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Income Tax Appellate Tribunal, PUNE BENCH ‘A’, PUNE
Before: SHRI INTURI RAMA RAO & SHRI VINAY BHAMORE
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 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 01.10.2021 valid upto the A.Y. 2024-25. 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 25.09.2023. 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 30.04.2022, or as extended upto 30.09.2022 as per the CBDT Circular No.08/2022 dated 31.03.2022. Since the activities of the trust was already commenced as on the date of provisional approval, i.e. on 30.12.1968. The present application in Form No.10AB was filed by the appellant trust only on 25.09.2023. 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.
The ld. AR submits that the provisional approval which was granted to the appellant trust vide order dated 01.10.2021 is valid upto March, 2025 and the appellant trust is only allowed to file application in Form No.10AB, six months before its expiry. Thus, she submits that since the application was filed on 25.09.2023, the application was well within time and therefore the ld. CIT(Exemptions) cannot reject the grant of approval on the ground of delay.
On the other hand, the ld. Sr. DR supporting the order of CIT(Exemptions) submits that no interference by this Tribunal is called for.
We heard the rival submissions and perused the material on record. In the present case, admittedly, the appellant trust has commenced the activities on 30.12.1968 even as on the date of grant of provisional approval on 01.10.2021. 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,— (i) …………………………………….. (ii) …………………………………….. (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; The literal interpretation of clause (iii) of proviso means that in case the institution has been provisionally approved, application in the prescribed form for grant of the requisite approval u/s.80G(5) is required to be made six months prior to expiry of the provisional approval or within six months of commencement of the activities whichever is earlier.
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 :
“(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 later;
We are also fortified in adopting the above construction by the decision of Hon’ble Supreme Court in the case of K.P. Varghese Vs. ITO 131 ITR 597 (SC).
Adverting to the facts of the present case, undisputedly, the appellant trust commenced its actual activities on 30.12.1968 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 30.09.2024. 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. Therefore, in the interest of justice, we restore the matter back to the file of CIT(Exemptions) for denovo disposal on merits in accordance with law.
In the result, the appeal filed by the assessee is partly allowed. Order pronounced in the open court on 12th July, 2024.