CLEAN TEETH CLEAN MOUTH CHARITABLE TRUST,RAJKOT vs. COMMISSIONER OF INCOME TAX (EXEMPTIONS), AHMEDABAD

PER SIDDHARTHA NAUTIYAL - JUDICIAL MEMBER:

The Assessee has taken the following grounds of appeal:- 2.

“1. The grounds of appeal mentioned hereunder are without prejudice to one another.

2. That the learned Commissioner of Income Tax (Exemptions), Ahmedabad has erred in law and on facts in refusing to grant approval U/S 80G(5) of the Income Tax Act, 1961.

3. Your Honour’s appellant craves leave to add, to amend, alter, or withdraw any or more grounds of appeal on or before the hearing of appeal.”

3. The brief facts of the case are that the assessee filed application for final approval under Section 80G(5)(iii) of the Act in Form No. 10AB on Clean Teeth Clean Mouth Charitable Trust vs. CIT(E) Asst.Year –N.A. - 2– 06.05.2023. The assessee / Applicant Trust had been earlier granted or for provisional approval in Form No. 10AC on 06.04.2023 under Clause (iv) of first proviso. On receipt of application, CIT(E) observed that as per provisions of Section 80G(5) as it stands from 01.04.2021, in the present case, since the assessee had got provisional approval under Section 80G(5) of the Act, the applicant was required to file application in Form No. 10AB under Clause (iii) of first proviso to sub-Section (5) of Section 80G of the Act within the time period of at least six months prior to expiry of the period of the provisional approval or within six months of commencement of it’s activity, whichever is earlier. Further, the CIT(E) was of the view that the aforesaid timeline prescribed are mandatory in nature in view of the Calcutta Tribunal decision in the case of Bishnupur Public Education Institute vs. Commissioner of Income Tax (Exemption) 139 taxmann.com 121 (Calcutta). Further, CIT(E) observed that CBDT on multiple occasions had extended the time line in filing the application in Form 10Ab and vide Circular No. 8/2022 had extended the time line to 30.09.2022. Thereafter, another Circular No. 6/2023 dated 24.05.2023 was introduced, but in such Circular the date so far as filing of Form 10AB under Section 80G(5)(iii) of the Act is concerned, was not extended beyond the period of 30.09.2022. Accordingly, in view of the aforesaid Circular, the last date of filing From No. 10AB for approval under Section 80G(5)(iii) of the Act was 30.09.2022. However, in this case, the applicant had been granted order for provisional approval in Form No. 10AC under Section 80G(5)(iv) on 06.04.2023 and the applicant filed Form No. 10AB under Section 80G(5) of the Act on 06.05.2023. Accordingly, in view of the above facts, CIT(E) observed that in view of the above provisions the applicant was required to file application in Form No. 10AB on or before 30.09.2022, which it failed to submit. Further, the CIT(E) was also of the view Clean Teeth Clean Mouth Charitable Trust vs. CIT(E) Asst.Year –N.A. - 3– that the date of commencement of activities in the case of the assessee should also be six months prior to the date of filing of From 10AB. Accordingly, Ld. CIT(E) rejected the application of the assessee for grant of approval with the following observations:-

“7. In the absence of any details filed by the applicant in this case date of commencement is assumed to be date of incorporation/creation/registration i.e. 01/05/2007. In view of discussion in Para 3 and Para 4 above, the applicant was required to file application in Form 10AB in this case on or before 30/09/2022, which he has failed to submit.. Therefore, the present application in Form No.10AB u/s 80G(5) of the Act has not been filed within the time limit prescribed therein and therefore, the same is liable to be rejected as such as non maintainable. Therefore, the present application in Form No.10AB u/s 80G(5) of the Act is rejected as non maintainable and also provisional approval granted in Form No. 10AC, under clause (iv) of first proviso to sub-section (5) of section 80G vide URN: AAATC9186HF20231 is hereby cancelled.”

