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Facts
The appellant, South Asia Foundation India, a society registered since 2002 with 12A registration, applied for provisional 80G(5)(iv)(A) registration, which was granted. Subsequently, it applied for regular 80G(5)(iii) approval via Form 10AB on 14.09.2023. The CIT(E) rejected this application, deeming it non-maintainable because it was filed more than 6 months after the commencement of activities, which predated Financial Year 2019-20.
Held
The Tribunal found merit in the appellant's argument for a harmonious interpretation of Section 80G(5), especially for long-established charitable organizations, noting that the CBDT had issued Circular No. 7/2024 extending due dates for Form 10A and 10AB. The Tribunal concluded that the CIT(E) failed to consider all facts and the welfare objective of Section 80G. Therefore, the application filed in Form No. 10AB should be treated as timely, and the matter was remitted back to the CIT(E) for a fresh decision on its merits.
Key Issues
Whether the application for regular 80G approval filed by a long-established charitable institution was maintainable despite being filed beyond 6 months from the commencement of activities, and the correct interpretation of the amended time limits under Section 80G(5) for existing entities.
Sections Cited
Section 80G, Section 80G(5)(iv)(A), Section 80G(5)(iii), Section 12A
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Income Tax Appellate Tribunal, DELHI BENCH ‘G’: NEW DELHI
ORDER
PER AVDHESH KUMAR MISHRA, AM
This appeal preferred by the assessee is against the order dated 26.03.2024 of the Commissioner of Income Tax (Exemptions), New Delhi [hereinafter, the ‘CIT(E)’] rejecting the request for regular approval under section 80G of the Income Tax Act, 1961 [hereinafter, the ‘Act’].
The relevant facts giving rise to this appeal are that the appellant/assessee is a registered society incorporated on 02.04.2002. The appellant/assessee had registration under section 12A of the Act. The appellant/assessee applied for the provisional registration under section 80G(5)(iv)(A) of the Act, which was granted on 09.02.2022. Thereafter, it applied for regular approval under section 80G(5)(iii) of 1 the Act in the prescribed Form No. 10AB of the Income Tax Rules on 14.09.2023. The CIT(E) rejected the said application as non- maintainable on the reasoning that the said application was filed after 6 months from the commencement of activities (which was prior to the Financial Year 2019-20).
Aggrieved, the appellant/assessee, vide present appeal, challenged the rejection of approval under section 80G(5)(iii) of the Act.
The Ld. AR argued that there were practical difficulties and anomalies in the provisions relating to approval under section 80G(5)(iii) of the Act. The provisions relating to approval under section 80G(5)(iii) of the Act were prejudice to the trusts and societies engaged in charitable activities since long. Firstly, they had to seek approval for provisional registration under section 80G(5)(iii) of the Act and thereafter for regular registration. How a trust and or society, engaged in charitable activities over the years, could apply for regular registration under section 80G(5)(iii) of the Act after 6 months from the date of commencement of the charitable activities when they had to seek both provisional registration and thereafter regular registration under section 80G(5)(iii) of the Act. He further, submitted that how the appellant/assessee, doing charitable activities since 2002, could apply for registration under section 80G(5)(iii) of the Act within 6 months of commencement of charitable activities; i.e. in the Financial Year 2023- 24, in accordance with new provisions of the section 80G(5)(iii) of the Act. 4.1 In support of his arguments, the Ld. AR placed reliance on the decision of the Hon’ble Supreme Court in the case of K. P. Varghese 131 ITR 597 where the Hon’ble Supreme Court had observed that the statutory provisions should be interpreted in such a way to avoid absurdity. Therefore, he prayed to treat the application filed under Form No. 10AB of the Income Tax Rules within the prescribed time limit. Further, it was argued that strict interpretation of new provisions of the section 80G(5)(iii) of the Act would result absurdity as expecting the appellant/assessee to file regular approval under section 80G(5)(iii) of the Act within 6 months from the commencement of the activities in 2002. According to the Ld. AR, the true interpretation of the amendment brought into the statute in 2021 was that the Trust and Institution incorporated and commenced activities prior to 2021 had to apply first for provisional registration under section 12A of the Act and approval under section 80G(5)(iii) of the Act thereafter within 6 months of the provisional registration/approval.
4.2 The Ld. AR placed emphasis on the memorandum to Finance Act, 2023 and reliance on the decisions of the Coordinate bench of Delhi in the case of Adarsh Paramedical Welfare Association; and also the decisions of ITAT, Pune Bench in the cases of Shri Kailash Math Trust vs. CIT(E), ITA No. 1177/Pun/2023 and T B Lulla Charitable Foundation vs. CIT(E), Pune ITA No. 1220/Pun/2023. The Ld. AR drew our attention to the Circular No. 7/2024 dated 25th April, 2024, by which the CBDT had extended the due date for filing from 10A and 10AB under the Act till 30.06.2024.
The Ld. CIT-DR, emphasizing on the order of the Ld. CIT(E), prayed dismissal of the appeal.
We have heard both the parties and perused the material available on the record. We find force in the argument of the Ld. AR that harmonious interpretation of the section 80G(5) of the Act in this case which is engaged in the charitable activities since long cannot be done in the above mentioned facts and circumstances. The CBDT has come out with Circulars from time to time to ease out difficulties/hardships of trusts/societies and to overcome anomalies of the section 80G(5) of the Act. The CBDT, vide Circular No. 7/2024 dated 25th April, 2024, has extended the due date for filing from 10A and 10AB under the Act till 30.06.2024.
In view of the above and following the reasoning of above- mentioned decisions, we are of the considered opinion that the Ld. CIT(E) has not dealt the issue keeping in view the facts in entirety and the objective of the section 80G of the Act being welfare legislations rather than penal in nature. Therefore, considering the larger interest of justice, objectives of the provisions of section 80G of the Act and intent of the CBDT CircularNo.7/2024, we are of considered view that the application filed under Form No. 10AB of the Income Tax Rules in this case has to be treated to have been filed within the prescribed time. Thus, we are remitting the matter back to the Ld. CIT(E) for de novo consideration treating this application as a valid application filed in time and decide the issue of approval under section 80G of the Act on merit.
In the result the appeal is allowed for statistical purposes. Order pronounced in open Court on 27th November, 2024.