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Income Tax Appellate Tribunal, “C” BENCH KOLKATA
Before: SHRI PRADIP KUMAR CHOUBEY & SHRI RAKESH MISHRA
Present for: Appellant by : Kishan Agarwal, AR Respondent by : Abhijit Kundu, CIT DR Date of Hearing : 01.10.2024 Date of Pronouncement : 14.10.2024 O R D E R
PER RAKESH MISHRA, ACCOUNTANT MEMBER:
This appeal filed by the assessee is against the order of the Ld. Commissioner of Income Tax (Exemption), Kolkata, [hereinafter referred to as “the Ld. CIT(E)”], dated 26.02.2024 rejecting the application for registration or approval u/s 80G(5) of the Income Tax Act, 1961 (in short ‘the Act’).
The grounds of appeal raised by the assessee are reproduced as under: “1 The learned Commissioner of Income Tax (Exemption) has erred in rejecting the application filed by the appellant Trust on the ground that the application filed in Form 10AB has not filed within time limit prescribed and therefore it is non- maintainable on facts and circumstances of the case, the action of the Ld. CIT(Exemption) of rejecting the application filed u/s 80G(5) of the Act is incorrect and unlawful and the approval u/s 80G(5) of the Act ought to have been granted to the Appellant Trust. The same please be held now.
Bhabar Bhawani Mandir Public Trust 2. The learned Commissioner of Income Tax (Exemption) has erred in rejecting the application filed u/s 80G(5)(iii) of the Act stating that the delay in filing of application cannot be condoned by him. It is submitted that the delay in filing of Application u/s 80G(5)(iii) is only because of bona fide reasons and circumstances prevailing beyond the control of the appellant Trust at that time. On facts and circumstances of the case, it is prayed before your honours that delay in application filed in Form 10AB u/s 80G(5)(iii) of the Act dated 3-09-2023 may please be given to Ld. CIT(Exemption) for granting approval u/s 80G(5)(iii) considering merits of the case. The same please be held accordingly.
The order passed by the learned Commissioner of Income Tax (Exemption) is bad in law and contrary to the provisions of law and facts. It is submitted that the same be held so now.
Your appellant craves leave to add, alter and/or to amend all or any of the grounds before the final hearing.”
Brief facts of the case are that the assessee is an existing trust and was granted provisional approval u/s 80G(5)(iv) of the Act in Form No.10AC vide order dated 24.11.2021 for a period from 24.11.2021 to A.Y. 2024-25. Subsequently, an application for approval of the trust u/s 80G(5)(iii) of the Act was filed electronically on 30.09.2023 in Form No. 10AB under Rule 17A of the Income Tax Rules, 1962 (in short ‘the Rules’). A notice was issued to the applicant/assessee to furnish detailed note on the activities carried out by the assessee, as well as certain details/documents as mentioned therein. The inquiry about the actual activities of the trust was necessary in view of the mandatory provisions of the procedure for approval u/s 80G(5)(iii) of the Act. The assessee responded as under:
“1. Whether your Trust/Society/Sec. 8 Company was earlier registered u/s 12A/12AA and 80G of the Act. Trust was registered u/s 12A. a) 12A Reg. No. AADTB5275B22KL01 Dated 28.06.2023 issued by CIT Exemption Kolkata. 12A Certificate Enclosed for your reference 1. Whether you had claimed exemption prior to 01.04.2021: - Trust had not claimed exemption prior to 01.04.2021.”