4. The assessee is in appeal before us against the aforesaid order passed by Ld. CIT(E) rejecting the application filed by the assessee / Applicant Trust. Before us, the Counsel for the assessee submitted that the assessee / Applicant Trust is an old Trust which was registered on 01.05.2007. The assessee Trust filed application for grant of final approval under Section 80G of the Act on 30.03.2023 and the assessee / Applicant Trust was granted provisional approval on 06.04.2023. Thereafter, within one month of grant of provisional registration, the assessee / Applicant Trust filed application for grant of final approval under Section 80G(5) of the Act on 06.05.2023. The said application filed by the assessee / Applicant Trust was rejected on 24.11.2023. Accordingly, the Counsel for the assessee submitted firstly that the assessee Trust had been incorporated on 01.05.2007 and therefore, the assessee / Applicant Trust had commenced it’s activities much prior to the Amendment / changes introduced in 80G(5) of the Act for grant of approval effective from 01.04.2021. Therefore, the reasonable interpretation of the Rules for making Clean Teeth Clean Mouth Charitable Trust vs. CIT(E) Asst.Year –N.A. - 4– application for grant of approval under Section 80G(5) of the Act is that the assessee should make application for grant of filing approval under Section 80G(5) of the Act within a period of six months from the date of grant of provisional registration. In the instant case, the Counsel for the assessee submitted that the assessee has satisfied the above time lines and has made application for grant of final registration (on 06.05.2023) within one month from date of grant of provisional registration (as on 06.04.2023). Accordingly, the Ld. CIT(E) erred in facts and in law in not granting registration / refusing to grant final registration under Section 80G(5) of the Act. Further, the Counsel for the assessee also submitted that on identical set of facts, vide order dated 04.11.2023, the assessee / Applicant Trust had been granted final approval under Section 12AB of the Act and therefore, there is no reason as to why on identical set of facts, the grant of final registration under Section 80G(5) of the Act should be rejected.

5. In response, the Ld. D.R. submitted that the assessee / Applicant Trust was issued several notices, and in absence of any details filed by the applicant, the date of commencement is assumed to be the date of incorporation i.e. 01.05.2007 and the applicant was required to file application in Form No. 10AB on or before on 30.09.2022 in terms of Circular No. 8/2022 dated 31.03.2022 which had extended the time for making application in Form 10AB under Section 80G(5)(iii) of the Act to 30.09.2022. Since the Applicant Trust had filed application for grant of registration beyond the stipulated time, there is no error in the order of CIT(E) denying the grant of registration to the Applicant Trust.

“8. In our considered view, the ITAT in the case of CIT-1982, Charitable Trust in has elaborately discussed the issue under consideration before us, after taking into consideration various judicial precedents which have been rendered in the past on the instant subject. The ITAT, in our considered view has correctly observed that there is no reason to provide for a distinction within the same provision, so as to have a different timeline for accepting application for grant of final approval in respect for grant of registration in Form No. 10AB for registration under Section 12A of the Act and for grant of final registration under Section 80G(5) of the Act. The ITAT, in our view has correctly observed that there cannot be a distinction within the same provision for having different time-lines, without bringing out any exception and further, even the provisions of Section 80G are for the benefit of the donors, who are donating money to the charitable Trust for claiming exemption in their returns of income. It would be useful to reproduce their relevant extracts of the Ruling for reference:

