Appeal allowed for charity trust to rectify approval date under Income Tax Act

The Tribunal allowed the appeal filed by the public charitable trust, directing the PCIT to rectify the approval date to 01.04.2021 in accordance with section 80G(5)(vi) of the Income Tax Act, 1961. The Tribunal emphasized that approval should commence from the start of the relevant assessment year, leading to the decision in favor of the assessee on 19th October 2022 in Chennai.

---

---

Issues:
1. Interpretation of provisions under section 80G(5)(vi) of the Income Tax Act, 1961 regarding approval of a public charitable trust.

Analysis:
The appeal before the Appellate Tribunal ITAT Chennai stemmed from the order passed by the PCIT (Exemption), Chennai concerning the approval of a Trust under section 80G(5)(vi) of the Income Tax Act, 1961. The crux of the matter was the discrepancy in the approval date granted by the PCIT, which the assessee contended should have been from 01.04.2021 as per the sixth proviso to section 80G(5) of the Act, rather than from 23.09.2021 as approved by the PCIT.

Upon examining the facts and contentions, it was revealed that the assessee, a public charitable trust, had applied for re-registration under section 12AB of the Act in August 2021. Subsequently, the PCIT granted provisional approval in September 2021, specifying the approval period from 23.09.2021 to the assessment year 2024-25. The assessee challenged this approval date before the Tribunal, asserting that as per the relevant provisions, the approval should have been effective from 01.04.2021.

The Tribunal delved into the provisions of section 80G(5) of the Act, particularly focusing on the first, second, fourth, fifth, and sixth provisos. The Tribunal emphasized that as per the sixth proviso, approval should be granted from the commencement of the relevant assessment year and not midway through the year. Therefore, the Tribunal concluded that the assessee was indeed entitled to approval from 01.04.2021, in alignment with the statutory provisions, and directed the PCIT to rectify the approval date accordingly.

In light of the above analysis and interpretation of the pertinent provisions, the Tribunal allowed the appeal filed by the assessee, emphasizing the clear and unambiguous nature of the statutory provisions governing the approval of public charitable trusts under section 80G(5) of the Income Tax Act, 1961. The Tribunal's decision was pronounced in an open court session on 19th October 2022 in Chennai.

---