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Income Tax Appellate Tribunal, ‘A’ BENCH, KOLKATA
Before: Shri Rajpal Yadav, Vice-(KZ) & Shri Rajesh Kumar
Per Rajpal Yadav, Vice-President (KZ):- The present appeal is directed at the instance of assessee against the order of ld. Commissioner of Income Tax (Exemption), Kolkata dated 11th February, 2024.
Pandanda Cheethamma Madappa Charitable Trust 2. The solitary grievance of the assessee is that the ld. CIT(Exemption) has erred in not granting approval under section 80G(5)(iii) of the Income Tax Act.
3. With the assistance of ld. Representatives, we have gone through the record carefully. It emerges out that the assessee is an old Trust, which was created on 20.02.2008. The application for grant of approval under section 80G(5)(iii) has been rejected by the ld. CIT on the ground that the assessee had commenced its activity more than six months ago before filing this application. Hence, this application is time barred in view of the provisions. The ld. CIT(Exemption) failed to take into cognizance the CBDT Circulars issued time to time. This aspect has been considered by the Coordinate Bench of this Tribunal in the case of Baijnath Somani Charitable Trust in order dated 07.05.2024, wherein all these Circulars as well as position of law has been discussed lucidly. We take note of this judgment, which reads as under:- “2. ITA No.321/Kol/2024 – The brief facts of the case are that the assessee was already registered/approved u/s 80G(5) of the Act as a charitable institution since 2008. However, an amendment was brought into the relevant provisions of Section 80G of the Act vide Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (hereinafter referred to as ‘Amendment Act of 2020’) with effect from 01.04.2021 whereby, an institution, which has already been approved before the aforesaid amendment, was required to re-apply for grant of approval under Clause (i) of the First Proviso to section 80G(5) of the Act within three months from the 1st day of April, 2021. The assessee, however, applied for provisional approval under Clause (iv) to First Proviso to section 80G(5) of the Act, which was meant for the institutes who have to apply for the first time and not for revalidating the existing approval prior to amendment. The assessee was granted provisional approval u/s Clause (iv) to First Proviso to section 80G(5) of the Act in Form 10AC vide order dated 24.09.2021 for a period from 24.09.2021 to AY ITA No. 456/KOL/2024 Pandanda Cheethamma Madappa Charitable Trust 2024-25. The assessee thereafter applied for final approval under Clause (iii) to First Proviso to section 80G(5) of the Act. However, ld. CIT (Exemption) rejected the application of the assessee observing that the time limit prescribed for making an application for final approval u/s 80G of the Act was at least six months prior to the expiry of the period of the provisional approval or within six months of the commencement of its activities, whichever is earlier. He observed that the assessee had already commenced its activities since long even prior to grant of provisional registration, and since the time period for making application mentioned in Clause (iii) to First Proviso to section 80G(5) of the Act had already expired, therefore, the assessee could not be granted final registration u/s 80G(5) of the Act. He also observed that vide CBDT Circular No. 18/2022, the date for submitting the application for final approval was extended up to 30.09.2022. However, the fresh application by the assessee was filed on 25.08.2023 which was after the extended date of 30.09.2022. He, therefore, rejected the application of the assessee for final approval u/s 80G of the Act.
The issue is squarely covered by the decision of the Coordinate Kolkata Bench of the Tribunal in the case of “Tomorrow’s Foundation vs. CIT(Exemption)” in order dated 27.02.2024 (the Judicial Member herein being the author the said order also). The relevant part of the order of the Coordinate Bench is reproduced as under: “3. We have heard the rival submissions and gone through the record. Before proceeding further, it will be relevant to reproduce here the relevant provisions of section 80G(5) of the Act: “80G(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 established in India for a charitable purpose and if it fulfils the following conditions, namely:- [(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 Taxation and Other Laws (Relaxation and Amendment of ITA No. 456/KOL/2024 Pandanda Cheethamma Madappa Charitable Trust Certain 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 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)in any other case, at least one month prior to commencement of the previous year relevant to the assessment year from which the said approval is sought: Provided further that the Principal Commissioner or Commissioner, on receipt of an application made under the first proviso, 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) 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 (B) the fulfilment of all the conditions laid down in clauses (i) to (v); (b) after satisfying himself about the genuineness of activities under item (A), and the fulfilment of all the conditions under item (B), of sub-clause (a),— (A) pass an order in writing granting it approval for a period of five years; or” Provided also that the approval granted under the second proviso shall apply to an institution or fund, where the application is made under— (a) clause (i) of the first proviso, from the assessment year from which approval was earlier granted to such institution or fund; Pandanda Cheethamma Madappa Charitable Trust (b) clause (iii) of the first proviso, from the first of the assessment years for which such institution or fund was provisionally approved; (c) in any other case, from the assessment year immediately following the financial year in which such application is made.
