SHRI GANGADHAR SHASTRI PATWARDHAN TRUST,PUNE vs. CIT EXEMPTION, PUNE, PUNE

This is an appeal filed by the assessee trust directed against the order of ld. Commissioner of Income Tax (Exemptions), Pune dated 11.03.2024 denying grant of approval u/s.80G(5) of the Income Tax Act, 1961 (hereinafter also called ‘the Act’).

The appellant is a trust, applied for approval in Form No.10AB under clause (iii) of the first proviso to sub-section (5) of section 80G. The trust was granted provisional approval vide order dated 14.10.2021 valid upto the 13.10.2024. Subsequently, the appellant trust filed application in Form No. 10AB under clause (iii) of first provision to sub-section (5) of section 80G of the Act on 29.09.2023. The said application came to be rejected vide impugned order dated 11.03.2024 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 13.04.2022, 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 were commenced on 15.10.2021. The present application in Form No.10AB was filed by the appellant trust only on 29.09.2023. Therefore, the ld. CIT(Exemptions) denied the grant of approval on the grounds of delay.

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

When the matter was called on, none represented the case of the assessee despite due service of notice of hearing. We, therefore, proceed to dispose of the appeal after hearing the ld. Departmental Representative.

The ld. Sr. DR supporting the order of CIT(Exemptions) submits that no interference by this Tribunal is called for.

We heard the ld. Departmental Representative and perused the material on record. In the present case, admittedly, the appellant trust has commenced the activities on 15.10.2021. In this connection, for better appreciation relevant provisions of proviso to section 80G are extracted below :

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 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 15.10.2021 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 13.04.2024 or 14.04.2022 whichever is later. In the present case, since the application in Form No.10AB under clause (iii) of the first proviso to sub-section (5) of section 80G was filed on 29.09.2023, 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. Therefore, we remand the matter back to the file of CIT(Exemptions) for denovo disposal of the application on merits in accordance with law.

In the result, the appeal filed by the assessee is partly allowed.