MUSLIM EDUCATION SOCIETY,RATNAGIRI vs. CIT, EXEMPTION, PUNE, PUNE

The appellant is a trust registered u/s.12A of the Act. It had applied for approval under clause (iii) of the first proviso to sub-section (5) of section 80G. The trust was granted provisional approval vide order dated 24.09.2021 valid upto the period 30.09.2024. Subsequently, the appellant trust filed application in Form No. 10AB under clause (iii) of first proviso to sub-section (5) of section 80G of the Act on 2 27.09.2023. The said application came to be rejected vide impugned order dated 22.03.2024 on the ground that the appellant trust had not filed the application within the prescribed time limit under clause (iii) of first provision to sub-section (5) of section 80G of the Act. According to the ld. CIT(Exemptions), the appellant trust was required to file the application in Form No.10AB for regular approval within six months from the date of provisional approval, i.e. on or before 23.03.2022, or as extended upto 30.09.2022 as per the CBDT Circular No.08/2022 dated 31.03.2022 whichever is earlier. Since the activities of the trust was already commenced as on the date of provisional approval, i.e. on 31.01.1941. The present application in Form No.10AB was filed by the appellant trust on 27.09.2023. Therefore, the ld. CIT(Exemptions) denied the grant of approval on the grounds of delay, without going into merits.

Being aggrieved, the appellant trust is in appeal before us in the present appeal.

We heard the rival submissions and perused the material on record. In the present case, admittedly, the appellant trust has commenced the activities on 31.01.1941 even as on the date of grant of provisional approval on 24.09.2021. In this connection, for better appreciation relevant provisions of proviso to section 80G are extracted below : “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,—

There can be two categories of institutions; (1) the institutions which had commenced the activity subsequent to the grant of provisional approval (2) the institutions which had commenced the activity much before the date of grant of provisional approval (2). No doubt, in the case of former category the literal interpretation of clause (iii) of proviso to section 80G(5) does not lead to any hardship, absurdity or injustice. It is only in the case of later category the literal interpretation leads to hardship, absurdity or injustice as it is impossible to comply with the time limits prescribed under the proviso which had commenced the activities six months prior to the date of grant of provisional approval. Thus, the provision produces a manifestly absurd and unjust result which could never have been intended by the Legislature. In such a situation, it is now a settled rule of construction that the courts may modify the language used by the Legislature or even “do some violence” to it, so as to achieve the obvious intention of the Legislature and produce a rational construction vide Luke V. IRC (1996) 54 ITR 692. The court may also in such a case read into the statutory provision a condition which, though 4 not expressed, is implicit as constituting the basic assumption underlying the statutory provision.

In our considered opinion, in the light of the above discussion, a fair and reasonable construction clause (iii) of proviso to section 80G(5) would be to read into it a condition that in the place of word ‘earlier’ word “later” be substituted and can be read as under :

Adverting to the facts of the present case, undisputedly, the appellant trust commenced its actual activities on 31.01.1941 and in view of the above construction of clause (iii) of proviso to section 80G(5) the appellant trust is entitled to file the application for regular approval prior to six months of expiry of the provisional approval, i.e., on or before 23.03.2022. Therefore, it cannot be said that the application filed by the appellant trust for grant of regular approval is barred by limitation prescribed under the proviso to section 80G(5). Therefore, the ld. CIT(Exemptions) is not justified in denying the grant of approval u/s.80G(5) to the appellant trust on the ground of delay in submission of Form No.10AB. In the circumstances, we remand the matter to the file of CIT(Exemptions) with a direction to dispose of the denovo application on merits.