4. A perusal of the above provisions would reveal that the institutions which stood already approved u/s 80G(5)(vi) on the date of Amendment brought to section 80G of the Act by Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 have to re-apply for fresh registration under Clause (i) to the First Proviso to section 80G(5) of the Act and those institutions have to be granted provisional registration for five years by the ld. CIT(Exemption) without any enquiry. The prescribed date for final application for approval under Clause (i) to the First Proviso to section 80G(5) of the Act was stipulated as three months from 1st Day of April 2022. However, the CBDT from time to time extended the date for filing of the said application under Clause (i) to the First Proviso to section 80G(5) of the Act and finally vide Circular No.6 of 2023 dated 24.05.2023, the said date was extended upto 30.09.2023. Further, the institutions which had to apply for the first time or the institutions which did not stand approved on the date of Amendment i.e. 01.04.2021 brought by the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020, they could apply under Clause (iv) of the First Proviso to section 80G(5) of the Act. In that case, the ld. CIT(Exemption) is supposed to make necessary enquiries and if found satisfied regarding the genuineness of the activities of such an institution would grant provisional approval for five years. In both the cases i.e. institutions which have been granted approval under Clause (i) or the institutions which have been granted approval under Clause (iv) to First Proviso to section 80G(5) of the Act have to apply for final registration under Clause (iii) of First Proviso to section 80G(5). Such institutions are required to apply for final registration at least six months prior to expiry of the period of provisional approval or within six months of commencement of its activities, whichever is earlier. In the case in hand, it appears that the assessee-institution instead of applying for renewal of registration under Clause (i) to First Proviso to section 80G(5) of the Act has applied for fresh provisional registration under Clause (iv) to First Proviso to section 80G(5) of the Act and incidentally, the said fresh provisional registration has also been granted to the assesseeinstitution from 10.03.2023 to A.Y 2025-26. If the 5 ITA No. 456/KOL/2024 Pandanda Cheethamma Madappa Charitable Trust assessee-institution would have applied for renewal of the registration under Clause (i), then its approval u/s 80G(5) would have continued without any break. The last date for making such an application was upto 30.09.2023 as per the extended date from time to time vide Circular no.6 of 2023. However, since the assessee-trust has applied for fresh approval under Clause (iv) to First Proviso to section 80G(5) of the Act, therefore, the assessee-trust was entitled to apply for final registration and there was no bar to the institution for making such application. This issue has already been adjudicated upon by the Coordinate Bench of the Tribunal in the case of “Vivekananda Mission Asram vs. CIT” in decided on 08.12.2023 (Judicial Member herein being the author of the said order) while deliberating upon the provisions of section 80G(5) of the Act, has held as under: “6. So far as the observation of the ld. CIT(E) that the assessee had already commenced its activities since long and that as per Clause (iii) of 1st Proviso to section 80G(5) of the Act, the application for final registration was to be filed within six months from the commencement of its activities and therefore, the application of the assessee for final registration was time-barred, is concerned, we note that the issue has already been discussed and adjudicated by the Coordinate Bench of the Tribunal in the case of West Bengal Welfare Society vs. CIT(Exemption), Kolkata vide order dated 13.09.23 [one of us i.e. the Judicial Member herein, being the author of the said order], wherein, it has been held that the assessee, who has been granted provisional registration, is eligible to apply for final registration irrespective of the fact that the assessee had already commenced its activity even prior to the date of grant of provisional approval. The relevant part of the order of the Coordinate Bench is reproduced as under: 6. We note that the ld. CIT(E) has misconstrued the aforesaid proviso to section 80G(5) of the Act. As per the provision, an application for final registration cannot be filed until and unless an assessee/trust has been given provisional approval u/s 80G(5)(iv) of the Act. The assessee was granted provisional approval on 30.11.2022 only, and within a few