. Subsequently, on 11/05/2024, 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 19/10/2014 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 Subharma Charitable Trust [hereafter 'the applicant' or 'the assessee'] filed application in Form 10AB seeking approval under section 80G(5) of the Income Tax Act[hereafter 'the Act']. It is found that the applicant has been granted Provisional Approval under Section 80G of the Act in Form 10AC valid from 23.03.2022 to AY 2024-25.
As the trust is provisionally registered, clause (ii) of 1st Proviso to section 80G(5) are applicable to it, which is reproduced as under: "(iii) 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 registration for three years, does not qualify to make the application u/s 80G(5)(ii). 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. For statistical purposes, this application is non maintainable and stands rejected.”
During the hearing, the learned Authorised Representative (“learned AR”) submitted that the assessee trust inadvertently filed the application under clause (ii) of first proviso to section 80G(5) of the Act instead of filing the same under clause (iii) of first proviso to section 80G(5) of the Act, since it already had provisional approval. The learned AR submitted that no 4 Subharma Charitable Trust. opportunity was granted to the assessee to revise its application in Form No.10AB correcting the aforementioned typographical mistake.
On the other hand, the learned Departmental Representative vehemently relied upon the impugned order.
Before considering the issue at hand, 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; (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
5 Subharma Charitable Trust. and such approval is expiring, clause (iii) of first proviso to section 80G(5) is applicable. It is evident from the record that the trust was incorporated only on 29/05/2021 and was provisionally approved vide Form No.10AC dated 23/03/2022 pursuant to application filed by the assessee in Form 10A on 16/03/2022. It is further evident that the provisional registration was for a period from 23/03/2022 to assessment year 2024-25. Thus, as per the provisions of clause (iii) of first proviso to section 80G(5), the assessee trust was required to file an application for approval at least six months prior to expiry of the period of the provisional approval. There is no dispute that in the present case, the assessee filed such an application on 11/05/2024 in Form No.10AB, i.e. six months prior to expiry of the period of the provisional approval. However, we find that instead of mentioning clause (iii) of first proviso to section 80G(5) in the application in Form No.10AB, the assessee mentioned clause (ii) of first proviso to section 80G(5), which is applicable to the trusts which already have regular approval and the application is made for the renewal of the same. Therefore, we are of the considered view that the error committed by the assessee is merely inadvertent and clerical, as the facts and circumstances of the case only require filing the application under clause (iii) of first proviso to section 80G(5) of the Act. We find that the impugned order is completely silent on any opportunity being granted to the assessee to rectify the error and file the revised application in Form No.10AB under clause (iii) of first proviso to section 80G(5) of the Act.
Accordingly, in the interest of justice and fair play, we restore the matter to the file of the learned CIT(E) to grant an opportunity to the assessee to file
6 Subharma Charitable Trust. the revised application in Form No.10AB under clause (iii) of first proviso to section 80G(5) of the Act and decide the same in accordance with law. With 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.