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Facts
The assessee filed an application for final approval under section 80G(5) in Form 10AB, inadvertently mentioning a wrong sub-clause. The CIT(E) rejected the application on this technical ground. The assessee had previously received provisional approval under a different clause.
Held
The Tribunal held that the inadvertent mistake of selecting the wrong section code is a curable defect and not fatal to the case. It is important to grant the assessee the benefit of section 80G.
Key Issues
Whether filing an application under the wrong section code for approval under section 80G(5) is a fatal defect, or a curable one allowing the assessee to receive the benefit of the exemption.
Sections Cited
250, 80G(5), 80G
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Income Tax Appellate Tribunal, “F” BENCH MUMBAI
Before: HON’BLE SHRI SANDEEP GOSAIN & SHRI PRABHASH SHANKAR
Assessee by Ms. Aarti Visanji a/w Shri Kshyap Vepari Revenue by Shri Ashish Heliwal, CIT DR Date of Hearing 08.01.2025 Date of Pronouncement 24.02.2025 आदेश / ORDER
PER SANDEEP GOSAIN, JM:
The present appeal has been filed by the assessee challenging the impugned order 16.09.2024, passed u/s 250 of the Income Tax Act, 1961 (‘the Act’), by the Commissioner of Income Tax (Exemptions), Mumbai for the assessment year 2025-26.
As per the facts of the present case, the assessee had filed application in form 10AB seeking approval under section 80G(5) of the Act, inadvertently, the said application was 2 Mumbai Animal Association, Mumbai filed under clause (ii) of first proviso to subsection (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. 3. However, assessee has been granted provisional approval under section 80G of the Act in form 10 AC valid from 26.03.2022 to AY 2024–25, since the assessee is provisionally registered, therefore, clause (iii) of first proviso to section 80G(5) is applicable. 4. Only on this inadvertent mistake, the application was not allowed by Ld. CIT(E) as the same was filed under wrong section and therefore the same was rejected. 5. Before us, the assessee has raised number of grounds which are interconnected and interrelated and relates to challenging the impugned order passed by Ld. CIT(E). Therefore, we have decided to take up all the grounds together and adjudicated the same through the present consolidated order. 6. At the very outset, AR submitted that the issue in question is squarely covered by the decision of the Coordinate Bench of ITAT, in the case of Rambha Charitable Trust Vs CIT, in wherein it was held as under:
We heard the parties and perused the material on record. Before we proceed to examine the facts in assessee's case, it is important to first look at the relevant provisions of first proviso to subsection (5) of section 80G which read as under - 3 Mumbai Animal Association, Mumbai 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[***Jat any time after the commencement of such activities:]
The assessee in terms of the above provisions first applied for a provisional approval under sub-clause (B) of clause (iv) of first proviso to subsection (5) of section 80G within and subsequently (refer clause 2 in Form 10A) and was given the provisional registration up to AY 2025-26 on 30.11.2022. In the application for final approval in Form 10AB, it noticed that the assessee has once again mentioned same section i.e. sub-clause (B) of clause
(iv) of first proviso to subsection (5) of section 80G whereas the correct section code under which the assessee ought to have sought approval is clause (iii) of first proviso to subsection (5) of section 80G. We also noticed that the CIT(E) has treated the application as one filed under sub-clause (B) of clause (iv) of first 4 Mumbai Animal Association, Mumbai proviso to subsection (5) of section 80G and accordingly rejected the application for not fulfilling the stipulated conditions prescribed for filing application for approval in Form 10AB. From the perusal of forms filed and the facts of the case, in our considered view, there is merit in claim of the Id AR that the assessee has selected the wrong section code inadvertently while filing the application for final registration in Form 10AB. Further, we notice that the assessee did not have the opportunity of being heard before CIT(E) due to incorrect course of action advised, and that otherwise the assessee might have explained the facts before the CIT(E) to avoid rejection. In view of these discussions and respectfully following the above decision of the Kolkata Bench in the case of North Eastern Social Research Centre (supra) we remit the issue back to CIT(E) with a direction to grant final approval to the assessee under Clause (iii) to First Proviso to section 80G(5) of the Act, if the assessee is otherwise found eligible. We also direct the CIT(E) to decide the application of the assessee for final approval as quickly as possible before the expiry of the provisional approval granted in order to enable the assessee to have the benefit of section 80G without any break. It is ordered accordingly.
In result the appeal of the assessee is allowed for statistical purposes. 7. Apart from above recently, the Hon’ble Delhi High Court in the case of Rajiv Shukla Vs Gopal Krishan Shukla in CM(M) 2342/2024 & CM Appl. 22074/2024 decided on 7 January 2025 has held that filing of an application under the wrong provision of law is not fatal to the case and is a curable defect provided no prejudice is caused to the other party.
After having gone through the contents of the decision in the case of Rambha Charitable Trust (supra), and considering the facts of the present case, we are of the considered view that there is merits in the claim as the 5 Mumbai Animal Association, Mumbai assessee had selected wrong section clause inadvertently, while filing the application for final registration in form 10 AB. Further, we noticed that assessee did not had the opportunity of being heard before Ld. CIT(E) otherwise the assessee might have explained the facts before the Ld. CIT(E) to avoid rejection. Hence, in view of our discussion and respectfully following the decision of the Coordinate Bench, we remit the issue of registration back to the file of Ld. CIT(E) with a direction to grant final approval to the assessee under clause (iii) to the first proviso to section 80G(5) of the Act, if the assessee is otherwise found eligible. It is ordered accordingly. 9. In the net result, the appeal filed by the assessee is allowed for statistical purposes.