Bhabar Bhawani Mandir Public Trust 3.1 The Ld. CIT(E) examined the submission of the assessee but did not find them acceptable. It is mentioned in the order that from perusal of details available on records it was observed that the assessee/applicant had filed Form No. 10AB u/s 80G(5)(iii) of the Act on 30.09.2023 but its activities had commenced from 21.08.2018 i.e. prior to 01.04.2021. The Ld. CIT(E) was of the view that the assessee was provisionally approved under section 80G(5)(iv) of the Act and therefore, the applicant/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 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 Commissioner of Income Tax has no power to condone the delay in filing application in Form No. 10AB. Although the dates for filing various forms were extended by the CBDT, however the date for filing application for approval under section 80G was extended up to 30th September, 2022 and, therefore, the application in Form No. 10AB u/s 80G(5)(iii) had not been filed in time. He was of the view that the activities of the applicant/assessee had already commenced in FY 2018-19 as the perusal of the income and expenditure account for the year ended 31.03.2019 showed that the assessee had incurred expenses on account of cloth distribution of Rs. 26,218/- and the present application filed in Form No.10AB u/s 80G(5)(iii) of the Act has not been filed within the time limit prescribed therein and therefore the same was liable to be rejected as such as non-maintainable, without going into the merits. Reliance was also placed on the decision of the Hon’ble Kolkata Tribunal in the case of Bishnupur Public Education Institute, reported in Bhabar Bhawani Mandir Public Trust 139 taxmann.com 121, wherein the Hon’ble Tribunal while adjudicating the issue of similar provisions of due date u/s 10(23C) of the Act, after placing reliance on various decisions of the Hon’ble Supreme Court and that of Hon’ble High Court has held that the adjudicating authorities under the Income-tax Act are quasi-judicial authorities and they can grant approval with retrospective effect if such mechanism is provided in the Act. As there is no such provision nor there is any power to condone the delay after considering the reasonable reasons, a reasonable cause can be taken into cognizance for condoning the delay, if such provision is provided in the Act while considering any issue for adjudication. Therefore, considering the above proposition, they have held that the ld. CIT (Exemption) had rightly rejected the application of the assessee for grant of approval under section 10(23C)(vi) of the Income-tax Act. The Ld. CIT(E) was of the view that the Circular no. 6 of 2023, dated 24th May 2023 issued by the CBDT, also does not extend the benefit of extension of due date to 30.09.2023 to cases u/s 80G(5) of the Act. Thus, it is evident that the due date to file such an application u/s 10AB was 30.09.2022. In view of the above, the application filed in Form No.10AB u/s 80G(5)(iii) of the Act was rejected as non-maintainable and the Provisional Certificate issued to the assessee was also cancelled w.e.f. the date of its issue. Aggrieved with the order of the Ld. CIT(E), the assessee has filed this appeal before the Tribunal.
Rival contentions were heard and the submissions made and the records were examined. In order to decide the appeal, it is imperative to understand the provisions of the Act in this regard. The relevant provisions of the relevant sub-sections of section 80G as applicable to the facts of the case of the assessee Bhabar Bhawani Mandir Public Trust are extracted below. Broadly speaking, these are the provisions which were applicable to the facts of the case of the assessee and are as under:
80G. (1) In computing the total income of an assessee, there shall be deducted, in accordance with and subject to the provisions of this section,— . . . (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 estab- lished in India for a charitable purpose and if it fulfils the following conditions, namely:— (i) where the institution or fund derives any income, such income would not be liable to inclusion in its total income under the provisions of sections 11 and 12 or clause (23AA) or clause (23C)] of section 10:
Provided that where an institution or fund derives any income, be- ing profits and gains of business, the condition that such income would not be liable to inclusion in its total income under the pro- visions of section 11 shall not apply in relation to such income, if— (a) the institution or fund maintains separate books of account in respect of such business; (b) the donations made to the institution or fund are not used by it, directly or indirectly, for the purposes of such business; and (c) the institution or fund issues to a person making the donation a certificate to the effect that it maintains separate books of account in respect of such business and that the donations re- ceived by it will not be used, directly or indirectly, for the p ur- poses of such business; (ii) the instrument under which the institution or fund is constituted does not, or the rules governing the institution or fund do not, con- tain any provision for the transfer or application at any time of the whole or any part of the income or assets of the ins titution or fund for any purpose other than a charitable purpose; (iii)the institution or fund is not expressed to be for the benefit10 of any particular religious community or caste; (iv)the institution or fund maintains regular accounts of its receipts and expenditure; (v) the institution or fund is either constituted as a public charitable trust or is registered under the Societies Registration Act, 1860 (21 of 1860), or under any law corresponding to that Act in force in any part of India or under section 2512of the Companies Act, 1956 (1 of 1956), or is a University established by law, or is any other educational institution recognised by the Government or by a Uni- versity established by law, or affiliated to any University Bhabar Bhawani Mandir Public Trust established by law, or is an institution financed wholly or in part by the Government or a local authority; (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; . . . 