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Income Tax Appellate Tribunal, NAGPUR BENCH, NAGPUR
Before: SHRI V. DURGA RAO & SHRI K.M. ROY, ACCOUNTANT, MEMBER
Date of Hearing – 01/08/2024 Date of Order – 01/08/2024
O R D E R PER K.M. ROY, A.M.
The present appeal has been filed by the assessee challenging the impugned order dated 12/10/2023, passed by the learned Commissioner of Income Tax (Exemptions), Pune, [“learned CIT(E)”], for the assessment year 2024–25.
In its appeal, the assessee has raised following grounds:–
“1. The rejection of application for approval under clause (iii) of the first proviso to sub-section (5) of section 80G of the Act without considering the submissions of the Appellant is against the principles of natural justice. 2. The rejection of application for approval under clause (iii) of the first proviso to sub-section (5) of section 80G of the Act without giving proper time for Devanshi Foundation ITA no.381/Nag./2023 further submissions as per the notices, is against the principles of natural justice.
3. The rejection of application for approval under clause (iii) of the first proviso to sub-section (5) of section 80G of the Act by assuming lower charitable expenditure and not verifying the details of the high bank balance is not according to law.
The rejection of application for approval under clause (iii) of the first proviso to sub-section (5) of section 80G of the Act without giving an opportunity to explain the reasons for the delay in filing the application in Form 10AB is against the principles of natural justice.
5. Any other ground may please be permitted at the time of hearing.”
The issue taken up by the assessee in this appeal is rejection of approval under section 80G of the Income Tax Act, 1961 ("the Act").
4. The learned CIT(E) cancelled the provisional approval granted on 09/07/2021, under clause (iv) of the first proviso to section 80G(5) of the Act by observing as follows:– “5.9 In view of the above, the present application filed in Form No. 10AB under clause (iii) of first proviso to section 80G(5) of the Act is liable to be rejected without going into the merits since the assessee has not filed the present application within the time limit allowed under clause (iii) of first proviso to section 80G(5) of the Income Tax Act, 1961.
6. In view of the above, the application filed by the assessee is hereby rejected and the provisional approval granted on 09/07/2021 under clause (iv) for first proviso to section 80G(5) of the Income Tax Act, 1961 is hereby cancelled.”
Nobody was present on behalf of the assessee.
The learned Departmental Representative submitted that there in no response from the assessee.
We have heard the submissions of the learned Departmental Representative and gone through the record. Before proceeding further, it will
Devanshi Foundation ITA no.381/Nag./2023 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 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-
Devanshi Foundation ITA no.381/Nag./2023
(a) clause (i) of the first proviso, from the assessment year from which approval was earlier granted to such institution or fund; (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.”
A perusal of the above provisions would reveal that the institutions which stood already approved under section 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 30-9-2023. 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 learned CIT(E) 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
Devanshi Foundation ITA no.381/Nag./2023 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 assessee-institution from 10/03/2023 to A.Y 2025-26. If the assessee-institution would have applied for renewal of the registration under clause (i), then its approval under section 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 Co–ordinate Bench of the Tribunal in the case of Vivekananda Mission Asram v. CIT in ITA No. 995/Kol./2023, dated 08/12/2023, while deliberating upon the provisions of section 80G(5) of the Act, has held as under:–
Devanshi Foundation ITA no.381/Nag./2023
"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 Co- ordinate 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 provision- al 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 3-12-2022, the assessee applied for final registration u/s clause (iii) of 1st Proviso to section 80G(5) of the 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."
It is to be further noted here that the learned CIT(E) 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 30/09/2023 Page | 6
Devanshi Foundation ITA no.381/Nag./2023 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. 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 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. 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.
Devanshi Foundation ITA no.381/Nag./2023
In our humble understanding, if the view of the learned CIT(E) 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.
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.
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 Co–ordinate Bench of the Tribunal in the case of Vivekananda Mission Asram (supra) and in the case of West Bengal Welfare Society v/s CIT(E), [IT Appeal Nos. 730 & 731 (Kol.) of 2023, dated 13-9- 2023] and further by the decision in the case of Sri Aurobindo Bhawan Trust v/s CIT(E) ITA No.1058/Kol./2023, dated 20/02/2024. Therefore, the Page | 8
Devanshi Foundation ITA no.381/Nag./2023 impugned order of the learned CIT(E) is set aside and the learned CIT(E) 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 learned CIT(E) will decide the application for final registration within three months of the receipt of copy of this order.
In the result, appeal filed by the assessee allowed for statistical purposes. Order pronounced in the open Court on 01/08/2024