SUNSHINE EDUCATIONAL TRUST,CUDDALORE vs. ITO,EXEMPTIONS, CHENNAI

आदेश / O R D E R

PER ABY T. VARKEY, JM: This is an appeal preferred by the assessee Trust against the order of the Learned Commissioner of Income Tax (Exemptions), (hereinafter in short “in short "the Ld.CIT(E)”), Chennai, dated 30.04.2023 against the rejection of the application filed on 03.10.2022 for registration u/s.80G of the Income Tax Act, 1961 (hereinafter in short ‘the Act’).

delay, drew our attention to Affidavit filed by the Managing Trustee of the assessee who has stated that assessee was established on 19.11.2018 as Charitable Trust to establish & manage Educational Institutions without profit motive; and to promote & advance cause of education in India and to provide free books to poor & needy students through the Trust which is running “Maharishi Vidhya Mandir” School in Neyveli; and has commenced activities from 29.01.2020. According to him, assessee filed an application for provisional registration u/s.12A(1)(ac)(vi) of the Act in Form 10A on 28.03.2022, which was granted in Form 10AC on 05.04.2022 for AY 2022-23 to AY 2024-25; and thereafter, the assessee had filed an application for continuation of registration on 30.09.2022 which was granted on 19.03.2022 for AYs 2022-23 to 2026-27. Likewise, according to assessee, an application for provisional approval u/s.80G(5) first proviso clause (iv) in Form 10A was filed on 28.03.2022; which was granted in Form 10AC on 05.04.2022 from 05.04.2022 to 2024-25. And an application for continuation of the approval u/s.80G(5) under first proviso clause (iii) in Form 10AB was filed on 03.10.2022. Pursuant thereto, the Ld CIT(E) on 13.03.2023, sought detailed note on the activities actually carried out by the assessee, which was furnished on 22.03.2023. Since the CIT(E) did not receive any response, he went ahead and rejected the application as non-maintainable by an order in Form 10AD dated 30.04.2023 on a different reason, stating that since the (AY -) Sunshine Educational Trust :: 3 ::

Applicant had commenced the activities on 29.01.2020, the application in Form 10AB made on 03.10.2022 was belatedly filed vide impugned order dated 30.04.2023. According to the Ld.AR, even though, the impugned order was passed by the Ld.CIT(E) on 30.04.2023, however, the assessee came to know about it only on 21.03.2024; and immediately thereafter filed the appeal before the Tribunal. Thus, there was a delay of 266 days and the delay caused was not deliberate; and the Ld.AR stated that assessee would not gain in not filing the appeal on time. And since, the assessee is a charitable organization, assessee prayed that delay may be condoned. Having gone through the contents of the Affidavit filed by the Managing Trustee, and taking note of the reasons stated therein, we find that there was reasonable cause for delay in filing the appeal and therefore, we condone it and proceed to hear the appeal on merits.

3. Coming to the grounds of appeal preferred against the rejection of registration u/s.80G of the Act, we note that the assessee Trust filed an application in Form No.10AB on 03.10.2022 seeking regular approval under clause (iii) of first proviso to sub-section (5) of Sec.80G of the Act.

The Ld.CIT(E) while processing the application noticed that the date of creation of the Trust was on 19.11.2018 and that it had been granted provisional approval in Form No.10AC on 05.04.2022 u/s.80G(5)(iv) of the Act, for period commencing from 05.04.2022 to AY 2024-25. The Ld.CIT(E) rejected the ibid application filed on 03.10.2022 by taking note (AY -) Sunshine Educational Trust :: 4 :: of the fact that the assessee had commenced its activities on 29.01.2020; and according to him, the application has been preferred by assessee not in accordance to statute, i.e, as per first proviso to sub-section (5) of Sec.80G of the Act, and more particularly, sub-clause (iii) [reproduced 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) ….. (ii) ….. (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) ….

4. The Ld.CIT(E) noted that the assessee was provisionally approved u/s. 80G(5)(iv) of the Act and therefore, the assessee was required to file application in Form No.10AB u/s 80G(5) (ii) of the Act at least six months prior to expiry of period of the provisional approval or within six months of commencement of its activities, whichever is earlier. According to him, the time line prescribed therein is mandatory and the Commissioner of Income Tax had no power to condone the delay in filing application Form No. 10AB. According to him, in the present case, since, the date of commencement of its activities is 29.01.2020 and date of filing application in Form 10AB was 03.10.2022, which is after expiry of six months of commencement of its activities, therefore, he held that the (AY -) Sunshine Educational Trust :: 5 ::

assessee’s application filed on 03.10.2022 in Form No.10AB u/s.80G(5)(iii) of the Act, was non-maintainable and he rejected it.

5. Aggrieved, the assessee is in appeal before this Tribunal.

Sl.No. CBDT Circular Extension Up to 1 No. 12 of 2021 dated 25-06-2021 31-08-2021 2 No. 16 of 2021 dated 29-08-2021 31-03-2022 3 No. 08 of 2022 dated 31-03-2022 30-09-2022

7. Further, the Ld.CIT(E) noted that the CBDT thereafter had issued Circular No.6 of 2023 dated 24.05.2023, extending the due date for filing the applications in Form 10AB from 30.09.2022 to 30.09.2023 only in (AY -) Sunshine Educational Trust :: 6 ::

respect of trusts/institutions approved u/s.10(23C) and registered u/s.12AB of the Act. However, since, the said Circular did not mention any such extension of due date for filing Form No.10AB to get approval u/s.80G of the Act, he rejected the application filed on 19.04.2023 as non-maintainable.

