2024 (5) TMI 388 - AT - Income Tax

Trust's delayed Form 10AB filing deemed directory not mandatory under section 80G(5)(iii) approval

ITAT Ahmedabad allowed the appeal against CIT(E)'s rejection of final approval application under section 80G(5)(iii) on technical grounds. The CIT(E) had ... Rejection of the application for final approval u/s. 80G on technical grounds - applicant was required to file application in Form No. 10AB on or before 30.09.2022, which it failed to submit - CIT(E) was of the view that the date of commencement of activities in the case of the assessee should also be six months prior to the date of filing of From 10AB - HELD THAT:- As decided in the case of CIT-1982 Charitable Trust [2024 (3) TMI 1201 - ITAT CHENNAI] while passing the order the Tribunal held that the Timeline prescribed under clause (iii) of first proviso to section 80G(5) should be treated as directory and not mandatory, hence, once timeline prescribed for filing Form No.10A for recognition under section 12A had been extended up to 30.09.2023, same may be treated as extended for forms namely Form No.10AB for renewal of approval/recognition/registration under clause (iii) of first proviso to section 80G also. In the case of Anudip Foundation for Social Welfare[2024 (3) TMI 1202 - ITAT KOLKATA] Tribunal has held that where assessee had been granted provisional approval under clause (iv) to first to section 80G(5), application nor final approval under clause (iii) to first proviso to section 80G(5) could not be rejected on ground that institution had already commenced its activities even prior to grant of provisional registration. Since in the instant facts, as it evident from the various dates mentioned above, the assessee / Applicant Trust had filed application for grant of final approval u/s 80G(5) of the Act within a period of six months from date of grant of provisional registration on 06.04.2023 (whereas date of grant of provisional approval u/s 80G(5) of the Act was 30.03.2023 and as noted by us in the preceding paragraph, the assessee could have filed application for grant of approval on or before 30.09.2023) i.e. within a period of six months from date of grant of provisional registration which stands further extended to 30.06.2024 vide Circular No. 7/2024 dated 25.04.2024. Accordingly, we are of the considered view that Ld. CIT(E) erred in summarily dismissing the application of grant for final approval u/s 80G(5)(iii) of the Act for reasons cited. Accordingly matter is restored to the file of Ld. CIT(E) for de-novo consideration. Issues Involved:1. Rejection of application for final approval u/s 80G of the Act.2. Rejection of 80G application on technical grounds.Summary:Issue 1: Rejection of application for final approval u/s 80G of the ActThe Assessee filed an application for final approval u/s 80G(5)(iii) of the Act in Form No. 10AB on 30.03.2023. The Assessee had earlier received provisional approval in Form No. 10AC on 24.03.2023. The CIT(E) observed that the application should have been filed within six months prior to the expiry of the provisional approval or within six months of commencement of activities, whichever is earlier. The CIT(E) noted that the last date for filing Form No. 10AB for approval u/s 80G(5)(iii) was 30.09.2022, which the Assessee failed to meet. Consequently, the application was rejected as non-maintainable, and the provisional approval was canceled.Issue 2: Rejection of 80G application on technical groundsThe Assessee argued that the Trust was incorporated on 08.03.2018 and commenced its activities much before the amendments in 80G(5) effective from 01.04.2021. The Assessee claimed that the application for final approval was filed within one week of receiving provisional registration, thus complying with the timeline. The Assessee contended that the CIT(E) erred in rejecting the application on technical grounds.Tribunal's Observations:The Tribunal noted that the Assessee was incorporated on 08.03.2018, and it would be reasonable to presume that activities commenced before the amendments effective from 01.04.2021. The Tribunal referenced the ITAT ruling in the case of Adani Education Foundation, which held that there should be no distinction in timelines for filing Form 10AB for registration under Section 12AB and Section 80G(5). The Tribunal observed that the CBDT had extended the timelines for filing Form 10A and 10AB multiple times due to genuine hardships faced by charitable institutions.Conclusion:The Tribunal concluded that the CIT(E) erred in rejecting the application solely on technical grounds and that the timeline for filing Form 10AB should be treated as directory, not mandatory. The Tribunal remanded the matter back to the CIT(E) for re-decision on merits, considering the extended timelines provided by the CBDT. The appeal of the Assessee was allowed for statistical purposes.Order Pronounced: The appeal was allowed for statistical purposes, and the matter was remanded back to the CIT(E) for de-novo consideration.