Charitable trust's application for permanent registration under section 80G not time-barred when filed before provisional approval expires

ITAT Pune held that a charitable trust's application for permanent registration under section 80G was not time-barred. The court interpreted that for existing trusts with provisional registration, the six-month deadline runs from expiry of provisional registration, not from commencement of activities. The trust had applied for permanent registration on 24.05.2023, before its provisional approval expired in A.Y. 2023-24, making the application valid and maintainable. The assessee's appeal was allowed.

---

---

Issues Involved:
1. Whether the delay in filing the application for approval under section 80G of the Income Tax Act can be condoned.
2. Whether the application for approval under section 80G was time-barred.

Issue-wise Detailed Analysis:

1. Delay in Filing the Application:
The appellant argued that the delay in filing the application under section 80G(5) was due to bona fide reasons and circumstances beyond their control. The Tribunal found that there was sufficient reason for the delay and accordingly condoned it. The Tribunal accepted the affidavit explaining the reasons for the delay, thus allowing the appeal to proceed.

2. Time-barred Application:
The core issue was whether the application filed by the assessee on 24.05.2023 for approval under section 80G was time-barred. The Commissioner of Income Tax (Exemption) [CIT(E)] had rejected the application on the grounds that it was not filed within the time limit specified under clause (iii) of the first proviso to section 80G(5).

Statutory Provisions and Interpretation:
The Tribunal examined the relevant statutory provisions of section 80G(5) and the amendments introduced by the Finance Act, 2020, which included the concept of "Provisional Approval." According to the proviso to section 80G(5), the application for approval must be made at least six months prior to the expiry of the provisional approval or within six months of the commencement of activities, whichever is earlier.

Background and Legislative Intent:
The Tribunal referred to the Budget Speech of the Hon'ble Finance Minister and the Memorandum of the Finance Bill, 2020, to understand the legislative intent behind the amendments. The amendments aimed to simplify the registration process for charitable institutions and introduced provisional registration to facilitate newly formed trusts.

Interpretation of Provisions:
The Tribunal emphasized a harmonious interpretation of the statutory provisions to avoid absurdity. It concluded that the phrase "within six months of commencement of its activities" applies to newly formed trusts that had not started charitable activities at the time of obtaining provisional registration. For existing trusts already engaged in charitable activities, the relevant time limit is within six months of the expiry of the provisional registration.

Findings:
The Tribunal found that the assessee trust, which had commenced its activities long before obtaining provisional registration, had applied for regular registration within the stipulated time frame. The application was filed before the expiry of the provisional approval, thus making it valid and maintainable.

Conclusion:
The Tribunal set aside the order of the CIT(E) and remanded the case for de novo adjudication. The CIT(E) was directed to provide an opportunity for the assessee to be heard. The appeal was allowed for statistical purposes.

Order Pronouncement:
The order was pronounced in the open Court on 18th April, 2024.

---