DECCAN GYMKHANA,DECCAN vs. CIT(EXEMPTION), PUNE, PUNE

The assessee has failed to furnish the details called for under the provisions of sub-clause (a) of clause (ii) of second proviso to section 80G(5) of the Income Tax Act, 1961 to verify the genuineness of activities of the institution/fund and fulfillment of conditions laid down in clauses (i) to (v) of Section 80G(5) of the Act. 4.1 The information called for is basic information required to ascertain the overall nature of activities of the assessee and are directly relevant to the present proceedings. However, the assessee has failed to submit such details information despite giving sufficient opportunity as discussed above. In absence of the compliance to the above requirement, it is not possible to arrive at any conclusion about the genuineness of activities of the assessee and fulfillment of conditions laid down in clauses (i) to (v) of Section 80G(5) of the Act. 4.2 It is clear that the assessee was given sufficient opportunity to comply, but it has failed to comply. It seems that the assessee is not having any supporting documents / evidence to submit. The assessee has failed to comply with the provisions of sub-clause (a) of clause (ii) of second proviso to section 80G(5) of the Income Tax Act, 1961 and hence, the undersigned is unable to draw any satisfactory conclusion about genuineness of activities of the assessee and fulfillment of conditions laid down in clauses (i) to (v) of Section 80G(5) of the Act and has left no alternative but to reject the application.

Without prejudice to the above, as per the provisions of clause (iii) of first proviso to section 80G(5) of the Act, where a trust or institution has been provisionally approved under section 80G(5)(vi) of the Act, the application for regular approval under section 80G(5)(vi) is required to be filed, at least six months prior to expiry of period of the provisional approval or within six months from the date of commencement of activities, whichever is earlier. As per the copy of form No.10AC, the date of provisional approval under section 80G(5)(vi) in this case is 30/03/2022. 5.1 Considering the above provisions, the assessee was specifically requested vide the initial notice itself to inform the date of expiry of provisional approval as well as the date of commencement of activities. The assessee has not informed the date of commencement of activities. However, it is seen that the date of incorporation of the trust/institution as per registration certified issued by Charity Commissioner is 14/01/1974 and it is also seen from the financial statements that the assessee has shown expenditure on objects right from the F.Y. 2016-17. Therefore, it is seen that the activities of the assessee were commenced at least from F.Y. 2016-17 i.e. before obtaining provisional approval. However, if the actual date of commencement of activity in this case is considered for computation of limitation period for filing application under clause (iii) of first proviso to section 80G(5) of the Act, the assessee would never be eligible to file any such application. 5.2 For the sake of argument, take a hypothetical case of an assessee whose activities were commenced on 01/05/2022 but makes an application under clause (iv) of first proviso to section 80G(5) for provisional approval under section 80G(5)(vi) of the Act on 01/12/2022 i.e. after commencement of activities and gets such provisional approval on 15/12/2022. Such assessee would be required to file an application under clause (iii) of first proviso to section 80G(5) for regular approval under section 80G(5)(vi) of the Act on or before 30/11/2022 i.e, within six months from the date of commencement of activities. In such a case the assessee would be required to file an application for regular approval before making an application for provisional approval under section 80G(5)(vi) of the Act. However, the Statute does not permit for making application directly for regular approval. The assessee has to mandatorily get provisionally approved first, for being eligible for making any application for regular approval. The only remedy for such assessee would be to file an application for provisional approval before commencement of activities and then only the assessee can observe the further timeline of clause (iii) of first proviso to section 80G(5) of the Act. In such a situation any assessee who misses the bus or an assessee who has commenced its activities before the implementation of newly inserted provisions of Law in this regard, will not get any approval under section 80G(5)(vi) of the Act. This definitely is not the purpose of bringing-in the new provisions for registration / approval of a charitable institution in the Statute. Considering the above, it is but natural that in case of an assessee who has already commenced its activities and intends to get approved under section 80G(5)(vi) of the Act, has to first get provisionally approved under section 80G(5)(vi) by making an application under clause (iv) of first proviso to section 80G(5) of the Act and then has to apply under clause (ii) of first proviso to section 80G(5) of the Act, for regular approval under section 80G(5)(vi), within 6 months from the date of provisional approval. In such a case, the date of commencement of activity would naturally be the date of provisional approval for computation of limitation period of six months for making an application under clause (iii) of first proviso to section 80G(5) of the Act. In view of the above, in the instant case, the limitation period for making application under clause (iii) of first proviso to section 80G(5) of the Income Tax Act, 1961 is required to be computed from the date of provisional approval. 5.3 Considering the above facts, it is seen that the assessee had commenced its activities before the date of provisional approval. Since, the activities of the assessee were already commenced before the date of provisional approval, the assessee was required to file the present application within 6 months from the date of provisional approval i.e. on or before 29/09/2022. The extended due date for filing of such application was 30/09/2022 as per CBDT, Circular No.8/2022, dated 31/03/2022. Whereas the present application filed by the assessee is on 30/09/2023, i.e. beyond the time limit allowed under clause (iii) of first proviso to section 80G(5) of the Income Tax Act, 1961. 5.4 From the provisions of clause (iii) of first proviso to section 80G(5) of the Act, it is evident that the time limits prescribed therein are mandatory and the Commissioner of Income Tax has no power to condone the delay in filing application in Form No. 10AB. The said legal position further gets fortified by the fact that the CBDT on multiple occasions had extended the time limit in filing the application in Form No.10A and/or From No. 10AB as under: (a) The CBDT vide Circular No.12 of 2021 dated 25/06/2021 in exercise of its power under section 119 of the Act, provided relaxation for various compliances, including making application under section 10(23C), 80G(5) (vi), 35(1)(ii)/(iia)/(iii) and 80G of the Act in Form No.10A/Form No.10AB, for approval / provisional approval /intimation / approval / provisional approval of Trusts / Institutions /Research Associations etc., which were required to be made on or before 30th June 2021 was allowed to be made / filed on or before 31st August 2021. (b) Thereafter, the CBDT vide Circular No.16 of 2021 dated 29/08/2021, further extended the date of filing of Form No.10A under section 10(23C), 12A, 35(1)(ii) / (iia)/(iii) or 80G, which was required to be filed on or before 30th June 2021 upto 31st March 2022 and similarly for application for approval or approval under section 10(23C), 12A or 80G of the Act in Form No.10AB, for which the last date for filing falls on or before 28th February, 2022 up to 31st March, 2022. (c) Thereafter, once again the CBDT vide Circular No.8/2022 dated 31/03/2022 on consideration of difficulties in electronic filing of Form No.10AB as stipulated in Rule 20 or 11AA or 17A of the Income Tax Rules, 1962, stipulated that "The application for approval or approval under section 10(23C), 12A or 80G of the Act, in Form No 10AB, for which the last date for filing falls on or before 29th September, may be filed on or before 30th September, 2022. (d) Thereafter, once again the CBDT vide Circular No.6/2023 dated 24/05/2023, further extended the date of filing of Form No. 10A in case of an application under clause (1) of the first proviso to clause (23C) of section 10 or under sub-clause (1) of clause (ac) of sub-section (1) of section 12A or under clause (i) of the first proviso to sub-section (5)of section 80G of the Act, till 30/09/2023 where the due date for making such application has expired prior to such date, and 5.5 Form No.10AB, in case of an application under clause (iii) of the first proviso to clause (23C) of section 10 or under sub-clause (iii) of clause (ac) of sub-section (1) section 12A of the Act, till 30/09/2023 where the due date for making such application has expired prior to such date.

