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Facts
The assessee, an old society with perpetual approval under Section 80G of the Income Tax Act, applied for fresh registration under the amended provisions. Its applications for registration under Section 12A/12AB and approval under Section 80G(5)(iv) were rejected by the CIT (Exemptions) as non-maintainable, premature, or incorrectly filed under the wrong sub-clause (B) of clause (iv) instead of clause (i) of the first proviso to Section 80G(5), which applies to old trusts.
Held
The Tribunal found that the assessee's error was merely technical, resulting from the complexity of new provisions, and such applications should not be rejected on that ground. Citing previous judgments, the Tribunal set aside the CIT (Exemptions)'s order and remanded the matter, directing the CIT (Exemptions) to consider the application as if it were filed under the correct clause (i) of the first proviso to Section 80G(5) for final approval, after providing the assessee with an opportunity of being heard.
Key Issues
Whether an application for 80G approval by an old, already approved trust should be rejected solely due to a technical error in filing under an incorrect sub-clause of the amended provisions, or if the application should be re-considered under the appropriate legal framework with due process.
Sections Cited
11, 12A, 12AB, 80G, 80G(5), 80G(5)(i), 80G(5)(ii), 80G(5)(iii), 80G(5)(iv), 80G(5)(iv)(B), 80G(5)(vi), 12A(1)(ac)(ii), 12A(1)(ac)(iii)
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Income Tax Appellate Tribunal, KOLKATA ‘C’ BENCH, KOLKATA
Before: SHRI SONJOY SARMA & SHRI RAKESH MISHRA
PER RAKESH MISHRA, ACCOUNTANT MEMBER:
This appeal filed by the assessee is against the order of the Ld. Commissioner of Income Tax (Exemption)-Kolkata [hereinafter referred to as the ‘Ld. CIT (Exemption)’] passed in respect of registration u/s 80G of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) dated 28.08.2024. 2. The assessee is in appeal before the Tribunal raising the following grounds of appeal: I.T.A. No.: 1980/KOL/2024 Assessment Year: N.A. Kalyan. “1) That the impugned Order of the Ld. Commissioner of Income Tax (Exemptions), Kolkata has erred in law in not having properly appreciate the replies of Appellant, on the other hand, rejected the application Form No. 10AB for approval of exemption under sub-clause (B) of clause (iv) of first proviso to sub-section (5) of section 80G of the Income Tax Act, 1961. 2) That the Rejection of approval of exemption under sub-clause (B) of clause (iv) of first proviso to sub-section (5) of section 80G of the Income Tax Act, 1961: The Ld. Commissioner of Income Tax (Exemptions), Kolkata erred in law and fact having not to grant the benefit of permanent exemption under section 80G(5)(ii) or (iii) or (iv) of the Income Tax Act, 1961 of the Institution, after verifying all necessary steps for granting approval exemption, the Ld. Commissioner of Income Tax (Exemptions), Kolkata merely quoted in the rejection order that the application have a non-applicable as "Section 80G(5) (iv) (B) of the Act is for newly established trusts or institutions that are not yet registered under section 12A of 12AB of the Act. As assessee trust is an old and established trust already registered under section 12A and claiming exemptions u/s. 11 of the Act". Therefore, your Appellant prays before the Hon'ble Members of the Appellate Tribunal for direction to approval of exemption under clause (ii) or (iii) of second proviso to sub-section (5) of Section 80G of the Income Tax Act, 1961against decision made by the Ld. of Commissioner of Income Tax (Exemptions), Kolkata. The Appellant craves the leave of the Hon'ble Members of Income Tax Appellate Tribunal to urge further ground(s) at the time of hearing and to produce the documents in support of its argument, if required.”
