Section 80G(5) provisional approval errors in Form 10AB cannot justify rejection when final approval is sought.

An institution already holding provisional approval under section 80G(5) must have its application for final approval examined under clause (iii) of the first proviso, not clause (iv)(B), because clause (iii) governs conversion from provisional to final approval. An incorrect selection of the code in Form 10AB was treated as an inadvertent procedural error and could not justify rejection on the basis of misclassification. The application was therefore required to be considered on merits under the correct statutory route, and the rejection was held not sustainable; the matter was directed to be reconsidered for final approval if the assessee is otherwise eligible.

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Issues: Whether the assessee, having already obtained provisional approval under section 80G(5), was wrongly treated as falling under clause (iv)(B) of the first proviso instead of clause (iii), and whether its application for final approval could be rejected on that basis.

Analysis: The assessee had been granted provisional approval and had applied for conversion of that approval into final approval. Clause (iii) of the first proviso governs cases where the institution has been provisionally approved, whereas clause (iv)(B) applies to other cases. The selection of the wrong code in Form 10AB was treated as an inadvertent procedural error, and the rejection was based on an incorrect classification of the application. In these circumstances, the correct statutory route was to consider the application under clause (iii) and decide it on merits.

Conclusion: The rejection was not sustainable. The application was held to fall under clause (iii) of the first proviso to section 80G(5), and the matter was directed to be reconsidered for grant of final approval if the assessee is otherwise eligible.

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