Section 80G(5) clause (iv)(B) allows trusts to apply anytime after starting activities; application remitted for decision

ITAT (Chennai) set aside the CIT(E)'s finding that the 80G application was not maintainable for delay, holding that after the Finance Act, 2024 insertion of clause (iv) to the first proviso of Section 80G(5) (w.e.f. 01.10.2024) trusts may apply at any time after commencement of activities. The Tribunal directed CIT(E) to treat the application filed in 2024 as having been made under clause (iv)(B) and to decide it according to law, allowing the appeal for statistical purposes.

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ISSUES PRESENTED AND CONSIDERED

1. Whether an application for approval under section 80G(5) filed after the date extended by CBDT Circular No. 7/2024 (25.04.2024) but around the period when the Finance Act, 2024 inserted clause (iv) into the first proviso to section 80G(5) (w.e.f. 01.10.2024) is maintainable.

2. Whether the Commissioner (Exemptions) was justified in rejecting the application as not maintainable for being filed beyond the extended deadline of 30.06.2024.

3. Whether, in light of the amendment (insertion of clause (iv) to the first proviso to section 80G(5)), an earlier-filed application should be treated as having been filed under the new clause (iv)(B) and remitted for fresh adjudication.

ISSUE-WISE DETAILED ANALYSIS

Issue 1 - Legal framework governing timing of applications for approval under section 80G(5)

Legal framework: Section 80G(5) contains a first proviso prescribing timelines for filing applications for approval; prior rules required application by six months before expiry of provisional approval. CBDT Circular No. 7/2024 (25.04.2024) extended the deadline to 30.06.2024. The Finance Act, 2024 inserted clause (iv) into the first proviso to section 80G(5), with effect from 01.10.2024, allowing an assessee that has commenced activities to apply for approval at any time after such commencement (clause (iv)(B) invoked).

Precedent Treatment: No judicial precedent was cited or applied by the Tribunal; the resolution rests on statutory amendment and administrative circular.

Interpretation and reasoning: The Tribunal recognised that the newly inserted clause (iv) is a distinct provision that liberalises the timing by permitting application any time after commencement of activities. The Tribunal treated clause (iv) as disjoint from the earlier timeline governed by clause (iii) and the CBDT circular, so that the amendment fundamentally changes the maintainability analysis for applications made around the amendment's effective date.

Ratio vs. Obiter: Ratio - the amendment (clause (iv)) alters the statutory timing regime and can be applied to applications pending or filed around the transitional period to permit adjudication under the new provision. Obiter - none relevant beyond this interpretive conclusion.

Conclusions: The statutory insertion of clause (iv) (w.e.f. 01.10.2024) must be given effect to; it permits consideration of applications under clause (iv)(B) irrespective of the earlier timeline that had been extended by the CBDT circular.

Issue 2 - Validity of rejection by CIT(E) as not maintainable for delay beyond CBDT-extended deadline

Legal framework: Administrative circulars (CBDT Circular No. 7/2024) set an extended date of 30.06.2024 for filing under the previous regime; Commissioners may treat applications filed after such date as time-barred under the earlier proviso structure.

Precedent Treatment: No precedential authority was invoked to uphold automatic rejection where the statutory regime has been amended during the pendency of the application.

Interpretation and reasoning: The Tribunal noted that the Commissioner (Exemptions) rejected the application on 12.02.2025 after the Finance Act amendment had come into force (01.10.2024). Given that the amendment provides a separate ground (clause (iv)) allowing application after commencement of activities, the earlier conclusion of non-maintainability solely on the basis of the CBDT-extended deadline was not sustainable. The Tribunal treated the Commissioner's rejection as premised on a superseded timetable and therefore inappropriate after the amendment.

Ratio vs. Obiter: Ratio - where statutory amendment alters the timeline for maintainability, administrative rejection premised exclusively on the prior timeline should be reconsidered in light of the amended provision. Obiter - discussion of administrative circular effect on pending applications is ancillary to the main holding.

Conclusions: The rejection as not maintainable solely because the application was filed after the CBDT-extended date was not appropriate after the insertion of clause (iv); the application should be re-assessed under the amended statutory framework.

Issue 3 - Treatment of the assessee's application under newly inserted clause (iv)(B) and direction for remand

Legal framework: Clause (iv)(B) of the first proviso to section 80G(5), as inserted by the Finance Act, 2024 (w.e.f. 01.10.2024), allows entities that have commenced activities to apply for approval at any time after commencement.

Precedent Treatment: No prior decisions were cited; the Tribunal's direction rests on statutory interpretation and the timing of the amendment relative to the Commissioner's order.

Interpretation and reasoning: The Tribunal observed that the application before the Commissioner was rejected on 12.02.2025 after the amendment's effective date. The Tribunal therefore directed the Commissioner to treat the application as filed under clause (iv)(B) of the first proviso to section 80G(5) and to decide it in accordance with law. The Tribunal's direction effectively remands the matter for fresh adjudication under the amended provision rather than endorsing the earlier rejection.

Ratio vs. Obiter: Ratio - an application filed prior to or around the amendment's effective date can be treated as having been filed under clause (iv)(B) and requires fresh consideration under the amended provision; remand for decision in accordance with the law is appropriate. Obiter - the judgment does not lay down a general rule on retrospective effect beyond the facts here.

Conclusions: The Tribunal directed that the application be treated as having been filed under clause (iv)(B) and remitted the matter to the Commissioner for decision under the amended provision. The appeal was allowed for statistical purposes to give effect to that direction.

Cross-references and procedural note

Cross-reference: See Issue 1 (legal framework/interpretation) and Issue 3 (remand direction) - the holding that clause (iv) is disjoint from the earlier timeline underpins the requirement to re-evaluate maintainability and merits under the amended provision.

Procedural outcome: The Tribunal allowed the appeal for statistical purposes and directed reconsideration of the application in accordance with clause (iv)(B) of the first proviso to section 80G(5) as inserted by the Finance Act, 2024 (w.e.f. 01.10.2024).

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