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Facts
The assessee, Janardhan Swami Yogabhyasi Mandal, applied for provisional registration under section 80G of the Income Tax Act. The CIT(E) rejected the application and cancelled the provisional approval granted earlier, citing that the trust had commenced its activities in 1962, making the provisional approval under sub-clause (A) of clause (iv) of the first proviso to section 80G(5) inapplicable.
Held
The Tribunal noted that the assessee had made a technical mistake in applying for provisional registration under the wrong sub-clause. However, the CIT(E) had not raised any objections regarding the charitable nature of the trust's activities. Considering the assessee had filed a fresh application for registration, the Tribunal set aside the impugned order.
Key Issues
Whether the rejection of provisional registration under section 80G solely on technical grounds of applying under a wrong sub-clause, despite the charitable nature of activities being undisputed, is justified.
Sections Cited
80G, 12A(1)(ac)(ii), 12A(1)(ac)(iii)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, NAGPUR BENCH, NAGPUR
Before: SHRI V. DURGA RAO & SHRI K.M. ROY, ACCOUNTANT, MEMBER
Date of Hearing – 03/02/2025 Date of Order – 05/02/2025
O R D E R PER K.M. ROY, A.M.
This appeal by the assessee is emanating from the impugned order dated 17/10/2024, passed by the learned Commissioner of Income Tax (Exemption), Pune, [“learned CIT(E)”].
In its appeal, the assessee has raised following grounds:– “1. On the facts and circumstances of the law, the CIT (Exemption), Pune is refusing the exemption and registration of the trust u/s 80G. 2. The Hon'ble CIT (exemption) rejected the application for final registration u/s 80G only on the technical grounds that the application for provisional registration made by assessee under different sub-cause of the proviso to sec 80G without verification charitable activities and genuiness of the activities of trust.
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Any other ground of appeal to be raised at the time of hearing with prior approval of the Hon'ble Authority.”
The findings of the learned CIT(E), vide Para–3 to 8, as contained in the impugned order passed by the learned CIT(E), while cancelling the provisional approval granted on 13/02/2024 under section 80G(5)(iv)(A) of the Act, the same read as under:– “3. The information / details were 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. These are the basic details required to ascertain the overall nature of the activities of the assessee and are directly relevant to the present proceedings.
On verification of the details submitted by the assessee in response to the said notice and the documents submitted along with the application, various discrepancies were noticed. Another notice was then issued to the assessee on 03/10/2024 and the discrepancies were duly communicated to it as reproduced below: "(i) Schedules J & K of I&E account of any FY have not been furnished. (ii) Note on activities actually carried out, with details of date and place of each activity, details of beneficiaries, how they were identified, other relevant information has not been furnished. (iii) No supporting evidence viz bills/invoices of expenditure on each activity, photographs, cuttings etc has been furnished to prove the genuineness of activities. (iv) On verification of records and details furnished by you, it is seen that the trust/ institution has obtained provisional approval under sub-clause (A) of clause (iv) of first proviso to sub-section (5) of section 80G of the Income-tax Act, 1961. Said provision of the Act is applicable to a case, where activities of the institution or fund have not commenced. However, as noticed from the submission made, the activities in your case were commenced in 1962. Therefore, said provisions of sec. 80G(5)(iv)(A) of the Act are not applicable to your case. Please clarify with supporting documents."
The assessee was requested to show cause as to why the application should not be rejected and why the approval granted under section 80G(5) of the Income Tax Act, 1961 should not be cancelled. The assessee was also given opportunity of being heard vide the said notice. The assessee was specifically informed that in the event of failure to comply by the due date, the application shall be liable to be rejected and the approval shall also be liable to be cancelled. The compliance to the said notice was due on 10/10/2024. The notice was duly served on the assessee through e-portal and email.
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The assessee furnished reply on 10/10/2024. On the issue of obtaining provisional registration in form 10AC under item (A), the assessee submitted that the trust filed application for registration under Sub-clause (A) of clause (iv) of first proviso to sub-section (5) of section 80G. As per provisions it is not mandatory to take the registration under 80G since commencement of the activities of trust. It can be taken any time during life time whenever required. The interpretation and contention of Ld AO is not proper in this case. The trust has entered to the provisions of sec 80G after 01/04/2021 which is possible only in case Sub-clause (A) of clause (iv) of first proviso to sub-section (5) of section 80G. Also applied for the final registration under sec 80G as per new provisions after 01/04/2021. Thus, trust has complied with the provisions of the act. The non-registration of trust under sec 80G of the act does not since commencement does not make the registration invalid.