Brief facts of the case as culled out from record and the paper book filed before us are as under: i) The assessee is an Association/Society registered under the West Bengal Societies Registration Act, 1961 and was incorporated on 26.02.1980. ii) The assessee was registered u/s 12A of the Act on 12.08.1999 vide certificate No. Assmnt/1496/C.T. 88/50/97-98 as per page 55 of the paper book. I.T.A. No.: 1980/KOL/2024 Assessment Year: N.A. Kalyan. iii) The assessee was granted approval u/s 80G of the Act vide order dated 08.08.2016 u/s 80G(5)(vi) of the Act of the Ld. CIT (Exemption), Kolkata. As per para 2 of the approval “This approval shall be valid in perpetuity from Asst. Year 31.03.2015 unless specifically withdrawn.” iv) The law relating to the registration of the Trust was amended with effect from 01.04.2021 by the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020, All entities registered under the pre-amended provisions were required to apply afresh as per the provisions within the specified time and as extended from time to time. v) The assessee accordingly applied for approval under sub- clause (ii) of clause (ac) of sub-section (1) of section 12A vide application dated 30.09.2022 which was treated as non- maintainable vide order dated 13.02.2023 of the Ld. CIT (Exemption). Similarly, application under sub-clause (A) of clause (iv) of first proviso to sub-section (5) of section 80G of the Act filed on 10.09.2021 was also rejected vide order dated 01.10.2021 of the Ld. CIT (Exemption). However, as is mentioned in Form No. 10AC, the assessee was granted provisional approval with effect from 01.10.2021 which was valid from 01.10.2021 to AY 2024-25. vi) The assessee subsequently applied for registration under clause (iii) of the first proviso to sub-section (5) of section 80G of the Act vide application dated 30.09.2022 which was rejected vide order dated 25.02.2023 of the Ld. CIT (Exemption). It is mentioned in the order that as the assessee had not received any approval u/s 12A(1)(ac)(iii) of the Act on Form No. 10AD, I.T.A. No.: 1980/KOL/2024 Assessment Year: N.A. Kalyan. therefore, the application was treated as non-maintainable and the same was rejected. Against this rejection, the assessee filed an appeal before the Tribunal which was decided vide order dated 10.07.2024 in which the following directions were given to the Ld. CIT (Exemption):
“4. We have perused the order of ld. CIT (Exemption) and find that the application of the assessee has only been rejected thereby saying that the assessee has not received any approval u/s 12A(1)(ac)(iii) of the Act in Form No.10AB. It is not in dispute that the assessee is a registered society. For the same assessee, the order of ITAT, Kolkata in ITA No. 919/KOL/2023 (supra) has also been brought to our notice. In the said application ITAT, Kolkata has passed an order and directed the ld. CIT (Exemption) to reconsider the application of the assessee for permanent registration file u/s 12AB of the Act in accordance with the law. The fact is similar; hence, we are of this opinion that ld. CIT (Exemption) to reconsider the application of the assessee for registration in accordance with law after affording necessary opportunity of being heard to the assessee. Accordingly, the grounds raised by the assessee are allowed in terms of the above.
In the result, the appeal filed by the assessee is allowed.” vii) The assessee also filed an application under sub-clause (iii) of clause (ac) of sub-section (1) of section 12A of the Act on Form No.10AB on 20.01.2023 which was also rejected vide order dated 29.07.2023 as the application filed by the assessee was premature as the earlier Form No.10AC was valid till AY 2026-27. The application filed by the assessee was treated as non-maintainable and for statistical purposes the same was treated as “rejected”. However, no adverse inference was drawn against the assessee by the Ld. CIT (Exemption). viii) Against the rejection order relating to section 12A of the Act dated 29.07.2023, the assessee filed an appeal before the Tribunal who vide order dated 06.02.2024 in ITA No. I.T.A. No.: 1980/KOL/2024 Assessment Year: N.A. Kalyan. 919/KOL/2023 order dated 06.02.2024 directed the Ld. CIT (Exemption) to reconsider the application of the assessee for permanent registration filed u/s 12AB of the Act and in accordance with law after giving necessary opportunity of being heard to the assessee. The Miscellaneous Application filed against the order of the Tribunal was rejected vide order dated 22.07.2022. ix) The assessee filed an application for registration or approval under sub-clause (B) of clause (iv) of first proviso to section (5) of section 80G of the Act on 06.02.2024 and the Ld. CIT (Exemption) issued several notices for filing the explanation and the same came to be rejected vide the impugned order dated 28.08.2024. The relevant extract from the order of the Ld. CIT (Exemption) rejecting the application is as under: “In its reply assessee has informed that assessee's application u/s. 80G(5)(iii) was rejected by CIT(E), Kolkata and against the order of CIT assessee preferred appeal before ITAT. Further it is observed from the order of Ld. ITAT that the appeal of the assessee is allowed with a direction to CIT(E), Kolkata for reconsideration the application of the assessee for registration in accordance with law after affording necessary opportunity of being heard. No further explanation has been offered by assessee. Section 80G(5)(iv) (B) of the Act is for newly established trusts or institutions that are not yet registered under section 12A of 12AB of the Act. As assessee trust is an old and established trust already registered under section 12A and claiming exemptions u/s. 11 of the Act, the provision of the section 80G(5)(iv)(B) are not applicable. In light of the above, the application filed by the assessee under section 80G(5)(iv)(B) is hereby rejected as it has been incorrectly filed under the wrong provision of the Act.”