Clean Teeth Clean Mouth Charitable Trust vs. CIT(E) Asst.Year –N.A. - 6–

“7.2 The legislature by way of amendment introduced new regime for taxation of Trusts w.e.f. 01.04.2021 and this amendment was made with the objective that it needs improvement with the advent of technology and keeping in mind the practical issue of difficulty in obtaining registration/approval/notification before actually starting the activities. To make the process of registration completely electronic under a 16 digit Unique Registration Number (URN), the new regime was introduced for new as well as to existing charitable institutions. Due to change in law, a new clause (ac) has been inserted in sub-section (1) of section 12A w.e.f. 01.04.2021 which states that notwithstanding anything contained in clauses (a) to (ab), the person in receipt of the income who wants to claim benefit of section 11 & 12 is to made an application in the prescribed form 10A or 10AB and in prescribed manner to the Principal Commissioner or Commissioner, for registration of the Trust or institution. 7.3 Similarly, for approval u/s.80G of the Act, similar changes were effected in the provisions of section 80G(5), the first and second provisos, which were made applicable with effect from 01.04.2021 for existing Trusts as well as new Trusts or entities. This amendment is brought in by Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 amended the provisions related to application by a Trust for registration or approval by amending the first and second proviso to clause (23C) of section 10, clause (ac) of sub-section (1) of section 12A of the Act, inserting section 12AB of the Act and amending the first and second proviso to sub-section (5) of section 80G of the Act. 7.4 We are concerned with the provisions of section 80G of the Act in these cases. In view of the above provisions, the deduction u/s.80G of the Act in respect of a donation made by a donor to a fund or institution referred to in sub-clause (iv) of clause (a) of subsection (2) of section 80G, shall be allowed to the donor only if a statement of such donations is furnished by the donee in Form 10BD. The certificate of such donation is required to be provided in Form No. 10BE. Further, Form No. 10BD and Form No. 10BE are required to be furnished on or before the 31st May, immediately following the financial year in which the donation is received. The timeline provided for filling of application for approval of Trust or any institution under the first and second proviso to sub-section (5) of section 80G of the Act is within six months of commencement of activities or at least six months prior to expiry of provisional approval. These two timelines are provided in first proviso to section 80G(5) of the Act. But, the CBDT time and again considering the difficulties in filing in the electronic mode of filing of Form No.10A or 10AB, in exercise of powers conferred upon it u/s.119 of the Act, extended the due date for filing Form No.10A or 10AB up to 30.09.2022 vide Circular No.16/2021 dated 29.08.2021 and further, vide Circular No.6/2023 dated 24.05.2023 up to 30.09.2023. But the CBDT has extended this date up to 30.09.2023 in filing Form No.10A for registration u/s.12A of the Act vide paras 6 to 8 of the Circular (which is reproduced in this order at para 7.1 above). The Revenue has filed the date and events which are undisputed in this case and as admitted by Revenue that in this case, provisional registration was granted u/s.80G(5) of the Act in Form No.10A under the new regime under clause (iv) of the said provision vide dated 23.09.2021. Even the final registration was granted u/s.12A of the Act in Form No.10AD under the new regime vide dated 13.09.2023 but rejected the application for final approval applied u/s.80G of the Act in Form No.10AB vide order dated 25.09.2023 by CIT(Exemption) on the reason that the application was filed by assessee only on 17.03.2023, which is belated application. There is no dispute about the final registration granted to the assessee Trust u/s.12A of the Act in Form No.10AD under the new regime vide order dated 13.09.2023 but Clean Teeth Clean Mouth Charitable Trust vs. CIT(E) Asst.Year –N.A. - 7– rejected assessee’s application filed in Form No.10AB u/s.80G of the Act dated 17.03.2023 vide order dated 25.09.2023 as the application is a belated one. 7.5 We have considered the case laws of Co-ordinate Bench of Jaipur Tribunal in the case of Go Gram Eco Foundation, supra and noted that the Jaipur Bench has considered this issue of delay in application filed in Form No.10AB in term of clause (iii) of first proviso to section 80G(5) of the Act, wherein the provisional registration was granted to the assessee Trust on 16.10.2021 in Form No.10A u/s.12A(1)(ac)(vi) and under clause (iv) of first proviso to section 80G(5) of the Act. In that case, the provisional registration was granted in form No.10AC on 27.10.2021. Admitted fact in the case is that the assessee Trust commenced its activities from 13.10.2021 being new Trust and assessee filed application for grant of approval under clause (iii) of first proviso to section 80G(5) on 16.12.2022, which is delayed by almost about 2.5 months from the extended date. The Tribunal considered this issue and finally in para 6.1 noted and the relevant reads as under:- There is no dispute as to the fact that assessee is provisionally registered till A.Y. 2024-25 vide order dated 27.10.2021. Thus it has complied with section 80G(5). The proviso to this section only deals with the procedure as to the filing of the application. The law of procedure has to be approached, understood and appreciated as a helpmate in the course of the process of administration of justice. Procedural provision should be so construed as to sub serve the course of justice and not to hinder it. It is a settled proposition of law that technicalities should not come in way in imparting the substantial justice. We get support of our this view from the decision of Hon’ble Supreme Court in case of S. Nagaraj & Others Vs. State of Karnataka & Another 4 SCC 595. 