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 Tax- ation and Other Laws (Relaxation and Amendment of Cer- tain 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 ap- proved, at least six months prior to expiry of the period of the provisional approval or within six months of com- mencement of its activities, whichever is earlier; (iv)in any other case, where activities of the institution or fund have–– (A)not commenced, at least one month prior to the com- mencement of the previous year relevant to the assessment year from which the said approval is sought; (B)commenced and where 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 pre- vious year ending on or before the date of such applica- tion, at any time after the commencement of such activi- ties: Provided further that the Principal Commissioner or Commis- sioner, on receipt of an application made under the first pro- viso, 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) or sub-clause (B) of clause (iv) 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 Bhabar Bhawani Mandir Public Trust (B) the fulfilment of all the conditions laid down in clauses (i) to (v); (b) after satisfying himself about the genuineness of activ- ities under item (A), and the fulfilment of all the condi- tions under item (B), of sub-clause (a),— (A) pass an order in writing granting it approval for a period of five years; or (B) if he is not so satisfied, pass an order in writing,- (I) in a case referred to in clause (ii) or clause (iii) of the first proviso, rejecting such application and can- celling its approval; or (II) in a case referred to in sub-clause (B) of clause (iv) of the first proviso, rejecting such application, after affording it a reasonable opportunity of being heard; (iii) where the application is made under sub-clause (A) of clause (iv) of the said proviso or the application is made under clause (iv) of the said proviso as it stood immedi- ately before its amendment vide the Finance Act, 2023, pass an order in writing granting it approval provision- ally for a period of three years from the assessment year from which the approval is sought, and send a copy of such order to the institution or fund: …
The scheme of granting approval underwent drastic change (‘the amended provisions’) w.e.f. 01.04.2021. In this case, the clause (vi) was substituted with effect from 01.04.2021 requiring the approval of the Prin- cipal Commissioner or the Commissioner under the new scheme. As the assessee was not approved earlier, clause (i) of the First Proviso was not applicable to it as it refers to institution or fund which is approved under clause (vi) of section 80G(5). The assessee was an old and existing trust which was not approved under the pre 01.04.2021 provisions (‘the old provisions’) of the Act by the Commissioner or the Principal Commissioner of Income-tax but which had commenced its activities w.e.f. 21.08.2018 as is mentioned in the order of the Ld. CIT(E). As it was not approved prior to 01.04.2021 it had not claimed any exemption earlier. The assessee ap- plied for approval under the amended provisions and was granted provi- sional approval under clause (iv) of the First Proviso to sub-section (5) of Bhabar Bhawani Mandir Public Trust section 80G vide order dated 24.11.2021, which was for a period from 24.11.2021 to AY 2024-25. As the activities had already commenced but the trust was not approved earlier, therefore this approval was under sub-clause (B) of clause (iv) to sub-section (5) of section 80G of the Act and the application could have been made at any time after the commencement of such activities. As it was not approved earlier, provisional approval was granted by Ld. CIT(E), which is in accordance with the provisions of the Act. It applied for final approval on 30.09.2023. As it was provisionally approved, as per clause (iii) of the First Proviso of sub-section (5) of section 80G, it was required to apply for grant of final approval 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. Since the provisions were amended w.e.f. 01.04.2021 and activ- ities had commenced from 02.11.2019, the assessee could not have possi- bly applied under the amended provisions within six months from the com- mencement of its activities as the period fell before 01.04.2021 when the new scheme of approval of trust and institution/funds came into force, as doing so would amount to asking the assessee to do the impossible; thereby implying that the first limb of clause (iii) of the First Proviso to sub-section (5) of section 80G only was applicable to the assessee. There is a Latin legal maxim “Lex non cogit ad impossibilia” that translates to “The law does not compel the impossible” in English. This principle is fundamental in legal systems worldwide and signifies that individuals cannot be re- quired to do something impossible for them to accomplish. The provisional approval was granted upto the period relevant for assessment year 2024- 25, and therefore was applicable till the end of the FY 2023-24 i.e. the pe- riod ending on 31.03.2024. Since the application for final approval was filed on 30.09.2023, it was filed six months prior to expiry of the period of the provisional approval and was therefore filed in time. Thus, there was no justification for cancellation of the provisional approval and the as- sessee ought to have been considered for approval as per the procedure Bhabar Bhawani Mandir Public Trust prescribed in clause (ii) of the Second Proviso to sub-section (5) of section 80G of the Act as a valid application seeking approval was filed under clause (iii) of the First Proviso to sub-section (5) of section 80G of the Act for approval.
Thus, the order of the Ld. CIT(E) treating the application filed by the as- sessee for final approval as not maintainable and also cancelling the pro- visional certification issued to the assessee is legally not sustainable and is hereby set-aside with the direction to consider the application filed, which was filed within time as is highlighted above, for granting the final approval to the assessee in accordance with law and grant the approval u/s 80G(5) if the assessee is otherwise found to be eligible. Thus, Ground Nos. 1, 2 and 3 of the appeal are allowed and the Ld. CIT(E) was not jus- tified in cancelling the provisional approval granted to the assessee. He ought to have proceeded under clause (ii) of the Second Proviso to sub- section (5) of section 80G for granting final approval in accordance with law.
Ground No. 4 is general in nature and does not require any separate adjudication.
In the result, the appeal filed by the assessee is allowed.
Order pronounced in the open court on 14th October, 2024.
Sd/- Sd/- (Pradip Kumar Choubey) (Rakesh Mishra) Judicial Member Accountant Member Dated: 14th October, 2024 AK, P.S.