Aggrieved with the order of the Ld. CIT(Exemption), the assessee has filed the appeal before the Tribunal. I.T.A. No.: 1980/KOL/2024 Assessment Year: N.A. Kalyan.
Rival submissions were heard and the record/paper book filed and the submissions made have been examined. Before us, in the course of appeal the assessee filed written statement and contended that the order of the Ld. CIT (Exemption) is not justified and requested for issuing certain directions for the following reasons: “The Appellant prays for ends your justices for the decision of the Ld. Commissioner of Income Tax (Exemptions) have not justified in respect of application as the rejection under Sub-clause (B) of clause (iv) of first proviso to sub-section (5) of section 80G of the Income Tax Act, 1961 as the Ld. Commissioner of Income Tax (Exemptions) has not any specific grounds / evidentiary document or any specified violation regarding as follows: a. the activity of the Appellant is not genuine. b. the Appellant is not being carried out in accordance with all or any of the conditions subject to which it was registered. c. the income derived from property held under trust, wholly or in part for charitable or religious purposes, has been applied, other than for the objects of the trust or institution. d. the trust or institution has applied any part of its income from the property held under a trust for private religious purposes, which does not ensure for the benefit of the public. the trust or institution established for charitable purpose created or established after the commencement of this Act, has applied any part of its income for the benefit of any particular religious' community or caste.”
1 The assessee has relied upon the following case laws in support of application for registration or approval under Form No.10AB: Mumbai [ITA No. 6133/MUM/2024, for Assessment Year: 2024-25] b. North Eastern Social Research Centre vs. CIT(Exemption), Kolkata [ITA No.741/Kol/2024] Tax (Exemption), Ahmedabad [I.T.A. No. 1091/Ahd/2023] d. Indian Red Cross Society vs. The CIT, Exemptions, Chandigarh [ITA NO. 288/Chd/2024]” I.T.A. No.: 1980/KOL/2024 Assessment Year: N.A. Kalyan.
We have considered the submissions made. It is relevant to refer to the order of the Coordinate Bench in the case of North East Social Research Centre vs. CIT(Exemption) in ITA No. 741/KOL/2024 order dated 09.07.2024 relied upon by the assessee wherein the Accountant Member was also part of the Bench. It is imperative to reproduce the following extracts in order to understand the controversy:
“3. We have heard the rival submissions and gone through the record. Before proceeding further, it will be relevant to reproduce here the relevant provisions of section 80G(5) of the Act: “80G(5) This section applies to donations to any institution or fund referred to in sub-clause (iv) of clause (a) of sub-section (2), only if it is established in India for a charitable purpose and if it fulfils the following conditions, namely:- [(vi) in relation to donations made after the 31st day of March, 1992, the institution or fund is for the time being [approved by the Principal Commissioner or Commissioner;] 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, at least one month prior to commencement of the previous year relevant to the assessment year from which the said approval is sought: Provided further that the Principal Commissioner or Commissioner, on receipt of an application made under the first proviso, shall,— I.T.A. No.: 1980/KOL/2024 Assessment Year: N.A. Kalyan. (i) where the application is made under clause (i) of the said proviso, pass an order in writing granting it approval for a period of five years; (ii) where the application is made under clause (ii) or clause (iii) of the said proviso,— (a) call for such documents or information from it or make such inquiries as he thinks necessary in order to satisfy himself about— (A) the genuineness of activities of such institution or fund; and (B) the fulfilment of all the conditions laid down in clauses (i) to (v); (b) after satisfying himself about the genuineness of activities under item (A), and the fulfilment of all the conditions under item (B), of sub- clause (a),— (A) pass an order in writing granting it approval for a period of five years; or” Provided also that the approval granted under the second proviso shall apply to an institution or fund, where the application is made under— (a) clause (i) of the first proviso, from the assessment year from which approval was earlier granted to such institution or fund; (b) clause (iii) of the first proviso, from the first of the assessment years for which such institution or fund was provisionally approved; (c) in any other case, from the assessment year immediately following the financial year in which such application is made.