7.8 After hearing the arguments of ld. counsel for the assessee and ld. CIT-DR as noted above, we find from the facts that the timeline prescribed for filing Form No.10AB for registration u/s.12A of the Act in the case of assessee trust has been extended up-to 30.09.2023 after considering the genuine hardship faced by charitable institutions vide various CBDT circulars and finally, vide Circular - 29 - 875 & 1136/Chny/2023 No.6/2023 dated 24.05.2023. Similarly, the timeline prescribed for filing Form No.10A for recognition u/s.80G of the Act was also extended up-to 30.09.2023 by the same circular for trusts filing registration under clause (i) to first proviso to section 80G(5) of the Act. But the above extension was not extended beyond 30.09.2022, unlike other forms which were extended up to 30.09.2023 to the disputed forms namely Form No.10AB for renewal of recognition u/s.80G(5) of the Act under clause (iii) of the first proviso to section 80G(5) of the Act. Once, the CBDT has extended the timeline for filing Form No.10AB for recognition u/s.12A of the Act and also for filing Form No.10A for recognition u/s.80G of the Act extended up to 30.09.2023 for trusts filing registration under clause (i) of first proviso to section 80G(5) of the Act, we find no difference in continuing hardship as recognized by CBDT even in filing Form No.10AB for renewal of recognition u/s.80G of the Act under clause (AY -) Sunshine Educational Trust :: 8 ::

(iii) of first proviso to section 80G(5) of the Act. In our view, this being a genuine hardship case, which is recognized by Revenue or CBDT by issuing a general circular, we are of the view that this specific provision of clause (iii) to first proviso to section 80G(5) cannot be excluded and or it has not been the intention of the CBDT while issuing the circular. There cannot be a distinction within the same provision without bringing out any exception and even this provision is for the benefit of the donors who are donating money to the charitable trusts for claiming exemption in their returns of income. In our view, we agree with the argument of ld. counsel for the assessee that the timeline prescribed under clause (iii) of first proviso to section 80G(5) of the Act should be treated as directory and not mandatory especially considering the transitional nature of the amendment as brought out by the taxation of other laws (relaxation and amendment of certain provisions) act 2020 for bringing new regime. Hence, in our view, the CIT(Exemptions) should not have rejected the assessee’s application in Form No.10AB only for this technical reason. We are of the view that the intention of CBDT in its circular clearly reflects their mind that once the timeline prescribed for filing Form No.10AB for recognition u/s.12A of the Act has been extended up to 30.09.2023, the same may be treated as extended for forms namely Form No.10AB for renewal of approval/recognition/registration under clause (iii) of first proviso to section 80G of the Act also. Hence, we accept the plea of assessee and agree with the arguments of ld. counsel for the assessee and remand the matter back to the file of the CIT(Exemption) to decide the issue on merits. Hence, the order of CIT(Exemption) on this issue is set aside and matter is remanded back to the file of the CIT(Exemption) for redeciding the issue on merits as per law. The appeal of the assessee is allowed for statistical purposes.

The bench thus held that the extended time limit of 30.09.2023 as per CBDT Circular would apply to Form No.10AB as well.

6. The bench also takes note of the latest decision of Hon’ble High Court of Madras in the case of Sri Nrisimha Priya Charitable Trust in WP Nos.27030 & ors. of 2024 order dated 02.04.2024 wherein Hon’ble Court has held that clause 5(ii) of Circular No.6 of 2023 dated 24.05.2023 is illegitimate, arbitrary and ultra vires the constitution of India. It has been held as under: -

(i) The clause 5(ii) of Circular No.6 of 2023 bearing F.No.370133/06/2023-TPL, dated 24.05.2023 of the first respondent is declared as illegitimate, arbitrary, and ultra vires the Constitution of India; (ii) The respondents are directed to consider the applications submitted by the petitioners as to the recognition/approval in respect of clause (i) of the first proviso to sub-section (5) of section 80G of the Act as within time and consider the same and pass orders thereon on merits, in accordance with law within six months from the date of receipt of a copy of this order;

Respectfully following the same, we set aside the impugned order and direct Ld. CIT(E) to consider the application on merits without raising the issue of timeline.

7. The appeal stand allowed for statistical purposes in terms of our above order.

mutatis mutandis to the present case and opine that once the timeline prescribed for filing in Form No.10AB for recognition u/s.12A of the Act, has been extended up to 30.09.2023, the same need to be treated as extended for forms viz., Form No.10AB for renewal of approval/recognition/registration under Clause (iii) of first proviso to sub- sec.(5) of Sec.80G of the Act; and therefore, we direct the Ld.CIT(E) to consider the application of the assessee Trust submitted by it for approval / recognition / registration under Clause (iii) of the first proviso to sub- sec.(5) of Sec.80G of the Act as within time and consider the same and pass orders thereon merits in accordance to law. The application of the assessee dated 03.10.2022 is restored back to the file of the Ld.CIT(E) for passing orders on merits.

Order pronounced on the 25th day of June, 2024, in Chennai.