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 rejected the application as the trust failed to file Form 10AB by the prescribed deadline of 30.09.2022 and commenced activities prior to provisional registration. The Tribunal held that the timeline for filing Form 10AB should be treated as directory, not mandatory, following precedents from ITAT Chennai and Kolkata. Since the timeline for Form 10A was extended to 30.09.2023, the same extension applied to Form 10AB applications. The matter was remanded to CIT(E) for fresh consideration.

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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 Act

The 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 grounds

The 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.

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