Provisional approval under section 10(23C) must run from the exemption year sought, not a later assessment year.

The amended section 10(23C) approval regime was applied with reference to the Finance Act-effective dates, and the substituted provisos required provisional approval to operate from the assessment year for which exemption was sought. Pending applications were to be processed under that revised framework, making the later assessment year adopted by the authority below inconsistent with the statutory scheme. On that basis, the effective date of provisional approval was required to be assessment year 2020-21, not assessment year 2021-22, and the assessee was entitled to relief from the earlier year.

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Issues: Whether the provisional approval under section 10(23C) was required to operate from assessment year 2020-21 instead of assessment year 2021-22.

Analysis: The amended regime governing approval of funds, trusts and educational institutions under section 10(23C) was examined with reference to the effective dates inserted by the Finance legislation. The relevant amendment to the provisos provided for application and approval from the assessment year from which exemption is sought, and the pending applications were to be treated in accordance with the substituted framework. On that basis, the approval date adopted by the authority below was found inconsistent with the statutory scheme.

Conclusion: The effective date of provisional approval ought to have been assessment year 2020-21 and not assessment year 2021-22.

Final Conclusion: The assessee was entitled to approval from the earlier assessment year, and the relief sought in the appeal was granted.

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