YOG VIDYA GURUKUL,PUNE vs. CIT EXEMPTION, PUNE, PUNE

Considering the above facts discussed in the show notice and discrepancies noticed and also that the assessee has not complied with the provisions of sub-clause (a) of clasue (ii) of second proviso to section 80G(5) of the Income Tax Act, 1961 as well as the provisions of Rule 11AA(2) of Income Tax Rules, 1962 in spite giving sufficient opportunities, the undersigned is unable to draw any satisfactory conclusion about the genuineness of activities of the assessee and fulfilment of conditions laid down in clause (i) to (v) of section 80G(5) of the Act.

In view of the above, the application filed by the assessee is hereby rejected and the provisional approval granted on 31/05/2021 under clause (iv) for first proviso to section 80G(5) of the Income Tax Act, 1961 is hereby cancelled.”

Ld. AR appearing from the side of the assessee trust submitted before us that the application for registration u/s 80G(5) was rejected merely on a technical ground of filing the application belatedly. It was submitted by Ld. Counsel of the assessee that under similar circumstances & identical facts, the Tribunal has already allowed appeals of other assessee passed in the case of Mitcon Forum for Social Development vs. CIT, Exemption, Pune in order dated 24.04.2025. Accordingly, Ld. AR requested before the Bench to set-aside the order passed by Ld. CIT, Exemption, Pune and further requested to direct him to treat the original application as filed within time.

Ld. DR appearing from the side of the Revenue supported the order passed by Ld. CIT, Exemption, Pune & requested to confirm the same.

We have heard Ld. Counsels from both the sides and perused the material available on record. We find that the assessee is an old trust and has already commenced its activities prior to 2021 and has obtained provisional approval on 31.05.2021. According to Ld. CIT, Exemption, Pune, the assessee was required to file present application upto 30th June, 2024 which was the extended time limit as per the circular issued by CBDT & since the application was furnished on 24th September, 2024 it is apparently beyond the time limit accordingly Ld. CIT, Exemption, Pune rejected the same. We further find that it was the contention of Ld. AR of the assessee that the provisional approval u/s 80G(5)(vi) of the IT Act was granted upto assessment year 2024-25 and therefore the assessee was required to file the present application at least six months prior to expiry of provisional approval i.e. on or before 30.09.2024. On the other hand, according to Ld. CIT, Exemption, Pune, the provisional approval was granted upto 31.03.2024 and therefore the assessee was required to file above application prior to six months from the expiry of provisional approval i.e. on or before 30.09.2023. In this regard, Ld. AR of the assessee relied on the order passed by the Co- ordinate Bench of this Tribunal in the case of Mitcon Forum for Social Development (supra) wherein under identical facts and similar circumstances, the Tribunal allowed the appeal of the assessee by treating the application as filed within time by observing as under :- “11. In this context, we will like to refer to observations of the Hon’ble Supreme Court in the case of K P Varghase(supra), where in the Hon’ble Supreme Court observed as under : Quote, “It is a well-recognised rule of construction that a statutory provision must be so construed, if possible, that absurdity and mischief may be avoided. There are many situations where the construction suggested on behalf of the revenue would lead to a wholly unreasonable result which could never have been intended by the Legislature. Take, for example, a case where A agrees to sell his property to B for a certain price and before the sale is completed pursuant to the agreement and it is quite well known that sometimes the completion of the sale may take place even a couple of years after the date of the agreement - the market price shoots up with the result that the market price prevailing on the date of the sale exceeds the agreed price at which the property is sold by more than 15 per cent of such agreed price. This is not at all an uncommon case in an economy of rising prices and in fact we would find in a large number of cases where the sale is completed more than a year or two after the date of the agreement that the market price prevailing on the date of the sale is very much more than the price at which the property is sold under the agreement. Can it be contended with any degree of fairness and justice that in such cases, where there is clearly no understatement of consideration in respect of the transfer and the transaction is perfectly honest and bona fide and, in fact, in fulfilment of a contractual obligation, the asses-see who has sold the property should be liable to pay tax on capital gains which have not accrued or arisen to him. It would indeed be most harsh and inequitable to tax the assessee on income which has neither arisen to him nor is received by him, merely because he has carried out the contractual obligation undertaken by him. It is difficult to conceive of any rational reason why the Legislature should have thought it fit to impose liability to tax on an assessee who is bound by law to carry out his contractual obligation to sell the property at the agreed price and honestly carries out such contractual obligation. It would indeed be strange if obedience to the law should attract the levy of tax on income which has neither arisen to the assessee nor has been received by him. If we may take another illustration, let us consider a case where A sells his property to B with a stipulation that after sometime, which may be a couple of years or more, he shall resell the property to A for the same price. Could it be contended in such a case that when B transfers the property to A for the same price at which he originally purchased it, he should be liable to pay tax on the basis as if he has received the market value of the property as on the date of resale, if, in the mean-while, the market price has shot up and exceeds the agreed price by more than 15 per cent. Many other similar situations can be contemplated where it would be absurd and unreasonable to apply section 52(2) according to its strict literal construction. We must, therefore, eschew literalness in the interpretation of section 52(2) and try to arrive at an interpretation which avoids this absurdity and mischief and makes the provision rational and sensible, unless of course, our hands are tied and we cannot find any escape from the tyranny of the literal interpretation. It is now a well-settled rule of construction that where the plain literal interpretation of a statutory provision produces a manifestly absurd and unjust result which could never have been intended by the Legislature, the Court may modify the language used by the Legislature or even 'do some violence" to it, so as to achieve the obvious intention of the Legislature and produce a rational construction -” Unquote. 11.1 Thus, as observed by the Hon’ble Supreme Court, that the statutory provision shall be interpreted in such a way to avoid absurdity. In this case to avoid the absurdity as discussed by us in earlier paragraph, we are of the opinion that the words, “within six months of commencement of its activities” has to be interpreted that it applies for those trusts/institutions which have not started charitable activities at the time of obtaining Provisional registration, and not for those trust/institutions which have already started charitable activities before obtaining Provisional Registration. We derive the strength from the Speech of the Hon’ble Finance Minister and the Memorandum of Finance Bill. 2020. 11.2 Therefore, in these facts and circumstances of the case, we hold that the Assessee Trust had applied for registration within the time allowed under the Act. Hence, the application of the assessee is valid and maintainable.

In these facts and circumstances, we set-aside the order under 80G to ld.CIT(E) for denovo adjudication. The ld.CIT(E) shall give a linear opportunity to the assessee of being heard. Accordingly, grounds of appeal