The assessee's contention is duly considered. It is, however, not found to be acceptable. As stated in its reply dt. 10/10/2024, the date of commencement of activities of the trust is 04/10/1983. The trust obtained provisional registration in form 10AC on 13/02/2024 u/s 80G(5)(iv)(A) of the Income-tax Act, 1961. Without prejudice to the above, it is seen that the trust/ institution has obtained provisional approval under sub-clause (A) of clause (iv) of first proviso to sub-section (5) of section 80G of the Income-tax Act, 1961. Said provision of the Act is applicable to a case, where activities of the institution or fund have not commenced. However, as noticed from the submission made, the activities in the assessee's case were commenced before said date. Therefore, said provisions of sec. 80G(5)(iv)(A) of the Act are not applicable in the assessee's case. 8. Considering the above, and since its activities were already commenced at the time of filing the present application, the assessee trust is not eligible for provisional approval u/s 80G(5) (iv)(A) of the Income-tax Act, 1961. Therefore, the application filed by the assessee is hereby rejected without going into the merits of the case and the provisional approval granted on 13/02/2024 under section 80G(5)(iv)(A) of the Income Tax Act, 1961 is hereby cancelled.”
Before us, the learned Authorised Representative furnished meticulous and incisive written submissions which are pertinent to reproduce herein below:– “1) The trust Janardhan Swami Yogabhyasi Mandal is charitable trust with primary objects of providing Yoga Education to general public free of cost. 2) The trust is registered under the Bombay Public Trust act 1950 on 31/07/1962 vide registration certificate no. F-385(N) the copy of registration certificate is enclosed at page no.1
4 Janardhan Swami Yogabhyasi Mandal ITA no.608/Nag./2024 3) The trust is providing diploma and degree courses in Yoga for which it is affiliated to Yashwantrao Chavan Open University Nasik. The copy of MOU is enclosed on page no. 2 to 6. 4) The trust is registered under the Income tax act section 12A on 04/10/1983 in old regime of trust provisions and on 29/03/2022 under new regime of trust provisions, the copy of registration certificates are enclosed at page no. 7 to 10. 5) The trust was also holding certificate u/s 80G of Income tax Act under old regime which was renewed on 29/09/2005 and again renewed on 21/10/2011, the copies of the certificates are enclosed on page no. 11 to 13 6) Trust is filing ITR 7 and had claimed the exemptions under sec 11 of the act. The copies of income tax returns along with the computation of income for last 3 years is enclosed on page no 14 to 22. 7) Since the trust is charitable trust had applied for the provisional registration on 06/02/2024 under sub-clause (A) of clause (iv) of first proviso to sub-sec 5 of sec 80G under Income tax Act. The copy of receipt is enclosed on page no. 23. 8) The provisional registration was granted by the Hon'ble PCIT Income tax on 13/02/2024 in form 10AC. The copy of provisional registration enclosed on page no. 24 to 25. 9) As per the provisions of clause (iii) of first proviso to sub-section 5 sec 80G, the trust immediately applied for final registration on 01/04/2024, the copy of receipt is given on page 26 to 27. 10) The Hon'ble CIT (Exemption) vide their letter dated 04/06/2024 had asked for several details/ documents and the same had been filed by the appellant on 18/06/2024. The copies of letter from hon'ble CIT (Exemption) and reply from assessee enclosed herewith on 28 to 38. 11) The Hon'ble CIT (Exemption) issued another letter dated 03/10/2024 asking for additional details which had been replied by the assessee on 10/10/2024. A copy of the letter and the reply of the appellant is enclosed herewith at page no. 39 to 44. 12) In the letter issued by the Hon'ble CIT (Exemption) issued on 03/10/2024, it had been stated in para 2(iv), that the assessee had obtained the provisional registration under sub-clause A of clause (iv) of first proviso to sub-section 5 of sec 80G. As per Hon'ble CIT the said clause to new trust hence the clarification has been sought for. 13) The assessee had replied in letter dated 10/10/2024 in para 4-5 that the trust obtained the registration under new regime after 01/04/2021 the trust has applied under sub-clause A. The sub-clause B is not applicable since the trust has availed the benefits under sec 10 and 11 of the Income tax Act.
