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Facts
The assessee, a registered charitable trust, applied for approval under Section 80G(5)(iv) of the Income Tax Act, 1961, by filing Form 10AB. The trust commenced its activities in 1993 and had previously claimed exemptions under Sections 11 or 12. The CIT (Exemption) rejected the application, deeming it non-maintainable because the trust had already commenced activities and claimed exemptions, thus not falling under the conditions of Section 80G(5)(iv).
Held
The Tribunal found that the assessee made a bona fide error in selecting sub-clause (iv) instead of sub-clause (ii) of Section 80G(5). It directed the CIT (Exemption) to reconsider the application under the correct provision, Section 80G(5)(ii), and grant approval if the assessee is otherwise eligible.
Key Issues
Whether the CIT(Exemption) was justified in rejecting an application for 80G approval due to the assessee inadvertently selecting the wrong sub-clause in Form 10AB, and if the matter should be remitted for reconsideration under the correct provision.
Sections Cited
80G, 80G(5), 80G(5)(ii), 80G(5)(iv), 80G(5)(vi), 12A, 12AA, 10(23C), 11, 12
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Income Tax Appellate Tribunal, “B” BENCH, AHMEDABAD
Before: SHRI SANJAY GARG & SHRI NARENDRA PRASAD SINHA
This appeal is filed by the assessee against the order dated 20.08.2024 passed by the Commissioner of Income Tax (Exemption) Ahmedabad, (in short ‘the CIT(Exemption)’), rejecting the application for approval u/s. 80G(5)(iv) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’).
There was a delay of 109 days in filing of this appeal. The assessee has filed an affidavit explaining the reason of delay. It has been submitted that the assessee and its trustees were not [Senior Citizen Council Gandhinagar vs. CIT(E)] - 2 – conversant with Income-tax matters and had never faced any Income-tax litigation in the past. The assessee was unable to operate or login to the Income-tax portal. In the month of January, 2025, the assessee had come to know about rejection of registration u/s 12A/approval u/s 80G5(iv) of another trust through some other trustees of similar trust. On getting this information the matter was verified about pending approval under section 80G5(iv) the Act of the assessee and it was learnt that the said approval was already rejected. Thereafter, the matter was taken up with an advocate and on his advice the present appeal was filed and, in the process, there was delay of 109 days. The assessee has submitted that the delay in filing of the present appeal was not intentional and that there was no mala-fide intention on the part of the assessee. The ld. CIT-DR, on the other hand, submitted that the condonation of delay may be decided on its merit. Considering the explanation of the assessee, the delay in filing the present appeal is condoned.
The brief facts of the case are that the assessee is a registered charitable trust and had made an application for approval u/s 80G(5)(iv)(B) of the Act by filing Form No. 10AB electronically on 26.02.2024. From the application it was evident that the assessee trust had commenced its activities on 17.02.1993. The ld. CIT(Exemption) observed that in order to avail the benefit of section 80G(5)(iv)(B) of the Act, it was necessary that the activities of the institution or funds shall be commenced and no income or part thereof has been excluded from the total income on account of applicability of section 10(23C) or section 11 or section 12 of the Act, for any previous year ending on or before the date of such application, at any [Senior Citizen Council Gandhinagar vs. CIT(E)] - 3 – time after the commencement of the activities of the trust. Therefore, the ld. CIT(Exemption) had made inquiry from the assessee in this regard vide notice dated 11.06.2024. In reply the assessee had informed that in accordance with approval granted under section 12AA of the Act, the trust has been claiming exemption under section 11 or 12 of the Act in the past years. Since the assessee admitted of having claimed exemption/excluded its income, the ld. CIT(Exemption) found that the assessee was not eligible for approval under section 80G(5)(iv)(B) of the Act. Therefore, the application of the assessee trust was rejected as non-maintainable.
Aggrieved with the order of the ld. CIT(Exemption) the assessee has filed the present appeal. The following grounds have been taken in this appeal:
1. That on facts, and in law, the learned CIT(Exemption) has grievously erred in rejecting the application for approval u/s 80G(5)(iv)(B) of the Act as non- maintainable.
2. That on facts and in law, the appellant made a bona fide error in selecting sub- clause (iv) instead of sub-clause (ii) of section 80G(5) of the Act.
3. That on facts, and in law, learned CIT(Exemption) be directed to consider the application under the correct provisions of section 80G(5)(ii) of the Act, and decide on merits.
