2025 (7) TMI 1885 - AT - Income Tax

Denial of 80G registration set aside and matter remanded for fresh CIT(E) review; CBDT Circular No.7/2024 not extending limits

Shiva Kiran Charitable Trust, Hyderabad Versus Commissioner Of Income Tax (Exemptions) Hyderabad

Shiva Kiran Charitable Trust, Hyderabad Versus Commissioner Of Income Tax (Exemptions) Hyderabad - TMI ISSUES PRESENTED AND CONSIDERED 1. Whether an application in Form-10AB for regular registration/approval under section 80G filed on 28/09/2024 is time-barred where provisional registration in Form-10AC was granted on 22/06/2022 valid from A.Y. 2023-24 to A.Y. 2025-26. 2. Whether the limitation for filing Form-10AB is to be reckoned with reference to (a) six months before expiry of provisional registration, or (b) six months from date of commencement of activities, when activities commenced prior to grant of provisional registration. 3. Whether extension of limitation by CBDT Circular No.7/2024 (dated 25/04/2024) applies to provisional registrations valid from A.Y. 2023-24 onwards or only to A.Y. 2022-23, and whether such extension affects the validity of the Form-10AB filed on 28/09/2024. ISSUE-WISE DETAILED ANALYSIS Issue 1 - Timeliness of Form-10AB filed 28/09/2024 where provisional registration runs A.Y. 2023-24 to 2025-26 Legal framework: Finance Act, 2020 prescribes that an entity granted provisional registration/approval in Form-10AC must apply for regular registration/approval in Form-10AB at least six months before expiry of the provisional registration or within six months from date of commencement of activities, whichever is earlier. CBDT circulars may extend statutory time limits for filing specified forms. Precedent treatment: The Tribunal considered earlier bench decisions cited by the applicant (ITAT Pune, Jodhpur, Rajkot) supporting the position that timeliness is to be assessed with reference to the provisional registration period where activities commenced prior to provisional registration. The impugned order followed the literal time-extension cut-off asserted by Revenue but did not apply the provisional-expiry rule in the assessee's factual matrix. Interpretation and reasoning: The Tribunal examined the effective validity of provisional registration (valid up to March 2025) and computed the statutory six-month prior cut-off as 30/09/2024. Since the Form-10AB was filed on 28/09/2024, it fell within that six-month-before-expiry window. The Tribunal also found the alternative six-months-from-commencement provision irrelevant because the activities of the trust had commenced prior to grant of provisional registration; thus the 'whichever is earlier' limb did not shorten the assessee's period. Ratio vs. Obiter: Ratio - Where provisional registration is valid until a future date, the requirement to file Form-10AB 'at least six months before the expiry' is satisfied if the application is filed within that six-month pre-expiry window; if activities commenced before grant of provisional registration, the six-months-from-commencement limb does not operate to curtail that window. Obiter - Observations about the general interplay of commencement-date and provisional-expiry rules outside the present factual matrix. Conclusion: The Form-10AB filed on 28/09/2024 was within the statutory period measured as six months before expiry of the provisional registration valid through A.Y. 2025-26; therefore it was not time-barred on that ground. Issue 2 - Applicability of CBDT Circular No.7/2024 to provisional registrations valid from A.Y. 2023-24 onwards Legal framework: CBDT circulars extend timelines for filing forms for specified assessment years; such extensions are year-specific and must be read with the particular assessment year(s) they cover. Precedent treatment: The Tribunal noted reliance by Revenue on Circular No.7/2024 which extended the time limit up to 30/06/2024; the impugned order treated that extension as determinative against the assessee's 28/09/2024 filing. Interpretation and reasoning: The Tribunal analyzed the scope of Circular No.7/2024 and concluded that the circular extended time limits for filing Form-10AB for A.Y. 2022-23 only. Given the provisional registration in the present case was effective from A.Y. 2023-24 onward, the circular's extension did not curtail the six-month-before-expiry deadline applicable to registrations covering later assessment years. Consequently, the circular could not be invoked to reject an application otherwise falling within the statutory window prescribed by the Finance Act, 2020. Ratio vs. Obiter: Ratio - A time-extension circular that is specific to a particular assessment year does not shorten or displace the statutory filing window applicable to provisional registrations covering different assessment years; a circular extending time to 30/06/2024 for A.Y. 2022-23 does not render an application filed within six months before expiry of provisional registration for A.Y. 2023-24 invalid. Obiter - Broader remarks on the proper construction of administrative circulars vis-à-vis statutory time limits. Conclusion: Circular No.7/2024 was not applicable to the provisional registration period in question; therefore the 28/09/2024 filing cannot be rejected on the basis that it was beyond the CBDT-extended deadline for A.Y. 2022-23. Issue 3 - Correctness of treating commencement-date limb as operative where activities had already commenced before provisional registration Legal framework: The Finance Act, 2020 provides two alternative temporal triggers for filing Form-10AB: six months before expiry of provisional registration, or within six months from commencement of activities, whichever is earlier. The 'earlier' qualification requires factual comparison of dates. Precedent treatment: Earlier Tribunal decisions relied upon by the assessee were held persuasive - those decisions treated the provisional-expiry computation as the operative limitation where activities had already commenced before provisional registration. Interpretation and reasoning: The Tribunal focused on the actual commencement date of activities: since activities began prior to grant of provisional registration, the alternate six-months-from-commencement limb did not accelerate the filing deadline to a date earlier than six months before expiry. The 'whichever is earlier' proviso thus did not operate to shorten the assessee's window. The Tribunal therefore rejected the CIT(E)'s treatment that the commencement-date limb made the 28/09/2024 filing time-barred. Ratio vs. Obiter: Ratio - When activities commence prior to provisional registration, the 'six months from commencement' limb does not necessarily create an earlier deadline than 'six months before expiry,' and the operative deadline must be fixed by comparing the two dates in fact; conclusions must follow the earlier of the two computed dates. Obiter - Discussion on hypothetical scenarios where commencement occurs after provisional registration. Conclusion: The commencement-date limb was not operative to shorten the deadline in the present facts; Form-10AB filed on 28/09/2024 met the operative statutory timeline. Final Disposition and Direction Interpretation and reasoning: Applying the legal framework and factual chronology, the Tribunal concluded the impugned rejection for delay was incorrect. The Tribunal set aside the CIT (Exemption)'s order rejecting Form-10AB as time-barred and remanded the application to the CIT (E) for reconsideration on merits, instructing consideration of all relevant facts, details and records. Ratio: The Tribunal's operative holding is that an application in Form-10AB filed within six months before expiry of provisional registration is timely even if filed after the period covered by a CBDT circular limited to an earlier assessment year, provided the circular does not expressly cover the provisional registration's assessment years; and that the commencement-date proviso is applicable only if it yields an earlier deadline on the facts.