KALPATARU FOUNDATION ,MUMBAI vs. CIT(EXEMPTION), MUMBAI

In this regard, it is submitted that assessee is a registered charitable trust u/s 12A and have been granted provisional approval u/s 80G(5) of the Act in form 10AC. Subsequently, assessee filed application in form AB for final registration. However, Ld. CIT(E) rejected the said application by stating that

As the trust is provisionally approved, provisions of clause (iii) of first proviso to sub- section (5) of section 80G are applicable to it, which is reproduced as under:

On perusal of the Form 10AB filed by the assessee it was observed that the assessee has applied under clause (ii) of first proviso to sub-section (5) of section 80G i.e. for renewal of approval and not for regularisation of provisional approval. Hence this Application is hereby rejected.

From the records, we found that the identical issue in similar circumstances has already been dealt with by the coordinate bench of ITAT in the case of Rambha Charitable Trust (supra), the operative portion is reproduced here in below:

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 - 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 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.

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 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. We also direct the Ld. CIT(E) to decide the application of the assessee for final approval expeditiously, in order to enable the assessee to have the benefit of section 80(G) without any break, we ordered accordingly.

In the result, the appeal filed by the assessee is allowed.

उप/सहायक पंजीकार ( Asst. Registrar) आयकर अपीलीय अिधकरण, मु�बई मु�बई / ITAT, Mumbai मु�बई मु�बई