AKSHAT EDUCATION AND CHARITABLE TRUST,ANAND vs. THE CIT(EXEMPTION), AHMEDABAD

The assessee has filed an application for condonation of delay along with an affidavit of one of its trustees, Shri Bhaktiswaroop Dharmaprasad, explaining the reasons for the delay. It has been submitted therein that the order of the Ld. CIT(E) dated 14.08.2024 was communicated to the registered email ID of the trust, namely rajendra_rabari@yahoo.com, which belonged to one of the trustees, Shri Rajendra Rabari. Since Shri Rabari had resigned from the Trust with effect from 05.12.2023, he did not inform the Trust about the passing of the impugned order. The other general-purpose email ID of the Trust, adharshilavidhyalaya@gmail.com, being accessed by 6. We have considered the rival submissions. The Hon'ble Supreme Court in the case of Collector, Land Acquisition v. Mst. Katiji [(1987) 167 ITR 471 (SC)] has held that a liberal approach is to be adopted in condoning delay, so as to advance substantial justice where no negligence, inaction or lack of bona fides can be attributed to the applicant. Keeping in view the reasons explained in the condonation petition and supported by affidavit, and also the fact that the delay was occasioned due to circumstances beyond the control of the assessee, we are satisfied that the assessee was prevented by sufficient cause from filing the appeal within the prescribed time. Accordingly, the delay in filing the appeal is condoned. The appeal is admitted for adjudication on merits. Facts of the Case

The appellant is a public charitable trust registered under the Bombay Public Trusts Act, 1950, vide Registration No. E/3082/Anand dated 26.09.2013, and is engaged in running various educational institutions under the name Adharshila Vidhyalaya. On 06.02.2024, the appellant filed an application in Form No. 10AB before the Ld. CIT(E), Ahmedabad, seeking approval under section 80G(5) of the Act. The Ld. CIT(E) issued statutory notices dated 11.06.2024 and 01.07.2024, requiring the assessee to furnish details/documents in support of its application. The assessee, vide regularly. The Ld. CIT(E) specifically examined the Income-tax Returns (ITRs) of the assessee for different years and recorded that: - For A.Y. 2019-20, the assessee filed ITR-7 and claimed exemption under section 11 to the tune of Rs.2,53,92,278. - For A.Y. 2020-21, the assessee filed ITR-7 and claimed exemption under section 11 to the tune of Rs.1,99,48,893. - For A.Y. 2023-24, the assessee filed ITR-7 and claimed exemption under section 10(23C)(via) amounting to Rs.2,26,63,350. 10. From the above, the Ld. CIT(E) held that the assessee had already claimed exemption/exclusion of income under section 11 and section 10(23C) in earlier years. Consequently, it was observed that the assessee's Form 10AB was held to be non-maintainable.

Accordingly, the Ld. CIT(E) rejected the assessee's application for approval under section 80G(5), treating it as not maintainable.

Aggrieved by the order of CIT(E), the assessee is in appeal before us raising following grounds of appeal:

It was contended that the appellant had no choice but to apply under sub-clause (B) of clause (iv) of the first proviso to section 80G(5), since clauses (i) to (iii) of the proviso were not applicable in its case. Attention was invited to the amendments made by the Finance Act, 2023 effective from 01.10.2023, which specifically recognised that trusts which had already commenced their activities could seek approval under clause (iv)(B). The AR further contended that the Ld. CIT(E) mi irected himself in law by rejecting the application merely on the ground that the assessee had already claimed exemption under section 11 and section 10(23C) in prior years. It was argued that such a restrictive interpretation would render clause (iv)(B) redundant, because any trust which had commenced activities and claimed exemption in earlier years would forever be debarred from obtaining 80G approval, which was never the intention of the Legislature. In support of this proposition, reliance was placed on CBDT Circular No. 1/2024 dated 23.01.2024, which explained the legislative intent of the Finance Act, 2023 amendments. The AR referred in particular to para 15.5.3(f) of the circular, which clarified that trusts and institutions under the 80G regime, which had already commenced their activities, shall make an application for regular approval under sub-clause (B) of clause (iv) without being disqualified on condition of “not having claimed exemption” with effect from 01.10.2024. 16. The AR submitted that even if the assessee's application is not treated as maintainable under sub-clause (B) of clause (iv) of the first proviso to section 80G(5), the same may at least be treated as maintainable under clause (iii) of the first proviso. It was urged that the CIT(E) may be directed to examine the application on merits under that clause instead of rejecting it as non-maintainable.