7.6 Even in the decision of Jodhpur Bench of this Tribunal in the case of Bhamashah Sundarlal Daga Charitable Trust, supra, the assessee Trust received provisional approval u/s.80G(5) vide order dated 16.08.2022 for the period from 16.08.2022 to A.Y. 2025-26. The assessee has also got approval u/s.12A(1)(ac) of the Act from A.Y. 2022-23 to A.Y. 2026-27 and assessee filed application in Form No.10AB for approval u/s.80G(5) of the Act on 11.01.2023, which was treated as belated application and appropriate authority rejected the approval application filed by the assessee. But the Tribunal allowed the maintainability of application and directed the CIT(Exemption) to re-decide on merits. Hence, these decisions favors the case of the assessee and clearly applicable to the facts of present case before us. 7.7 The case law cited by the Revenue of Kolkata Tribunal in the case of Bishnupur Public Education Institute, supra wherein the Kolkata Tribunal has relied on the decision of Hon’ble High court of Madras in the case of All Angels Educational Society, supra and the Hon’ble High Court of Andhra Pradesh in the case of Aurora Educational Society vs. CCIT reported in 20 taxmann.com 46, after considering these decisions has decided the issue on the approval of application filed u/s.10(23C)(vi) of the Act rejected by CIT(Exemption) relating to assessment years 2016-17, 2017-18 & 2018-19. The assessee’s application was dated 11.02.2019 under the old regime. The new regime of taxation of charitable Trusts / institutions started w.e.f. 01.04.2021 and hence, reliance placed by Revenue on the Co-ordinate Bench decision of Kolkata Tribunal in the case of Bishnupur Public Education Institute, supra is not at all relevant and even the case law of Hon’ble High Court of Madras and the Hon’ble High Court of Andhra Pradesh are also relating to taxation of old regime prior to 01.04.2021. Hence, these are clearly Clean Teeth Clean Mouth Charitable Trust vs. CIT(E) Asst.Year –N.A. - 8– distinguishable on facts and hence, not applicable. In term of the above, we now go through the factual aspect. 7.8 After hearing the arguments of ld. counsel for the assessee and ld. CIT-DR as noted above, we find from the facts that the timeline prescribed for filing Form No.10AB for registration u/s.12A of the Act in the case of assessee Trust has been extended up-to 30.09.2023 after considering the genuine hardship faced by charitable institutions vide various CBDT circulars and finally, vide Circular No.6/2023 dated 24.05.2023. Similarly, the timeline prescribed for filing Form No.10A for recognition u/s.80G of the Act was also extended up-to 30.09.2023 by the same circular for Trusts filing registration under clause (i) to first proviso to section 80G(5) of the Act. But the above extension was not extended beyond 30.09.2022, unlike other forms which were extended up to 30.09.2023 to the disputed forms namely Form No.10AB for renewal of recognition u/s.80G(5) of the Act under clause (iii) of the first proviso to section 80G(5) of the Act. Once, the CBDT has extended the timeline for filing Form No.10AB for recognition u/s.12A of the Act and also for filing Form No.10A for recognition u/s.80G of the Act extended up to 30.09.2023 for Trusts filing registration under clause (i) of first proviso to section 80G(5) of the Act, we find no difference in continuing hardship as recognized by CBDT even in filing Form No.10AB for renewal of recognition u/s.80G of the Act under clause (iii) of first proviso to section 80G(5) of the Act. In our view, this being a genuine hardship case, which is recognized by Revenue or CBDT by issuing a general circular, we are of the view that this specific provision of clause (iii) to first proviso to section 80G(5) cannot be excluded and or it has not been the intention of the CBDT while issuing the circular. There cannot be a distinction within the same provision without bringing out any exception and even this provision is for the benefit of the donors who are donating money to the charitable Trusts for claiming exemption in their returns of income. In our view, we agree with the argument of ld. counsel for the assessee that the timeline prescribed under clause (iii) of first proviso to section 80G(5) of the Act should be treated as directory and not mandatory especially considering the transitional nature of the amendment as brought out by the taxation of other laws (relaxation and amendment of certain provisions) act 2020 for bringing new regime. Hence, in our view, the CIT(Exemptions) should not have rejected the assessee’s application in Form No.10AB only for this technical reason. We are of the view that the intention of CBDT in its circular clearly reflects their mind that once the timeline prescribed for filing Form No.10AB for recognition u/s.12A of the Act has been extended up to 30.09.2023, the same may be treated as extended for forms namely Form No.10AB for renewal of approval/recognition/registration under clause (iii) of first proviso to section 80G of the Act also. Hence, we accept the plea of assessee and agree with the arguments of ld. counsel for the assessee and remand the matter back to the file of the CIT(Exemption) to decide the issue on merits. Hence, the order of CIT(Exemption) on this issue is set aside and matter is remanded back to the file of the CIT(Exemption) for re-deciding the issue on merits as per law. The appeal of the assessee is allowed for statistical purposes.”

