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Facts
The assessee, an old trust, inadvertently filed an application for registration under section 80G(5)(iv) instead of section 80G(5)(i) of the Income Tax Act, 1961. This resulted in provisional registration for three years instead of the eligible five years. The appeal arose from the rejection of a subsequent application for regularization.
Held
The Tribunal directed the Ld.CIT(E) to treat the provisional registration granted for three years as if it were granted for five years, considering the assessee's status as an old trust and the circumstances of the inadvertent error.
Key Issues
Whether an inadvertently filed application under section 80G(5)(iv) can be treated as an application under section 80G(5)(i) to grant the eligible period of registration.
Sections Cited
80G, 80G(5), 80G(5)(i), 80G(5)(iv), 12A, 12AA
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Income Tax Appellate Tribunal, ‘B’ BENCH: CHENNAI
Before: SHRI ABY T. VARKEY & SHRI AMITABH SHUKLA
आदेश / O R D E R
PER ABY T. VARKEY, JM:
1. This is an appeal preferred by the assessee Trust against the order of the Learned Commissioner of Income Tax (Exemptions), (hereinafter referred to as “the Ld.CIT(E)”), Chennai, dated 16.09.2022 granting provisional registration to the assessee u/s.80G(5)(iv) of the Income Tax Act, 1961 (hereinafter referred to as "the Act”) from 16.09.2022 to AY 2025-26 [three years]. This registration has been granted consequent to application filed by the assessee u/s.80G(5)(iv) of the Act dated 09.09.2022.
At the outset, the Ld.AR of the assessee brought to our notice that the appeal has been filed belatedly by ‘976’ days and assessee has filed an affidavit explaining the cause for the delay. Having gone through the contents of the same, and considering the overall facts of the case, we find that cause for delay was reasonable, so we excuse the same and proceed to hear the assessee’s appeal on merits.
The assessee Trust (erstwhile IFMR Foundation) is noted to be formed on 04.08.2008 and has been granted registration u/s.12A(aa)
w.e.f.16.09.2008 vide order dated 02.02.2009 by the Commissioner of Income Tax (Exemptions), Chennai, and has been granted approval u/s.80G of the Act vide order dated 02.02.2009 onwards. And the assessee Trust has got its name changed from IFMR Finance Foundation to Dvara Research Foundation. Thus, the assessee is noted to be enjoying registration u/s.12AA of the Act as well as approval u/s.80G of the Act from 2009 onwards i.e. during old regime viz., before the new regime which came into force after Taxation and Other Laws (Relaxation and Amendment of certain Provisions) Act, 2020 (hereinafter referred to as ‘TOLA, 2020‘) w.e.f. 01.04.2021.
As per the new provisions, post TOLA, 2020 w.e.f. 01.04.2021, the assessee being an old trust, was required by the amendment to have filed its application in Form 10A for registration under clause (i) of proviso to section 80G(5) of the Act. According to the assessee, since the entire process of registration was new and the forms for obtaining registration under clause (i) and clause (iv) were both in Form 10A, the assessee inadvertently filed its application u/s.80G(5)(iv) of the Act in Form 10A on 09.09.2022 and obtained provisional registration for three (3) years (from 16.09.2022 to A.Y.2025-26) years in Form 10AC dated 16.09.2022.
According to the Ld.AR, if the assessee had correctly filed its application u/s.80G(5)(i) of the Act, it would have been automatically granted registration for five (5) years up to AY 2026-27. In this context, the Ld.AR pointed out that the registration granted by the Ld.CIT(E) on applications filed under clauses (i) and (iv) of the Act are automatic (i.e.) the same do not require any examination/verification. As per the discussion (supra), according to the Ld.AR, the proper route for registration u/s.80G of the Act for old and new trusts can be explained as under:
Registration in Form 10A Under 80G(5)(i) Under 80G(5)(iv) (for five (5) years) (for three (3) years)
Renewal of registration in form 10AB Under 80G(5)(ii) Under 80G(5)(iii)
The Ld.AR also brought to our notice the timeline for filing the above applications, which is tabulated as under:
No. Clause Form Time-limit 1 (i) 10A On or before 30.06 2024 (as extended by CBDT Circular No.7 of 2024) 2 (ii) 10AB Six months prior to expiry of registration granted subsequent to application under clause (i) 3 (iii) 10AB Six months prior to expiry of provisional registration granted subsequent to application under clause (iv) or within six months of commencement of activities, whichever is earlier extended until 30.06.2024 4 (iv) 10A One month prior to commencement of the P.Y. relevant to the A.Y. from which approval is sought as introduced by TOLA, 2020 amendment by Finance Act, 2023
Thus, according to the Ld.AR, the proper route for the assessee which had enjoyed registration u/s.80G of the Act to have followed post TOLA 2020 is as under:
a. File an application in Form 10A seeking registration under clause (i) of 1st proviso to section 80G(5) of the Act. b. Obtain registration for 5 years under clause (i) of 2nd proviso to section 80G(5) of the Act c. File an application in Form 10AB seeking registration under clause (ii) of 1st proviso to section 80G(5) of the Act, at least six months prior expiry of registration granted as above, and d. Obtain registration for 5 years as per 80G(5) 2nd proviso (ii)(b)(A) for 5 years.
However, according to Ld.AR, in the present case, since, the assessee did not originally file its application under clause (i), it could not file its application for renewal of registration under clause (ii). Hence, it inadvertently filed application in form 10AB under clause (iii) on 31.05.2024 for the regularization of its provisional registration which was rejected by the Ld.CIT(E) vide order dated 29.11.2024.
In the aforesaid back-drop, the prayer of the assessee before this Tribunal is noted as under:
The application filed under clause (iv) be sent back to the file of the CIT(E) to consider the application filed under clause (i).
The Ld.AR gave the reasons for the assessee’s second prayer and submitted that the assessee is undisputedly an old trust since it commenced its activities in the year 2009 and enjoyed registration u/s.80G of the Act and even though assessee inadvertently filed under clause(iv) for registration u/s.80G which was granted for three (3) years, it had to file for regular registration by filing application under clause (iii) before the two (2) events, which are noted as under: a. Six months prior to expiry of provisional registration granted, which in the assessee’s case would be on or before 30.09.2023 or b. Within six months of the commencement of the assessee’s activities, which in the assessee’s case would be, on or before 16.03.2008.
According to the Ld.AR, in the assessee’s case, the earlier of the two (2) events would be "within six months of commencement of the assessee’s activities". Thus, it transpires that the application ought to have been filed on or before 16.03.2008, which is impossible in the assessee’s case. This incongruous situation has arisen due to the assessee’s error in initially filing its application for registration under clause (iv) instead of clause (i) of 1st proviso to section 80G(5) of the Act.
The assessee’s error has led to an impossibility of performance for the assessee.
In this context, the Ld.AR drew our attention to the due date for filing an application under clause (i) which was extended until 30.06.2024.
And brought to our notice that the assessee had filed its application albeit under clause (iv) on 16.09.2022. Thus, the prayer of the assessee is that the application filed under clause (iv) be directed to be treated as an application filed under clause (i), so that the assessee can enjoy the benefit of registration for five (5) years, as it is eligible for the same.