Accordingly, the writ petition is partly allowed and the finding rendered by the respondent that the petitioner's application cannot be considered as the same is time barred is affirmed and the finding with regard to objectives of the Society by respondent holding that the Society cannot be said to be solely for education purpose is set aside. Consequently, the matter is remanded back to the respondent for fresh consideration and the petitioner's application is directed to be considered for the assessment year 2013-2014 in accordance with law and while doing so, may consider the amendments made to the objectives of the petitioner Trust, No Costs. M.P. No. 1 of 2014 is closed."

Similar is the view of Hon'ble Andhra Pradesh High Court propounded in Aurora Educational Society case (supra). The Hon'ble Orissa High Court has also considered this aspect in the case of Roland Educational & Charitable Trust (supra). The concluding paragraph of the judgment is worth to note in this aspect, which read as under: "Be that as it may, we are here concerned whether in the absence of any statutory provision to condone the delay in presenting the application under section 10(23C)(vi), the Chief Commissioner of Income-tax can exercise any such power".

In the result, all the appeals of the assessee are dismissed."

We have heard the rival arguments made by both the sides and perused the order of the Ld. CIT(E) and the paper book filed on behalf of the assessee. It is an admitted fact that despite sufficient opportunities granted by the Ld. CIT(E), the assessee did not respond to the notice(s) for which he rejected the application for grant of approval u/s 80G of the Act. It is the submission of the Ld. Counsel for the assessee that non-compliance before the Ld. CIT(E) was not intentional but was on account of certain circumstances beyond the control of the assessee. It is also his submission that given an opportunity, the assessee is in a position to present and substantiate its case by filing the requisite details before the Ld. CIT(E) to his satisfaction. Considering the totality of the facts of the case and in the interest of justice, we deem it proper to restore the issue to the file of the Ld. CIT(E) with a direction to give one final opportunity to the assessee to substantiate its case by filing the relevant details and decide the issue as per fact and law. We hold and direct accordingly. The grounds raised by the assessee are accordingly allowed for statistical purposes.

In the result, both the appeals filed by the assessee are allowed for statistical purposes.