days i.e. on 03.12.2022, the assessee applied for final registration u/s Clause (iii) of 1st Proviso to section 80G(5) of the 6 Pandanda Cheethamma Madappa Charitable Trust Act. Though the assessee might have commenced its activities prior to grant of provisional registration but that does not mean that the assessee in that event will be precluded from applying for final registration even after the grant of provisional registration. The assessee as per statutory provision could not have directly applied for final registration without grant of provisional registration. The aforesaid proviso, therefore, is to be read as that after the grant of provisional registration, if the assessee has not commenced its activities, he may apply for registration within six months of the commencement of its activities or within the six months prior to the expiry of the period of provisional approval, whichever is earlier. In any case, the assessee is eligible to apply for final registration only after the grant of provisional approval. Therefore, we hold that there is no delay on the part of the assessee in filing application in the prescribed form for grant of final registration under Clause (iii) of 1st Proviso to section 80G(5) of the Act. In view of the above observations, the matter is restored the file of the CIT(E) for decision afresh in the light of the observations made above.”
5. It is to be further noted here that the ld. CIT(Exemption) firstly misconstrued about the CBDT Circulars regarding the exemption of date for final applications for approval. The said Circular/time limits are applicable only for the institutions who stood already registered on the date of Amendment and have made application for renewal of the registration without any time break. However, the said last date which has been extended to 30.09.23 by CBDT Circular No.6 of 2023 is not applicable for the institutions who have filed application for fresh provisional registration under Clause (iv) to First Proviso to section 80G(5) of the Act and thereafter for making application under Clause (iii) to First Proviso to section 80G(5) of the Act. 5.1 We deem it appropriate to mention here that CBDT has extended the date upto 30.09.2023 for making application under Clause (i) to First Proviso to section 80G(5) of the Act, which means that the institutions, which were already registered prior to the amendment brought to section 80G(5) by Amendment Act of 2020 w.e.f. 01.04.2021, if an institution for some reasons could not make an application for renewal/continuance of registration under Clause (i) to 7 Pandanda Cheethamma Madappa Charitable Trust First Proviso to section 80G(5) of the Act within the stipulated period of three months, it could still apply under Clause (i) upto 30.09.2023. However, once an institution has applied under Clause (i) to First Proviso to section 80G(5) of the Act on or before 30.09.2023, it will be further governed by the statutory provisions of Clause (iii) of First proviso to section 80G(5) of the Act and not by the CBDT Circular for the purpose of limitation. CBDT Circular is for extension of date to help the institutions which could not apply under Clause (i) within stipulated period of three months, and not for curtailing limitation or barring institutions for final registration under Clause (iii) to First Proviso to section 80G(5) of the Act. 5.2 As observed above, for making application for final registration under Clause (iii) to First Proviso to section 80G(5) of the Act, the institution must have been provisionally registered either under Clause (i) or Clause (iv) to First Proviso to section 80G(5) of the Act. 5.3 In our humble understanding, if the view of the ld. CIT(Exemption) is accepted to be correct, then no institution which has already been into charitable activities before seeking provisional approval under Clause (iv) to First Proviso to section 80G(5) of the Act would ever be entitled to grant of final registration under Clause (iii) to First Proviso to section 80G(5) of the Act even after grant of provisional approval, which would make the relevant provisions of section 80G(5) otiose and defeat the object and purpose of these statutory provisions.
6. In view of the above discussion, it is held that after grant of provisional approval, the application cannot be rejected on the ground that the institution had already commenced its activities even prior to grant of provisional registration. Under such circumstances, the date of commencement of activity will be counted when an activity is undertaken after the grant of provisional registration either under Clause (i) or Clause (iv) to First Proviso to section 80G(5) of the Act.
