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Income Tax Appellate Tribunal, ‘A’ BENCH, CHENNAI
Before: SHRI MAHAVIR SINGHAND SHRI MANOJ KUMAR AGGARWAL
PER MAHAVIR SINGH, VICE PRESIDENT: These appeals by the assessees are arising out of the different orders of the Commissioner of Income Tax (Exemption), Chennai dated 23.03.2024 / 18.03.2024 / 16.03.2024, rejecting Form No.10AB filed for seeking approval under clause (iii) of first proviso to section 80G(5) of the Income Tax Act, 1961 (hereinafter the ‘Act’). The issue involved in all these appeals is common and hence, by way of this common order, these appeals are being disposed off.
The only issue in all these appeals of assessees is against the order of CIT(Exemption) refusing approval / recognition / registration under clause (iii) of first proviso to section 80G(5) of the Act by holding that the application filed in Form No.10AB was barred by limitation. For this, assessees have raised various grounds which are factual and argumentative and hence, need not be reproduced.
The grounds raised by assessees in all these three appeals are identically worded and facts and circumstances are exactly identical and hence, will take the facts from in the case of M/s.Aggrow Farmers Development Organisation.
- 3 - 883 & 884/Chny/2024 4. Brief facts are that the assessee trust filed an application in Form No.10AB on 30.09.2023 seeking approval / recognition under clause (iii) of first proviso to section 80G(5) of the Act. The CIT(E) noted that the assessee has filed Form 10AB u/s.80G(5)(iii) of the Act on 30.09.2023. From Para 4b of said Form 10AB filed/Trust Deed, it is observed that the assessee has mentioned the date of incorporation / creation / registration as 18.05.2020. Further, the assessee has granted provisional approval in Form No.10AC issued on 04.04.2023 u/s.80G(5)(iv) of the Act, for the period commencing from 04.04.2023 to AY 2025-2026. The assessee is 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)(iii) of the Act within the time period of at least six months prior to the expiry of period of the provisional approval or within six months of commencements of its activities, whichever is earlier. From the provisions of section 80G(5)(iii) of the Act, it is evident that the time limits prescribed therein is mandatory and the CIT has no power to condone the delay in filing application in Form No.10AB. Hence, the CIT(A) rejected the assessees applications by giving identical finding in all these three appeals by observing in para 4.93 as under:- 4.93. Hence, in view of the above and as explained in para 1 of this order, regarding the second proviso to sub section of section(5) of section 80G of the .T. Act, 1961, if the application is made under sub-clause (i) or sub- clause (ii) of section(5) of section 80G of the I.T. Act and the Principal
- 4 - 883 & 884/Chny/2024 Commissioner or Commissioner has not satisfied, he can reject the application as well as cancel the approval of the trust/institution. In view of the above facts and circumstances of the case, its application dated 30.09.2023 filed in Form No. 10AB under clause (iii) of first proviso to section 80G(5) of the Income Tax Act, 1961, seeking approval u/s. 80G is not maintainable for the reasons stated in para 4.1 to 4.92 of this order and hence its application is rejected and its approval also cancelled.
Aggrieved against rejection of assessees applications filed in Form No.10AB u/s.80G(5) of the Act, the assessees came in appeal before the Tribunal.
We have heard rival contentions and gone through facts and circumstances of the case. We find that this issue now stands covered by the Co-ordinate Bench decision in the case of Teddy Trust in order dated 10.04.2024, wherein the Tribunal has considered the entire factum and also considered the decision of Hon’ble Madras High Court in the case of Sri Nrisimha Priya Charitable Trust in WP Nos.27030 & ors. of 2024, order dated 02.04.2024 and held as under:- 5. It is admitted fact that the assessee is an old trust and it has already commenced its activities on 17.01.1992. It could further be noted that the assessee has already received provisional approval u/s 80G(5)(iv) for a period commencing from 21.10.2022 to AY 2025-26. It sought approval u/s 80G(5)(iii) by filing Form No.10AB on 30.03.2023 which has been rejected by Ld. CIT(E) on the ground that the assessee had violated the mandatory time lines as statutorily provided. However, we find that this issue has been decided by co-ordinate bench in bunch of appeals titled as M/s CIT-1982 Charitable Trust & Ors, ITA No.827/Chny/2023 order dated 08.03.2024 as under: -
- 5 - 883 & 884/Chny/2024
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 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 (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 - 6 - 883 & 884/Chny/2024 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: -
In the result, these Writ Petitions are allowed on the following terms: - (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;
- 7 - 883 & 884/Chny/2024 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.
We further noted that the CBDT has extended the due date for filing of Form No.10A / 10AB till 30.06.2024 vide Notification F.No.173/25/ 2024-ITA-I, Circular No.7/2024 dated 25th April, 2024. In view of the above, we set aside the orders of CIT(E) in all these three assessees appeals and remand the matter back to the file of CIT(E) for fresh adjudication on merits. In term of the above, the appeals of the assessees are allowed for statistical purposes.
In the result, the appeals filed by the assessees in 883 & 884/CHNY/2024 are allowed for statistical purposes.
Order pronounced in the open court at the time of hearing on 24th June, 2024 at Chennai.