Existing charitable trust not bound by six-month time limit under section 80G(5) for registration application

ITAT Surat allowed assessee's appeal against CIT(E)'s rejection of 80G registration application. CIT(E) had rejected the application citing non-compliance with time limits under section 80G(5) third proviso clause (iii). ITAT held that the six-month time limit for applying after provisional registration applies only to newly formed trusts that haven't commenced activities, not to existing trusts already conducting charitable activities before obtaining provisional registration. Following Jodhpur ITAT precedent, the matter was remanded to CIT(E) for fresh consideration with proper hearing opportunity.

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Issues Involved:
1. Rejection of application for registration under Section 80G.
2. Interpretation of the proviso to Section 80G(5) regarding the timing of the application.
3. Consideration of provisional registration granted by the predecessor Commissioner.
4. Compliance with the extended period for filing the application as per CBDT Circular.

Issue-wise Detailed Analysis:

1. Rejection of Application for Registration under Section 80G:
The assessee, a trust established in 1953 and registered under Section 12A since 1977, applied for final approval under Section 80G on 02/02/2023 after obtaining provisional approval on 16/12/2022. The Commissioner of Income Tax (Exemptions) [CIT(E)] rejected the application on the grounds that it was not filed within the prescribed time limit under clause (iii) of the third proviso to Section 80G(5). The CIT(E) also canceled the provisional approval granted earlier.

2. Interpretation of the Proviso to Section 80G(5):
The CIT(E) interpreted the proviso to Section 80G(5) to mean that the application should have been filed on or before 30/09/2022, which the assessee failed to do. The assessee argued that the application should be considered valid due to the extension granted by CBDT Circular No. 6/23 dated 24/05/2023, which extended the due date to 30/09/2023. The Tribunal referred to the Jodhpur Bench's decision in Bhamashah Sundarlal Daga Charitable Trust Vs CIT(E), which clarified that the phrase "within six months of commencement of its activities" applies to newly formed trusts and not to those already engaged in charitable activities. The Tribunal agreed with this interpretation, noting that the intention of the legislation was to simplify the registration process and not to create absurd situations.

3. Consideration of Provisional Registration Granted by the Predecessor Commissioner:
The assessee highlighted that it had been granted provisional registration by the predecessor Commissioner, which was valid until AY 2025-26. The Tribunal noted that the CIT(E) did not mention any specific violations by the assessee that would justify canceling the provisional approval. The Tribunal emphasized that the provisional approval should remain valid unless specific violations are identified.

4. Compliance with the Extended Period for Filing the Application as per CBDT Circular:
The assessee argued that their application should be considered valid in light of the CBDT Circular extending the due date to 30/09/2023. The Tribunal found that the assessee had applied for final approval within the extended period and that the CIT(E) should have considered this extension. The Tribunal directed the CIT(E) to reconsider the application afresh, following the decision of the Jodhpur Bench and granting the assessee a reasonable opportunity for a hearing.

Conclusion:
The Tribunal restored the matter to the file of the CIT(E) to reconsider the application afresh, following the decision of the Jodhpur Bench in Bhamashah Sundarlal Daga Charitable Trust Vs CIT(E). The CIT(E) was directed to pass a new order in accordance with the law, granting the assessee a reasonable opportunity for a hearing. The appeal was allowed for statistical purposes.

Order:
The appeal of the assessee was allowed for statistical purposes, and the matter was announced in open court on 11th January 2024.

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