7. In the case in hand, the assessee admittedly has applied for final registration after grant of provisional registration under Clause (iv) to First Proviso to section 80G(5) of the Act and therefore, the application filed by the assessee is within limitation period. The issue is otherwise squarely covered by the decision of the Coordinate Bench of the Tribunal in the case of Vivekananda Mission Asram vs. CIT (supra) and in the case of “West Bengal Welfare Society vs. CIT(Exemption)” (supra) and further by the decision in the 8 ITA No. 456/KOL/2024 Pandanda Cheethamma Madappa Charitable Trust case of “Sri Aurobindo Bhawan Trust, Krishnagar vs. CIT(Exemption)” order dated 20.02.2024 (Judicial Member herein being the author of the said orders). Therefore, the impugned order of the CIT(Exemption) is set aside and the ld. CIT(Exemption) is directed to grant provisional approval to the assessee under Clause (iii) to First Proviso to section 80G(5) of the Act, if the assessee is otherwise found eligible. The ld. CIT(A) will decide the application for final registration within three months of the receipt of copy of this order.
Further, the Coordinate Bench of the Tribunal in the case of “Anudip Foundation for Social Welfare vs. CIT(Exemption), Kolkata” in order dated March 4th, 2024 in almost similar facts and circumstances has made the following further observations: “4.1. It is further directed that, if the assessee is granted final approval by the ld. CIT(E) then, the benefit of approval u/s 80G of the Act, available to the assessee prior to the Amendment brought vide Amending Act of 2020, will be deemed to be continued without any break. The assessee will not be deprived of the benefit during the time period falling between 31/03/2021 and the date of grant of provisional approval under clause (iv) i.e., 28/05/2021, due to technical errors occurred in making the application under the relevant provisions of the Act because of the confusion and misunderstanding on part of the assessee as well as on part of the ld. CIT(E) in properly interpreting the relevant provisions.”
At this stage, the ld. Counsel for the assessee has brought our attention to the recent CBDT Circular No.7 of 2024 dated 25.04.2024, vide which the due date for filing application for final approval under clause (iii) of the 1st Proviso to section 80G of the Act has been extended till 30.06.2024. In para 5 of the said Circular, it has also been provided that if an existing trust, institution or fund who had failed to file Form No.10A (meant for ‘grant of provisional approval under clause (i) of the 1st Proviso to section 80G of the Act’) within the due date as extended by the CBDT Circular No.6 of 2023 dated 24.05.2023 and subsequently applied for provisional registration as a new trust, institution or fund and has received Form No.10AC (granting of provisional approval under clause (iv) of the 1st Proviso to section 80G of the Act), such trust or institution or fund as the case may be can avail the option to surrender the said Form 10AC and applied for registration for A.Y 2022-23 as 9 Pandanda Cheethamma Madappa Charitable Trust an existing trust, institution or fund in Form 10A within the extended time i.e. upto 30.06.24. The relevant para 5 of the Circular is reproduced as under: “5. It is also clarified that if any existing trust, institution or fund who had failed to file Form No. 1OA for A Y 2022-23 within the due date as extended by the CBDT circular no. 6/2023 dated 24.05.2023 and subsequently, applied for provisional registration as a new trust, institution or fund and has received Form No. 1OAC, it can avail the option to surrender the said Form No. 1OAC and apply for registration for A Y 2022-23 as an existing trust, institution or fund in Form No. 1OA within the extended time provided in paragraph 3(i) i.e. 30.06.2024.”
In view of above fresh instructions of the CBDT, an option has been given to the existing trusts which were duly registered u/s 80G(5) of the Act prior to the date of amendment w.e.f. 01.04.2021 and who have instead of filing the application under clause (i) of the 1st Proviso to section 80G of the Act had filed the application as a fresh institution under clause (iv) of the 1st Proviso to section 80G of the Act and have been granted provisional registration, such institutions can avail the option to surrender the such provisional approval under clause (iv) and apply for registration as an existing institution under clause (i) of the 1st Proviso to section 80G of the Act. The ld. Counsel for the assessee has stated at bar that the assessee is interested in availing the said benefit/option granted by the CBDT.