4. The appellant craves liberty to add, altar, amend any ground of appeal.
5. Sri Mehul K Patel, ld. AR of the assessee submitted that ld. CIT(Exemption) was not correct in rejecting the application for approval under section 80G(5)(iv)(B) of the Act as non-maintainable. He submitted that the assessee, while submitting the application, had made a bona fide error in selecting the sub-clause (iv) instead of sub-clause (ii) of the proviso to section 80G(5) of the Act. He, therefore, requested that the matter may be [Senior Citizen Council Gandhinagar vs. CIT(E)] - 4 – set aside to the file of ld. CIT(Exemption) with a direction to consider the application of the assessee under the correct provision of section 80G(5)(ii) of the Act and decide the same on merits. The ld. AR relied on the decision of the Mumbai Bench of the Tribunal in the case of Rotary Charity Trust vs CIT(E) (2024) in dated 09.01.2025 in this regard and prayed for a similar direction.
Sh. R P Rastogi, the ld. CIT-DR on the other hand submitted that the ld. CIT(E) had rejected the application based on the submission made by the assessee in Form 10AB stating that the application is made under section 80G(5)(iv)(B). The ld. DR further submitted that the matter can be remitted back to the CIT(E) to consider the application afresh based on the claim of the assessee that wrong section had been inadvertently mentioned in the Form 10AB.
We have heard the parties and perused the material on record. Before we proceed to examine the facts in assessee's case, it is necessary to first look at the relevant provisions of first proviso to sub-section (5) of section 80G which read as under - 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; 89[or] 90[(iv) 91[***] where activities of the institution or fund have— [Senior Citizen Council Gandhinagar vs. CIT(E)] - 5 –
(A) not commenced, at least one month prior to the commencement of the previous year relevant to the assessment year from which the said approval is sought; (B) commenced 91a[***] at any time after the commencement of such activities:]
The application to be made to the Principal Commissioner or Commissioner for approval of the fund / institution u/s 80G(5)(vi) of the Act is guided by the first proviso to sub-section (5) of section 80G of the Act. Under clause (iv) of the said proviso, the application is required to be made in a case where the activities of the institution or fund has not commenced, at least one month prior to the commencement of the previous year relevant to the assessment year from which the said approval is sought or where it has commenced at any time after the commencement of the previous year. In the present case the assessee had filed its application on 26.02.2024 but its activities had commenced long back on 17.02.1993. Therefore, the clause (iv) of first proviso to sub-section (5) of section 80G of the Act was not applicable in its case. The assessee’s case was covered in clause (ii) of first proviso to sub-section (5) of section 80G of the Act, as it was already allowed approval in the past which was going to expire. Therefore, the correct section code under which the assessee ought to have selected is clause (ii) of first proviso to subsection (5) of section 80G. The ld. CIT(E) has treated the application as one filed under sub-clause (B) of clause (iv) of first proviso to subsection (5) of section 80G and accordingly rejected the application for not fulfilling the stipulated conditions prescribed for filing application for approval in Form 10AB.
In view of above facts, we are of the considered view that there is merit in claim of the ld. AR that the assessee had selected the wrong section code inadvertently while filing the application for approval in Form 10AB. In view of these discussions and respectfully following the decision of the [Senior Citizen Council Gandhinagar vs. CIT(E)] - 6 – Mumbai Bench in the case of Rotary Charity Trust (supra), we remit the issue back to the file of ld. CIT(E), with a direction to consider the application of the assessee as under Clause (ii) to first proviso to section 80G(5) of the Act, and thereafter grant approval accordingly, if assessee is otherwise found eligible.
In the result, the appeal of the assessee is allowed for statistical purpose.
This Order pronounced on 21/05/2025
Sd/- Sd/- (SANJAY GARG) (NARENDRA PRASAD SINHA) JUDICIAL MEMBER ACCOUNTANT MEMBER Ahmedabad; Dated 21/05/2025 आदेश की �ितिलिप अ�ेिषत/Copy of the Order forwarded to : अपीलाथ� / The Appellant 1. ��थ� / The Respondent. 2. संबंिधत आयकर आयु� / Concerned CIT 3. 4. आयकर आयु�(अपील) / The CIT(A)- 5. िवभागीय �ितिनिध, आयकर अपीलीय अिधकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाड% फाईल / Guard file. आदेशानुसार/ BY ORDER,