In support, reliance was placed on the decision of the Kolkata Bench of the Tribunal in West Bengal Welfare Society v. CIT(E) [ITA Nos.730 & 731/Kol/2023], where the Tribunal held that even if activities had commenced prior to provisional approval, the assessee could still apply for final registration under section 80G(5) within the statutory timeline. The Co- ordinate Bench in that case had restored the matter to the file of CIT(E) to decide afresh on merits. The appeal of the Revenue against that decision was dismissed by the Hon'ble Calcutta High Court.

In conclusion, the AR prayed that the impugned order passed by the narrow interpretation adopted by the Ld. CIT(E) in treating the assessee's application under section 80G(5)(iv)(B) as non-maintainable on the ground that the assessee had claimed exemption of its income under section 11/10(23C) in earlier assessment years.

It is not in dispute that the assessee is a registered public charitable trust under the Bombay Public Trusts Act, 1950, engaged in imparting education, and that it had been granted provisional approval under section 80G(5) for the period from 22.06.2022 to A.Y. 2025-26. It is also undisputed that the assessee had duly filed application in Form No. 10AB dated 06.02.2024 seeking final approval as mandated under the law. The assessee has complied with notices issued and has placed on record audited accounts, activity reports and other documents to demonstrate compliance with statutory requirements.

The Ld. CIT(E), however, rejected the application relying strictly on the wording of section 80G(5)(iv)(B), holding that since the assessee had already claimed exemption under section 11/10(23C), the application was outside the scope of maintainability. In our considered view, this approach is unduly restrictive and does not give effect to the true intent of the legislation.

The Finance Act, 2023 substituted clause (iv) of the first proviso to section 80G(5) with effect from 01.10.2023, and CBDT Circular No. 1/2024 sub-clause (B) of clause (iv). Importantly, para 15.5.3(f) of the Circular makes it explicit that such institutions are to be examined on merits for grant of approval and that the fact of having claimed exemption in earlier years cannot by itself operate as a bar. Further, the Memorandum explaining the provisions of the Finance Bill, 2024 also confirms that the restrictive condition of “not having claimed exemption” has been dropped with effect from 01.10.2024, thereby reinforcing the intention that charitable institutions already in operation must not be denied approval on hyper- technical grounds. This amendment is remedial and clarificatory in nature, intended to remove an anomaly, and therefore must be read as having retrospective effect. In our opinion when a provision is amended to cure a defect or to remove hardship in implementation, such amendment is declaratory in nature and has retrospective applicability. Viewed in this light, the rejection of the assessee's application as “non-maintainable" was misconceived. The amendment brought by Finance Act, 2024 only clarifies what was implicit even earlier, namely, that claiming exemption in prior years does not debar a trust from seeking approval under section 80G(5). The legislative intent is to encourage donations to genuine charitable institutions, and hyper-technical construction must give way to purposive interpretation.

We also take note of the decision of the Coordinate Bench in West Bengal Welfare Society v. CIT(E) [ITA Nos.730 & 731/Kol/2023], where in similar circumstances the Co-ordinate Bench held that rejection of the application as non-maintainable was misconceived, and directed the matter to be restored to the file of the CIT(E) for adjudication on merits. The said view has been affirmed by the Hon'ble Calcutta High Court. The ratio of that decision squarely applies to the facts of the present case.

Accordingly, we hold that the impugned order passed by the Ld. CIT(E) is not sustainable in law and is liable to be quashed. We direct that the application for final approval under section 80G(5) filed by the assessee shall be treated as maintainable, and the matter is restored to the file of the Ld. CIT(E) to examine the application afresh on merits, in accordance with law, after affording due opportunity of hearing to the assessee. The impugned order of the Ld. CIT(E) is quashed,

In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced in the Open Court on 19thAugust, 2025 at Ahmedabad. (SUCHITRA KAMBLE) JUDICIAL MEMBER (MAKARAND V.MAHADEOKAR) ACCOUNTANT MEMBER () Ahmedabad, Dated 19/08/2025 Manish, Sr. PS आदेश की प्रतिलिपि अग्रेषित/