A perusal of the above provisions would reveal that the institutions which stood already approved u/s 80G(5)(vi) on the date of Amendment brought to section 80G of the Act by Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 have to re-apply for fresh registration under Clause (i) to the First Proviso to section 80G(5) of the Act and those institutions have to be granted approval for five years by the ld. CIT(Exemption) without any enquiry. The prescribed date for final application for approval under Clause (i) to the First Proviso to section 80G(5) of the Act was stipulated as three months from 1st Day of April 2022. However, the CBDT from time to time extended the date for filing of the said application under Clause (i) to the First Proviso to section 80G(5) of the Act and finally vide Circular No.6 of 2023 dated 24.05.2023, the said date was extended upto 30.09.2023. Further, the institutions which had to apply for the first time or the institutions which did not stand approved on the date of Amendment i.e. 01.04.2021 brought by the Taxation and Other Laws I.T.A. No.: 1980/KOL/2024 Assessment Year: N.A. Kalyan. (Relaxation and Amendment of Certain Provisions) Act, 2020, they could apply under Clause (iv) of the First Proviso to section 80G(5) of the Act. In that case, the ld. CIT(Exemption) is supposed to make necessary enquiries and if found satisfied regarding the genuineness of the activities of such an institution, would grant provisional approval for five years. Such institutes who have been granted provisional approval under clause (iv) to First Proviso to section 80G(5) of the Act, have to apply for final approval under Clause (iii) of First Proviso to section 80G(5). Such institutions are required to apply for final approval at least six months prior to expiry of the period of provisional approval or within six months of commencement of its activities, whichever is earlier. In the case in hand, provisional approval has also been granted to the assessee-institution from 28.06.2022 to A.Y 2025-26, therefore, the assessee-trust was entitled to apply for final approval and there was no bar to the institution for making such application. This issue has already been adjudicated upon by the Coordinate Bench of the Tribunal in the case of “Vivekananda Mission Asram vs. CIT” in ITA No.995/Kol/2023 decided on 08.12.2023 (Judicial Member herein being the author of the said order) while deliberating upon the provisions of section 80G(5) of the Act, has held as under:
“6. So far as the observation of the ld. CIT(E) that the assessee had already commenced its activities since long and that as per Clause (iii) of 1st Proviso to section 80G(5) of the Act, the application for final registration was to be filed within six months from the commencement of its activities and therefore, the application of the assessee for final registration was time-barred, is concerned, we note that the issue has already been discussed and adjudicated by the Coordinate Bench of the Tribunal in the case of West Bengal Welfare Society vs. CIT(Exemption), Kolkata vide order dated 13.09.23 [one of us i.e. the Judicial Member herein, being the author of the said order], wherein, it has been held that the assessee, who has been granted provisional registration, is eligible to apply for final registration irrespective of the fact that the assessee had already commenced its activity even prior to the date of grant of provisional approval. The relevant part of the order of the Coordinate Bench is reproduced as under:
We note that the ld. CIT(E) has misconstrued the aforesaid proviso to section 80G(5) of the Act. As per the provision, an application for final registration cannot be filed until and unless an assessee/trust has been given provisional approval u/s 80G(5)(iv) of the Act. The assessee was granted provisional approval on 30.11.2022 only, and within a few days i.e. on 03.12.2022, the assessee applied for final I.T.A. No.: 1980/KOL/2024 Assessment Year: N.A. Kalyan. registration u/s Clause (iii) of 1st Proviso to section 80G(5) of the Act. Though the assessee might have commenced its activities prior to grant of provisional registration but that does not mean that the assessee in that event will be precluded from applying for final registration even after the grant of provisional registration. The assessee as per statutory provision could not have directly applied for final registration without grant of provisional registration. The aforesaid proviso, therefore, is to be read as that after the grant of provisional registration, if the assessee has not commenced its activities, he may apply for registration within six months of the commencement of its activities or within the six months prior to the expiry of the period of provisional approval, whichever is earlier. In any case, the assessee is eligible to apply for final registration only after the grant of provisional approval. Therefore, we hold that there is no delay on the part of the assessee in filing application in the prescribed form for grant of final registration under Clause (iii) of 1st Proviso to section 80G(5) of the Act.
