SHRI SANATAN DHARAM MAHAVIR DAL,PATIALA vs. CIT (EXEMPTIONS), CHANDIGARH

That the CIT(E) was not justified in rejecting the application for registration of assessee-trust under section 80G(5) on the ground that the application is time barred whereas as per the Assessee the application filed by the assessee-trust was well within time and therefore the order of the CIT(E) deserves to be set aside.

The assessee craves leave to add or delete any ground(s) before the appeal is finally heard for disposal.

Briefly the facts of the case are that the assessee had moved an application seeking provisional registration u/s 80G which was allowed on 16/05/2023. Thereafter, the assessee society moved an application in Form 10AB for seeking final registration under Section 80(G)(5)(iii) on 02/09/2023. 3. The application so filed by the assessee was rejected by the ld CIT(E) for the reason that Form 10AB was filed beyond time limits prescribed under Clause (iii) of first proviso to sub-section (5) of section 80G of the Act and various other

Being aggrieved, the assessee has filed the present appeal before us.

During the course of hearing, Ld. AR submitted that the assessee was granted provisional registration on 16/05/2023 and it has applied for the final registration on 02/09/2023 within the prescribed limitation period. It was submitted that the relevant provisions state that the application for final registration has to be applied atleast six months prior to expiry of the period of the provisional registration or within six months of commencement of its activities, whichever is earlier. It was submitted that the assessee couldn’t have applied for the final registration prior to the grant of the provisional registration and therefore, even where it had commenced its activities in October 2018, the earliest it can apply for the final registration is soon after getting the provisional registration which it has duly complied within the stipulated period. It was submitted that the application seeking final registration has been wrongly dismissed by the ld CIT(E) and the order rejecting application of the assessee for registration under section 80G may kindly be quashed and the matter be restored to the file of the ld CIT(E) to be adjudicated on merits after allowing necessary opportunity to the assessee society. In support, reliance was placed on the Coordinate Bench decision in case of Anudip Foundation for Social Welfare vs CIT(Exempton) (ITA No. 1341/Kol/2023 dated 11/03/2024).

In his submissions, the ld CIT/DR submitted that the Central Board Direct Taxes (Circular no. 07/2024, dated 25-Apr-2024) has issued a circular whereby an extended time limit has now been granted to all charitable trusts and societies to file fresh application in Form 10AB and relevant paragraph 4.1 of the said circular reads as under: "Further, in cases where any trust, institution or fund has already made an application in Form No. 10AB. and where the Principal Commissioner or Commissioner has passed an order rejecting such application, on or before the issuance of this Circular, solely on account of the fact that the application was furnished after the due date or that the application has been furnished under the wrong section code, it may furnish afresh application in Form No. 10AB within the extended time provided in paragraph 3(H) i.e. 30.06.2024.”

The ld CIT/DR fairly submitted that since the time limit for filing fresh application as so stated in the CBDT circular has expired and to avoid any further technicalities/complexity, it would be in fitment of things that since the Bench is ceased of the present matter, the matter may be set-aside to the file of the ld CIT(E) and where the Bench so decide, the Revenue has no objection for the ld CIT(E) to examine the same on merits of the case.

Heard both the parties and purused the material available on record. Admittedly the application seeking final registration under Section 80G has been moved by the assessee on 02/09/2023, within the prescribed due date, after getting the provisional registration on 16/05/2023. We therefore find merit in the contention advanced by the ld AR that the application seeking final registration has been moved well within the prescribed time period and is thus not barred by limitation. As far as requirement of second limb of moving such application within six months of commencement of its activities is concerned, the same doesn’t apply in the facts of the present case as the assessee has already commenced its activities well before seeking the provisional registration and the period of six months of its activities had already expired well before applying the provisional registration thus, making the said requirement as not applicable. Similar view has been taken by various Benches of the Tribunal and useful reference can be drawn to the decision of the Coordinate Bench in case of Anudip Foundation for Social Welfare (Supra) and the relevant findings read as under:

The issue is squarely covered by the decision of the Coordinate Kolkata Bench of the Tribunal in the case of “Tomorrow’s Foundation vs. CIT(Exemption)” in ITA No.367/Kol/2024 order dated 27.02.2024 (the Judicial Member herein being the author the said order also). The relevant part of the order of the Coordinate Bench is reproduced as under:

It is to be further noted here that the ld. CIT(Exemption) 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 30.09.23 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.

1 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.

2 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.

3 In our humble understanding, if the view of the ld. CIT(Exemption) 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 Coordinate Bench of the Tribunal in the case of Vivekananda Mission Asram vs. CIT (supra) and in the case of “West Bengal Welfare Society vs. CIT(Exemption)” (supra) and further by the decision in the case of “Sri Aurobindo Bhawan Trust, Krishnagar vs. CIT(Exemption)” order dated 20.02.2024 (Judicial Member herein being the author of the said orders). Therefore, the impugned order of the CIT(Exemption) is set aside and the ld. CIT(Exemption) 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 ld. CIT(A) will decide the application for final registration within three months of the receipt of copy of this order.

The facts and issues involved in this case in hand are identical to that of the above referred to decision, the appeal of the assessee is allowed accordingly and the ld. CIT(Exemption) 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. It is directed that the ld. CIT(E) will decide the application of the assessee for final approval as expeditiously as possible but not later than two months from the receipt of this order.

It is further directed that, if the assessee is granted final approval by the ld. CIT(E) then, the benefit of approval u/s 80G of the Act, available to the assessee prior to the Amendment brought vide Amending Act of 2020, will be deemed to be continued without any break. The assessee will not be deprived of the benefit during the time period falling between 31/03/2021 and the date of grant of provisional approval under clause (iv) i.e., 28/05/2021, due to technical errors occurred in making the application under the relevant provisions of the Act because of the confusion and misunderstanding on part of the assessee as well as on part of the ld. CIT(E) in properly interpreting the relevant provisions.

With the above observations, the appeal of the assessee is treated as allowed for statistical purposes.

Having said that, we find that CBDT has also received certain representation on difficulties being faced by the assessees and has come out with a Circular no. 07/2024 dated 25/04/2024. It has been provided in the said circular that where the Principal Commissioner or Commissioner has passed an order rejecting such application, on or before the issuance of the Circular, solely on account of the fact that the application was furnished after the due date or that the application has been furnished under the wrong section code, it may furnish afresh application in Form No. 10AB within the extended time provided in paragraph 3(H) i.e. 30/06/2024. In the instant case, we find that the application of the assessee has been rejected vide order dated 20/02/2024 before the issuance of the aforesaid circular dated 25/04/2024 and though the time limits prescribed therein have expired, going by intent and spirit of the circular so issued by the CBDT and submissions so made by the ld AR and ld CIT/DR, the assessee application deserve to be examined on merits and cannot be dismissed as barred by limitation.

In light of the same, we remit the matter to the file of the ld CIT(E) to admit the application of the assessee as filed within the stipulated period and examine the same on merits as per law as expeditiously as possible preferably within two months of receipt of this order after providing reasonable opportunity to the assessee.

In the result, the appeal of the assessee is allowed for statistical purposes.