Clean Teeth Clean Mouth Charitable Trust vs. CIT(E) Asst.Year –N.A. - 9–

In the case of CIT-1982 Charitable Trust vs. ITO 160 taxmann.com 9. 475 (Chennai – Tribunal), while passing the order the Tribunal held that the Timeline prescribed under clause (iii) of first proviso to section 80G(5) should be treated as directory and not mandatory, hence, once timeline prescribed for filing Form N0.10A for recognition under section 12A had been extended up to 30.09.2023, same may be treated as extended for forms namely Form No.10AB for renewal of approval/recognition/registration under clause (iii) of first proviso to section 80G also.

10. This brings us to the second issue regarding the interpretation of Amendment in the provisions of Section 80G(5) of the Act, effective from 01.04.2021, which provides that where the institution or fund has been provisionally approved, then the applicant was required to file application in Form No. 10AB under Section 80G(5)(iii) of the Act within the period of six months prior to expiry of period of provisional approval or within six months of commencement of it’s activities, whichever is earlier. We have observed in the earlier paragraphs that, on a reasonable interpretation, the assessee could be permitted to file application for grant of registration under Section 80G(5) of the Act in Form 10AB up to 30.09.2023 in view of extension granted to Clean Teeth Clean Mouth Charitable Trust vs. CIT(E) Asst.Year –N.A. - 10– registration of Trust under Section 12A of the Act till 30.09.2023. In the case of Tomorrow’s Foundation vs. CIT(E) 160 taxmann.com 174 (Kolkata – Tribunal), while passing the order the Tribunal has held that where assessee had been granted provisional approval under clause (iv) to first proviso to section 80G(5), application for final approval under clause (iii) to first proviso to section 80G(5) could not be rejected on ground that institution had already commenced its activities even prior to grant of provisional registration.

“ Circular No. 7/2024 F. No. 173/25/2024-ITA-I Government of India Ministry of Finance Department of Revenue Central Board of Direct Taxes New Delhi, Dated 25th April, 2024 Sub: Extension of due date for filing of Form No. 10A/10AB under the Income-tax Act, 1961-reg.

Clean Teeth Clean Mouth Charitable Trust vs. CIT(E) Asst.Year –N.A. - 11– On consideration of difficulties reported by the taxpayers and other stakeholders in the electronic filing of Form No. 10A/10AB, the Central Board of Direct Taxes (the Board) in exercise of its powers under section 119 of the Income-tax Act, 1961 (the Act) extended the due date for filing Form No. 10A to 31.08.2021 by Circular No. 1212021 dated 25.06.2021, to 31.03.2022 by Circular No. 16/2021 dated 29.08.2021, to 25.11.2022 by Circular No. 22/2022 dated 01.11.2022 and further to 30.09.2023 by Circular No. 6/2023 dated 24.05.2023, and extended the due date for filing Form No. 10AB to 30.09.2022 by Circular No. 8/2022 dated 31.03.2022 and further to 30.09.2023 by Circular No. 6/2023 dated 24.05.2023.

Clean Teeth Clean Mouth Charitable Trust vs. CIT(E) Asst.Year –N.A. - 12–