SANAND NYAS,INDORE vs. COMMISSIONER OF INCOME TAX, EXEMPTION, BHOPAL

(iv) Thereafter, the assessee filed application dated 25.09.2024 [Form No.

10AB] under clause (iii) of first proviso to sub-section (5) of section 80G for conversion of provisional approval u/s 80G into final approval but the Ld. CIT(E) rejected assessee’s application vide Order dated

28.03.2025. The assessee is aggrieved by this Order dated 28.03.2025 of Ld. CIT(E) [“impugned order”] and has come in present appeal before us.

(i) There is no ‘dissolution clause’ incorporated in the deed of assessee- trust and also nothing is mentioned/clarified about the transfer/ utilization of funds in case of dissolution of assessee-trust.

(ii) The provisional approval u/s 80G under new regime was granted to assessee vide Order dated 20.01.2023 and the assessee was required to file application for conversion into final approval [Form No. 10AB] in terms of provision of clause (iii) of first proviso to section 80G(5), before six months prior to expiry of the provisional approval or within six months from the commencement of activities, whichever is earlier.

Since the assessee’s activity was already started since long period of time, the assessee should have applied within 6 months of the commencement of activities but the same is not done. The Ld. CIT(E) has further observed that although the CBDT has extended date for filing of Form No. 10AB through its circulars but the extended date was also 30.06.2024 whereas the assessee has filed Form No. 10AB

Page 3 of 19 on 25.09.2024 after expiry of extended date. Therefore, the Form No.

10AB filed by assessee was time-barred and not valid.

5. There are two objections raised by Ld. CIT(E) in rejecting assessee’s applications as discussed above. On a careful consideration, we give our adjudication as under:

5.1 The first objection of Ld. CIT(E) is that there is no ‘dissolution clause’ incorporated in the deed of assessee-trust and also nothing is mentioned/clarified about transfer/utilization of funds in case of dissolution of assessee-trust. In this regard, Ld. AR narrated certain additional facts. He submitted that assessee passed following resolution in the meeting of trustees on 27.03.2025:

Page 5 of 19 However, due to paucity of time, the assessee could not furnish above resolution to CIT(E) and the CIT(E) passed impugned order on 28.03.2025 rejecting assessee’s application. But, thereafter, the assessee filed a fresh application dated 29.03.2025 in Form No. 10AB to CIT(E) seeking final approval under clause (iv)(B) of first proviso to sub-section (5) of section 80G and while dealing such fresh application of assessee, the CIT(E) raised following specific query to assessee with respect to dissolution clause:

Page 7 of 19 In response to this query, the assessee filed following reply-letter dated 29.07.2025 accompanied by abovementioned resolution dated 27.03.2025:

Page 8 of 19 And after considering reply of assessee, the CIT(E) granted final approval to assessee u/s 80G(5) vide Order dated 18.08.2025 for AY 2025-26 to 2029- 30; the copy of Order is scanned and re-produced below for an immediate reference:

Page 10 of 19 Thus, from above facts/documents on record as shown by Ld. AR, we find that the assessee has already passed resolution dated 27.03.2025 for dealing the situation of dissolution and utilization of assets in the event of dissolution. Further, the said resolution has already been accepted by CIT(E) and the CIT(E) has granted final approval u/s 80G to assessee in the proceeding of fresh application filed by assessee as discussed above. Since the very same resolution dated 27.03.2025 remained un-considered by CIT(E) while passing impugned order dated 28.03.2025 due to non- furnishing by assessee, we remand this issue to the file of Ld. CIT(E). We direct the assessee to file the said resolution to CIT(E) and also direct the Page 11 of 19 CIT(E) to take the same on record and dissolve/close his objection in the same manner as done by him while dealing assessee’s fresh application.

5.2 The second objection of Ld. CIT(E) is regarding time-limit. According to Ld. CIT(E), the provisional approval u/s 80G under new regime was granted to assessee vide Order dated 20.01.2023 and the assessee was required to file application for conversion into final approval [Form No. 10AB] in terms of provision of clause (iii) of first proviso to section 80G(5), before six months prior to expiry of the provisional approval or within six months from the commencement of activities, whichever is earlier. Since the assessee’s activity was already started since long period of time, the assessee should have applied within 6 months of the commencement of activities but the same is not done. The Ld. CIT(E) has further observed that although the CBDT has extended date for filing of Form No. 10AB through its circulars but the extended date was also 30.06.2024 whereas the assessee has filed Form No. 10AB on 25.09.2024 after expiry of extended date. Therefore, the Form No. 10AB filed by assessee was time-barred and not valid. With these observations, the CIT(E) has considered the Form No. 10AB filed by assessee as time-barred. This issue of time limitation has already been dealt by ITAT, Kolkata in North Eastern Social Research Centre Vs. CIT(Exemption), order dated 09.07.2024, the relevant portion of ITAT’s order is re-produced below:

“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:- XXX (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; XXX 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) 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 Page 13 of 19 (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" XXX 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.

4. 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 (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

Page 14 of 19 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 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: 6. 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 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.

Page 15 of 19 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."

5. It is to be further noted here that the Ld. CIT (Exemption) firstly mis- construed 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. 5.3 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.

6. In view of the above discussion, it is held that after grant of provisional approval, the application cannot be rejected on the ground that the institution had already commenced its activities even prior to grant of provisional registration. Under such circumstances, the date of commencement of activity will be counted when an activity is undertaken after the grant of provisional registration either under Clause (i) or Clause (iv) to First Proviso to section 80G(5) of the Act.

7. In the case in hand, the assessee admittedly has applied for final registration after grant of provisional registration under Clause (iv) to First Proviso to section 80G(5) of the Act and therefore, the application filed by the assessee is within limitation period. The issue is otherwise squarely covered by the decision of the Coordinate Bench of the Tribunal in the case of Vivekananda Mission Asram vs. CIT (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.”

6. In view of above discussions and for the reasons stated therein, we remand this matter back to the file of Ld. CIT(E) for consideration afresh and pass necessary order as expeditiously as possible.

7. Before parting, we may mention here that we are not expressing any view on the sustainability or otherwise of the final approval already granted by CIT(E) to assessee vide aforesaid Order dated 18.08.2025 for AY 2025-26 to 2029-30 under clause (iv)(B) of first proviso to sub-section (5) of section 80G since the same is not before us. It is for the Income-tax Department/ assessee to look into the same and take/not to take any action if warranted/not warranted.

Order pronounced in open court on 28/11/2025