5 Janardhan Swami Yogabhyasi Mandal ITA no.608/Nag./2024 14) Registration was rejected by Hon'ble CIT (Exemption) on 17/10/2024 only on the ground that the assesse applied for provisional registration under (iv)(A) of proviso to sec 80G(5), which should be (iv)(B) of proviso to sec 80G(5) to the interpretation of Hon'ble CIT rejection order enclosed with Form 36 page appeal memo. Submission in support of grounds of appeal. 15) With the respect to provisions of income tax act, provisional registration under clause (iv) of proviso to sec 80G(5) contains 2 sub-clauses which are substituted by finance Act 2023, w.e.f. 01/10/2023, which are reproduced under, A. not commenced at least one month prior to the commenced of the previous year relevant to the assessment year from which the approval is sought. B. where the activities commenced and no income or part thereof of the said institution or fund has been excluded from the total income on account of applicability of sub-clause (iv) or sub-clause (v) or sub-clause (vi) or sub- clause (via) of clause (23C) of section 10 or section 11 or section 12 for any previous year ending on or before the date of such application, at any time after the commencement of such activities.' 16) It is further submitted that, the Hon'ble CIT was correct in sign that the activities of the trust commenced prior to 01/04/2021. However the trust has obtained provisional registration under the new regime after 01/04/2021. The trust has obtained the registration under sub-clause A of clause (iv) of proviso to the sub-section 5 of section 80G. The sub-clause B is not applicable for the trust since the activities commenced and trust had taken benefits of sec 11 and 10 of Income tax Act in the previous assessments. 17) It is further submitted that the Hon'ble PCIT had granted the provisional registration without raising any objection on the sub-Section at time of granting the certificate under form 10AC and now at time when assesse applied for final registration, suddenly the Hon'ble CIT objected on the provisional registration certificate and cancelled the same. The action of the Hon'ble CIT (Exemption) is totally unjustified and against the natural justice. 18) The clause A or B is immaterial and only timing for application and technical in nature, this does not affect the merits of the case. The final registration under sub-clause (iii) does not speak about the clauses and just says about the activities, which means whatever the provisional registration is, if the activities are genuine and all the requirements for registration were followed the registration to be granted. 19) The Income tax appellate Tribunal Chennai Bench in matter of Sri Jeyamkonda Choleeswara Soundaranayaki Amman Kumbhabisheka Mala Kuzhu (2024), 159 502 and in the matter of TEDDY trust Vs CIT (Exemption) (ITA no. 1315/CHNY/2023) has passed the order and it has been stated that the rejection of application just on the grounds of application is filed under 6 Janardhan Swami Yogabhyasi Mandal ITA no.608/Nag./2024 wrong sub-section is just a technical error on the part of Hon'ble CIT and directed to reconsider the matter. In both the cases the appeal is allowed and remanded the back to Hon'ble Commissioner where Tribunal specifically stated that the wrong mentioning of sub-section does not a reason for cancellation of registration. A copies of the judgment of both cases are enclosed on page no. 45 to 52. 20) Assessee trust had given full submission of required documents along explanations of activities of trust and also attached numerous documents in support of activities of trust as a proof of activities. The Hon'ble CIT (Exemption) has verified all the documents and do not made any comments about the activities of the trust which are of charitable nature, it means that the Hon'ble CIT was fully satisfied about the charitable activities of the trust and simply rejected the application of the assessee on technical ground i.e. obtaining provisional registration in wrong section. The action of the Hon'ble CIT is totally incorrect and unjustified. 21) So considering the above facts it is clearly observed that the Hon'ble Commissioner do not have any other adverse objection on the activities of trust and the rejection is technical in nature and against natural justice. Prayer: In view of the above facts and judicial pronouncement it is most humbly submitted that the rejection of registration under Sub-clause A of clause (iv) of sub-section 5 of sec 80G of the I.T. Act by the Hon'ble CIT Exemption is totally incorrect, illegal and bad in law. The assessee kindly request your Lordship to cancel order of the Hon'ble CIT Exemption and grant a registration u/s. 80G of I.T. Act.”
The case laws relied upon by the learned Authorised Representative have been perused. Placing reliance on settled legal proposition and the preponderant judicial view, it is noted that the assessee has simpliciter made a technical mistake in applying u/s.12A(1)(ac)(ii) instead of 12A(1)(ac) (iii) of the Act. It was informed to the Bench by the learned Authorised Representative for the assessee that even now the assessee has filed fresh Form no.10AB, seeking registration under section 12A(1)(ac)(iii) of the Act, which can also be considered. In our view, the same purpose will be served by adjudicating the same application. Hence, we set aside the impugned order passed by the learned CIT(E) and remand the matter back to his file for 7 Janardhan Swami Yogabhyasi Mandal ITA no.608/Nag./2024 fresh adjudication, either considering the subsequent application of the assessee under section 12A(1)(ac)(iii) of the Act or he can call a fresh application from the assessee. In term of the above, matter is restored back to the file of the learned CIT(E) for denovo adjudication.
In the result, appeal by the assessee stands allowed for statistical purposes. Order pronounced in the open Court on 05/02/2025