In view of the above observations, the matter is restored the file of the CIT(E) for decision afresh in the light of the observations made above.”
It is to be further noted here that the ld. CIT(Exemption) firstly misconstrued about the CBDT Circulars regarding the exemption of date for final applications for approval. The said Circular/time limits are applicable only for the institutions who stood already registered on the date of Amendment and have made application for renewal of the registration without any time break. However, the said last date which has been extended to 30.09.23 by CBDT Circular No.6 of 2023 is not applicable for making application under Clause (iii) to First Proviso to section 80G(5) of the Act.
3 In our humble understanding, if the view of the ld. CIT(Exemption) is accepted to be correct, then no institution which has already been into charitable activities before seeking provisional approval under Clause (iv) to First Proviso to section 80G(5) of the Act would ever be entitled to grant of final registration under Clause (iii) to First Proviso to section 80G(5) of the Act even after grant of provisional approval, which would make the relevant provisions of section 80G(5) otiose and defeat the object and purpose of these statutory provisions.
In view of the above discussion, it is held that after grant of provisional approval, the application cannot be rejected on the ground I.T.A. No.: 1980/KOL/2024 Assessment Year: N.A. (supra) and in the case of “West Bengal Welfare Society vs. CIT(Exemption)” (supra) and further by the decision in the case of “Sri Aurobindo Bhawan Trust, Krishnagar vs. CIT(Exemption)” order dated 20.02.2024 (Judicial Member herein being the author of the said orders). Therefore, the impugned order of the CIT(Exemption) is set aside and the ld. CIT(Exemption) is directed to grant provisional approval to the assessee under Clause (iii) to First Proviso to section 80G(5) of the Act, if the assessee is otherwise found eligible. The ld. CIT(A) will decide the application for final registration within three months of the receipt of copy of this order.
Further, the Coordinate Bench of the Tribunal in the case of “Anudip Foundation for Social Welfare vs. CIT(Exemption), Kolkata” in I.T.A No. 1341/Kol/2023 order dated March 4th, 2024 in almost similar facts and circumstances has made the following further observations:
“4. 1. It is further directed that, if the assessee is granted final approval by the ld. CIT(E) then, the benefit of approval u/s 80G of the Act, available to the assessee prior to the Amendment brought vide Amending Act of 2020, will be deemed to be continued without any break. The assessee will not be deprived of the benefit during the time period falling between 31/03/2021 and the date of grant of provisional approval under clause (iv) i.e., 28/05/2021, due to technical errors occurred in making the application under the relevant provisions of the Act because of the confusion and misunderstanding on part of the assessee as well as on part of the ld. CIT(E) in properly interpreting the relevant provisions.”
