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

The learned Commissioner of Income Tax (Exemption), Mumbai ["CIT(E)"] erred in fact and in law in rejecting the approval u/s 80G(5) of the Income Tax Act, 1961 ("the Act"). 2. The learned CIT(E) erred in fact and in law in rejecting the application for approval on technical grounds. 3. The learned CIT(E) erred in fact and in law in rejecting the application for approval without considering the facts on record in proper perspective. Without prejudice to the above: 4. The learned CIT(E) erred in fact and in law in rejecting the application for approval u/s 80G(5) of the Act without appreciating the fact that vide order dated 06.05.2020, the Appellant was granted approval u/s 80G(5)(vi) from AY 2020-21 till it is rescinded after complete verification of the nature of activities carried out by the Appellant. 5. The learned CIT(E) erred in fact and in law in rejecting the application for approval u/s 80G(5) of the Act despite the fact that there was no change in the activities of the trust as per the approval already granted vide order dated 06.05.2020, 6. The learned CIT(E) erred in fact and in law in rejecting the application and approval under first proviso to 80G(5) despite the fact the same would cause genuine hardship to the Appellant. 7. The learned CIT(E) erred in fact and in law in passing the order and rejecting the application in violation of principle of natural justice. 8. The learned CIT(E) erred in fact and in law in rejecting the application without granting proper opportunity of being heard. 9. Your Appellant craves the right to add to or to alter, amend, substitute, delete or modify all or any of the above grounds of appeal.

As per the facts of the present case, the application of the assessee for approval u/s 80G(5) of the Act was rejected .

The only effective ground raised by the assessee is with regard to challenging the order of Ld. CIT(E) in rejecting the application for approval under section 80G(5) of the Act on technical grounds.

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 1. M/s Kalpataru Foundation [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']. The applicant has been granted Provisional Approval under Section 80G(5) of the Act in Form 10AC.

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

For statistical purposes, this application is non maintainable and stands rejected.

It was submitted that the assessee while filing form for final registration in form 10 AB had inadvertently mention wrong section i.e clause (ii) of first proviso to sub-section (5) of section 80(G) instead of clause (iii) of first proviso to subsection (5 ) of section 80(G). It was further submitted that the assessee could not explain the error before Ld. CIT(E) as proper opportunity was not given to the assessee before rejecting the application for registration u/s 80(G) of the Act, Ld. AR also submitted that the grounds raised and relief sought by the assessee is squarely covered by the decision of the coordinate bench of ITAT Mumbai, in case of Rambha 5111/MUM/2024, dated 29/11/24 and requested for similar directions.

On the other hand, Ld. DR relied upon the orders passed by the revenue authorities and submitted that Ld.CIT(E) has decided the application based on the submissions made by the assessee in form 10 AB. It was further submitted by Ld. DR that matter can be remitted back to the Ld. CIT(E) to consider the application afresh

We have heard the counsel for both the parties and perused the material placed on record, judgements cited before us and the orders passed by the revenue authority

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 -

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

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.

अपीलाथ / The Appellant 2. थ / The Respondent. 3. संबंिधत आयकर आयु / The CIT(A) 4. आयकर आयु(अपील) / Concerned CIT 5. िवभागीय ितिनिध, आयकर अपीलीय अिधकरण, मुबई / DR, ITAT, Mumbai 6. गाड फाईल / Guard file. आदेशानुसार/ BY ORDER, सािपत ित ////

उप/सहायक पंजीकार ( Asst.