Trust wins appeal against registration denial under Section 80G(5)(iii) despite missing timeline requirements

ITAT Chennai allowed the appeal of a trust challenging denial of registration under Section 80G(5)(iii). The CIT(E) had rejected the application filed in Form 10AB on grounds of exceeding mandatory timeline - the trust was required to apply within 6 months of commencing activities or before 6 months prior to provisional approval expiry. The trust, having commenced activities in July 2020, filed application in September 2022 (later revised in January 2023). ITAT held the timeline should be treated as directory, not mandatory, given the transitional nature of amendments. The matter was remanded to CIT(E) for consideration on merits without timeline objections.

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Issues involved: Denial of registration u/s. 80G(5)(iii) by CIT(E), Delay in filing appeal, Timeliness of application for registration u/s 80G(5)(iii), Interpretation of CBDT Circulars regarding time limits for filing Form No.10AB.

Summary:

Issue 1: Denial of registration u/s. 80G(5)(iii) by CIT(E):
The assessee, an old trust, sought registration under clause (iii) of first proviso to sub-section (5) of Sec.80G. However, the application was filed after the mandatory timeline prescribed by law, leading to rejection by CIT(E). The tribunal noted that the earlier application was within the extended time limit, and following a similar case, held that the timeline should be treated as directory, not mandatory. The appeal was allowed, and the matter remanded for re-decision on merits.

Issue 2: Delay in filing appeal:
The appeal noted a delay of 31 days, which was condoned by the tribunal based on a condonation petition and affidavit submitted by the authorized signatory of the assessee trust. The appeal was admitted for adjudication after condoning the delay.

Issue 3: Timeliness of application for registration u/s 80G(5)(iii):
The assessee, an old trust, filed an application for registration under the wrong sub-clause initially, and later filed a revised application under the correct sub-clause. The tribunal held that the extended time limit as per CBDT Circulars should apply to Form No.10AB as well, setting aside the rejection by CIT(E) and directing a reconsideration on merits.

Issue 4: Interpretation of CBDT Circulars regarding time limits for filing Form No.10AB:
The tribunal emphasized that the extended time limit granted by CBDT Circulars for other forms should also be applicable to Form No.10AB for renewal of recognition u/s 80G(5)(iii). The tribunal considered this a genuine hardship case and deemed the timeline as directory, not mandatory. The order of CIT(E) was set aside, and the matter was remanded for re-decision on merits.

In conclusion, the tribunal allowed the appeal for statistical purposes, directing CIT(E) to reconsider the application on merits without raising the issue of timeline, following the interpretation of CBDT Circulars and the principle of genuine hardship.

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