The facts and issues involved in the case in hand being identical to that of the above referred to cases and in view of the findings given by the Coordinate Benches of the Tribunal, the appeal of the assessee is allowed accordingly and the ld. CIT(Exemption) is directed to grant final approval to the assessee under Clause (iii) to First Proviso to section 80G(5) of the Act, I.T.A. No.: 1980/KOL/2024 Assessment Year: N.A. Kalyan. if the assessee is otherwise found eligible. It is directed that the ld. CIT(Exemption) will decide the application of the assessee for final approval as expeditiously as possible but not later than two months from the receipt of this order. It is further directed that, if the assessee is granted final approval by the ld. CIT(Exemption) then, the benefit of approval u/s 80G of the Act, if it was available to the assessee prior to the Amendment brought vide Amending Act of 2020, will be deemed to have been continued without any break. The assessee will not be deprived of the benefit during the time period falling between 31/03/2021 and the date of grant of provisional approval under clause (iv) i.e., 28/06/2022, due to technical errors occurred in making the application under the relevant provisions of the Act because of the confusion and misunderstanding on part of the assessee as well as on part of the ld. CIT(Exemption) in properly interpreting the relevant provisions.
With the above observations, the appeal of the assessee is treated as allowed for statistical purposes.”
Thus, to summarize the facts in the issues at hand, since the assessee is an old Society and the approval u/s 80G(5) of the Act was granted in perpetuity vide order dated 08.08.2016 unless withdrawn, hence under the amended provisions it ought to have applied under clause (i) of the first proviso to sub-section (5) of section 80G of the Act while it incorrectly applied under the other clause. Since it applied as a new Society/Trust, provisional approval was granted whereas in view of the provision of the Act as per clause (i) of the first proviso to sub-section (5) of section 80G of the Act it ought to have been granted approval for 5 years without the need of any provisional approval. Thus, there was a technical error in mentioning the correct clause while making the application, which error ought to have been considered and the application ought not have been rejected on mere technicality as the provisions and the system put in place for filing the online application were new to the applicant as well as to the Department. That being so, the directions of the Hon'ble Tribunal have also been complied by rejecting the application. Therefore, in view of the totality of facts and I.T.A. No.: 1980/KOL/2024 Assessment Year: N.A. Kalyan. as the incorrect provisional approval u/s 12A of the Act granted was valid till AY 2026-27, the application for approval u/s 80G of the Act ought not to have been rejected on account of non-approval u/s 12A of the Act as has been done in one of the orders of the Ld. CIT (Exemption). Therefore, in the interest of justice, it was considered imperative that the assessee may be granted another opportunity to file its submission in response to the notice issued by the Ld. CIT (Exemption) for justifying the genuineness of the activities and claim of exemption. Hence in the interest of justice and fair play, since the assessee is an old Society/Trust and in view of the decision in the case of North East Social Research Centre (supra), decided by the Coordinate Bench, the order of the Ld. CIT (Exemption) is liable to be set aside to consider the totality of facts of the case and grant final approval to the assessee under clause (i) to the first proviso to sub-section (5) of section 80G of the Act for which it is entitled as the assessee is an old Society/Trust and the application was separately filed in time but under the wrong section and the same shall be deemed to be filed under the relevant clause (i) of the first proviso to sub-section (5) of section 80G of the Act and the Ld. CIT(E) shall consider the same for grant of approval if the assessee is otherwise eligible and the application is in accordance with the provisions of the Act.
Hence, the order of the Ld. CIT (Exemption) is set aside and the matter is remanded to him for deciding the application afresh in accordance with law after granting an opportunity of being heard to the assessee and allowing the assessee to make proper submission in respect of the queries raised. I.T.A. No.: 1980/KOL/2024 Assessment Year: N.A. Kalyan.
In the result, the appeal filed by the assessee is allowed for statistical purposes. Order pronounced in the open Court on 5th May, 2025. [Sonjoy Sarma] [Rakesh Mishra] Judicial Member Accountant Member Dated: 05.05.2025 Bidhan (P.S.) I.T.A. No.: 1980/KOL/2024 Assessment Year: N.A. Kalyan. Copy of the order forwarded to:
Kalyan, At Village Bongabari, Post Office Vivekanandanagar, Purulia, Purulia-I, Vivekananda Nagar S.O, West Bengal, India, 723147. 2. CIT (Exemptions), Kolkata.
CIT(A)-
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CIT(DR), Kolkata Benches, Kolkata.
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