2025 (9) TMI 160 - AT - Income Tax

Form 10AB filing held within limitation; order set aside and matter remanded for fresh 80G registration review

ITAT, Hyderabad held the assessee's Form 10AB was filed within limitation, rejecting the CIT(E)'s view that provisional registration commencement date ... Grant of regular registration/approval u/s 80G - HELD THAT:- In the case in hand, the assessee has stated in the reply filed before the CIT (E) that the assessee Trust commenced its charitable activity with effect from the date of its registration i.e. 22/06/2016 and therefore, when the activities of the assessee were commenced prior to the provisional registration granted on 22/06/2022, then the limitation reckoned from the commencement of the activity becomes irrelevant. Following the earlier order of this Tribunal Shiva Kiran Charitable Trust [2025 (7) TMI 1885 - ITAT HYDERABAD] we hold that the application filed by the assessee in Form 10AB is within the period of limitation and consequently, the impugned order of the CIT (E) is set aside and the matter is remanded to the record of the CIT (E) for reconsideration of the application of the assessee for grant of regular registration/approval u/s 80G of the Act on merits by considering all relevant facts, details and record. ISSUES PRESENTED AND CONSIDERED 1. Whether an application for final registration under section 80G(5)(iii) filed in Form 10AB on 30/09/2024 (or 28/09/2024 as per different files) is barred by limitation where provisional registration in Form 10AC was granted with validity from A.Y. 2023-24 to A.Y. 2025-26 (provisional registration dated 22/06/2022)? 2. Whether the CBDT Circular No.7 of 2024 (extending time for filing Form 10A/10AB till 30/06/2024) applies to provisional registrations valid from A.Y. 2023-24 onwards, or only to provisional registrations/approvals for A.Y. 2022-23? 3. Whether the alternative limitation (within six months of commencement of activities) in proviso to section 80G(5)(iii) is applicable to an existing trust that commenced activities prior to the new regime (prior to 01-04-2021), or whether limitation must be reckoned exclusively with reference to six months prior to expiry of provisional registration? 4. Whether condonation of delay or consideration on merits is required where the Tribunal finds the application to be within limitation and the Commissioner rejected the Form 10AB as time-barred without considering condonation request or merits. ISSUE-WISE DETAILED ANALYSIS Issue 1 - Limitation for filing Form 10AB where provisional registration runs from A.Y. 2023-24 to 2025-26 Legal framework: First proviso to section 80G(5) prescribes time limits for making application in Form 10AB where provisional approval exists: (i) at least six months prior to expiry of provisional approval, or (ii) within six months of commencement of activities, whichever is earlier. Precedent treatment: Tribunal applied its earlier decision on identical facts (referred order in ITA No.627/Hyd/2025) where the same point was considered and resolved in favor of the applicant. Interpretation and reasoning: Provisional registration granted on 22/06/2022 was valid through A.Y. 2025-26 (i.e., up to March 2025). Six months prior to expiry therefore fell on 30/09/2024. The application filed on 30/09/2024 (or 28/09/2024) was thus within the six-month-before-expiry window. Where the trust commenced activities prior to provisional registration (and prior to the new regime), the alternative limb tied to commencement-of-activities is inapplicable; limitation is to be reckoned with reference to expiry of provisional registration. Ratio vs. Obiter: Ratio - where provisional registration is valid beyond A.Y. 2022-23, and trust's activities commenced prior to provisional registration, filing Form 10AB within six months before expiry of the provisional registration complies with section 80G(5)(iii). Obiter - none materially relied upon for outcome beyond this fact pattern. Conclusions: The Tribunal held the application to be within the time limit prescribed by the statute and set aside the Commissioner's rejection on limitation grounds, remanding for reconsideration on merits. Issue 2 - Applicability of CBDT Circular No.7/2024 extending time to 30/06/2024 Legal framework: Administrative circulars may extend time for compliance for specified assessment years; applicability depends on the period targeted by the circular. Precedent treatment: Tribunal distinguished the circular's scope on identical facts in the cited Tribunal order, holding the circular extended time for A.Y. 2022-23 only. Interpretation and reasoning: Circular No.7/2024 extended the time limit for submitting Form 10A/10AB till 30/06/2024 for the A.Y. 2022-23. Where provisional registration in the case at hand was valid from A.Y. 2023-24 to 2025-26, the circular's extension did not operate to shorten or override the statutory six-month-before-expiry calculation applicable to that provisional registration period. Therefore, reliance on the circular to treat the application as time-barred was misplaced. Ratio vs. Obiter: Ratio - the CBDT circular's extension was confined to A.Y. 2022-23 and is not applicable to provisional registrations commencing from A.Y. 2023-24; thus the extension cannot be invoked to declare an otherwise timely application (by reference to six months before expiry) as time-barred. Obiter - none beyond this scope. Conclusions: The Tribunal held the circular inapplicable to the provisional registration period in question and therefore could not be the basis for rejection for delay. Issue 3 - Relevance of commencement-of-activities limb when activities commenced prior to new regime Legal framework: The proviso to section 80G(5) provides an alternative time limit - within six months of commencement of activities - but only where that limb is 'earlier' than six months before expiry of provisional approval. Precedent treatment: Tribunal followed its earlier decision distinguishing situations where an institution commenced activities before the new regime, holding the commencement limb irrelevant where activities predated relevant statutory change and provisional registration timing governs limitation. Interpretation and reasoning: If activities began prior to the effective date of the new regime, the 'within six months of commencement' limb does not operate to shorten the timeframe below the statutory six months-before-expiry requirement. The relevant comparator is whichever is earlier; in the present fact pattern, commencement occurred well before provisional registration and therefore is not the operative earlier date. Ratio vs. Obiter: Ratio - for trusts whose activities commenced prior to the new regime, the commencement-of-activities limb does not displace the six-month-before-expiry reckoning; the latter governs limitation. Obiter - application where commencement post-dates the new regime would require separate consideration. Conclusions: The Tribunal found the commencement limb inapplicable and confirmed that the filing date complied with the statutory deadline measured from expiry of provisional registration. Issue 4 - Duty to consider condonation requests and merits where application is found timely Legal framework: If an administrative authority rejects an application solely as time-barred without considering a condonation request or the merits, the Tribunal may set aside that decision and remit for reconsideration on merits. Precedent treatment: Tribunal relied on its prior similar order to set aside the rejection and remit for fresh consideration of the substantive application. Interpretation and reasoning: Because the Tribunal concluded the Form 10AB was filed within the relevant statutory period, the Commissioner's rejection on limitation grounds (and apparent failure to consider condonation) could not stand. The proper course is remand to enable the Commissioner to decide the application on merits and consider any condonation request in light of the correct limitation analysis and evidentiary material. Ratio vs. Obiter: Ratio - where a tribunal finds an impugned administrative rejection premised on incorrect limitation analysis, the appropriate remedy is to set aside the order and remit for reconsideration on merits, including consideration of condonation where raised. Obiter - none material. Conclusions: The Tribunal set aside the rejection, remanded the matter to the Commissioner for fresh consideration of the Form 10AB application on merits and to consider the condonation request and all relevant records. Overall Disposition The Tribunal allowed the appeal for statistical purposes, holding that the Form 10AB application was within the statutory time limit (six months prior to expiry of provisional registration), that CBDT Circular No.7/2024 did not apply to provisional registrations valid from A.Y. 2023-24, that the commencement-of-activities limb was inapplicable for existing trusts whose activities preceded the new regime, and remitted the matter to the Commissioner for merits consideration.