However, the ld. CIT-DR, however, has submitted that the benefit of the said Circular No.7 of 2024 cannot be extended to the assessee. He in this respect has submitted that in relevant para 5 of the said Circular, it has been provided that the trust which had failed to apply in Form 10A which was meant for provisional registration of existing institutions within the due date as extended by CBDT Circular No.6 of 2023 upto 30.09.2023 ‘subsequently’ applied for provisional registration as a new trust in Form 10AC, it can avail the option to surrender the said Form 10AC and apply for fresh registration as an existing institution. The word ‘subsequently’ written in the said Circular has created an anomaly (emphasis supplied by us).
As observed by us in our several orders including as referred to the above in the case of “Tomorrow’s Foundation vs. CIT(Exemption)” (supra), there are many cases of the 10 Pandanda Cheethamma Madappa Charitable Trust assessee-trusts who, due to complexity of the relevant provisions of section 80G(5), could not correctly understand and interpret the same and instead of filing the application under clause (i) of the 1st Proviso to section 80G of the Act moved the application as a new trust/institution under clause (iv) of the 1st Proviso to section 80G of the Act. We have also observed that the aforesaid amended complex provisions of this Act were not correctly understood and hence misconstrued even by the CIT(Exemptions) in many cases. Though, an attempt has been made through the aforesaid Circular No.7 of 2024 to avoid and mitigate the genuine hardship in such cases, however, an anomaly, as pointed out by the ld. CIT-DR has occurred in the said Circular. The word ‘subsequently’ mentioned in the said Circular gives the interpretation/impression that only those institutions would get the benefit of this Circular of 2024 who had failed to apply under clause (i) in Form 10A till the last date as extended by Circular no.6/2023 i.e. upto 30.09.2023; and ‘subsequently’ they had applied under clause (iv) as a fresh institution. This means that the institutions which due to complexity of the provisions could not properly understand the said provisions and instead of applying as an existing institution under clause (i), applied under the wrong clause i.e. clause (iv) which was meant for new trusts/institutions, though within due date as extended by the CBDT Circular 6 of 2023 i.e. on or before 30.09.2023 would not be entitled to the benefit of Circular No.7/2024. The effect of the said anomaly, if so interpreted as pointed out by the ld. CIT-DR, could be that the institutions/trusts which had been vigilant and had made effort to comply with the amended provisions and duly applied for fresh registration within the due date but mistakenly under the wrong clause, would be deprived of benefit of the said Circular, whereas, the institutions who did not apply at all till the last date as extended by CBDT Circular no.6 of 2023 i.e. upto 30.09.2023, but applied ‘subsequently’ as a new trust, will be benefited by the said Circular. Even the institutions which did not apply at all either as an existing institution or as a new institution, the benefit of the said circular has also been extended to the said institutions and they have given the option to apply upto 30.06.2024. We are of the view that the object and intention behind the CBDT Circular No.7 of 2024 is not to deprive any such institutions of its benefit. Therefore, it is held that the assessee will also be entitled to the benefit of the said Circular No.7 dated 25.04.2024 and the application of the assessee will not be rejected by the CIT(Exemption) finding any fault in the application of the assessee on the basis of any such interpretation of the said Circular No.7 of 2024. With the 11 ITA No. 456/KOL/2024 Pandanda Cheethamma Madappa Charitable Trust above observations, the present appeal of the assessee is disposed of with the liberty to the assessee-trust to move a fresh application as per CBDT Circular No.7 of 2024 and if such an application is made by the assessee, the same will be decided by the ld. CIT(Exemption) within two months of receipt of such application. If the assessee is granted final approval by the ld. CIT(Exemption), then the benefit of approval u/s 80G of the Act will be deemed to be continued without any break as admissible to the assessee prior to the Amendment brought vide Amending Act of 2020. The assessee will not be deprived of the benefit during the time period falling between 31.03.2021 and the date of grant of provisional approval under clause (iv) i.e. 28.05.2021. 9. - The facts of the present appeal are identical to that have been discussed above in ITA No.321/Kol/2024, except with regard to the relevant dates of events, therefore, our findings given above will mutatis mutandis apply to this appeal also.
With the above observations, both the appeals of the assessee are treated as allowed for statistical purposes”.