Appeal allows post-commencement 80G(5) approval application; delay condonation, matter remanded under amended proviso from 01-10-2024

ITAT Pune held that, in view of the amended proviso to section 80G(5)(iv) effective from 01-10-2024, an assessee may file an application for approval under section 80G(5) even after commencement of its activities. Consequently, there was no delay in the assessee's application. The order of the CIT (Exemptions), Pune rejecting the application on the ground of delay was set aside, and the matter was remanded for fresh consideration in accordance with law after affording reasonable opportunity of hearing. The assessee's appeal was allowed for statistical purposes.

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1. ISSUES PRESENTED AND CONSIDERED

1.1 Whether delay in filing the appeal before the Tribunal deserved condonation on showing sufficient cause.

1.2 Whether, in view of the amendment effective from 01.10.2024 to the proviso to section 80G(5)(iv), the assessee's application in Form No. 10AB for approval under section 80G(5) could be treated as time-barred.

1.3 Consequentially, whether the rejection of the assessee's application under section 80G(5) solely on the ground of delay was sustainable, or the matter required remand for fresh adjudication on merits.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Condonation of delay in filing appeal

Interpretation and reasoning:

2.1 The Tribunal examined the reasons stated in the assessee's affidavit explaining delay in filing the appeal.

2.2 The Tribunal was satisfied that the assessee was prevented by "sufficient cause" from filing the appeal within the prescribed limitation period.

Conclusions:

2.3 Delay in filing the appeal was condoned and the appeal was admitted for adjudication.

Issue 2: Timeliness of application under section 80G(5) in light of the amended proviso to section 80G(5)(iv)

Legal framework (as discussed):

2.4 The Commissioner (Exemption) applied clause (iii) of the first proviso to section 80G(5), holding that where a trust or institution has been provisionally approved, application for regular approval must be filed within six months from commencement of activities, and, considering CBDT Circular No. 7 of 2024, treated the extended due date as 30.06.2024.

2.5 The Tribunal noted that, with effect from 01.10.2024, there is an amendment to the proviso to section 80G(5)(iv) permitting an application for approval even after commencement of activities, specifically recognizing that where activities have commenced, application may be made "at any time after the commencement of such activities".

Interpretation and reasoning:

2.6 The impugned rejection order proceeded solely on the basis that the assessee's Form 10AB application dated 15.10.2024 was filed beyond the time-limit calculated under the earlier regime (provisional approval dated 31.05.2023; activities already commenced; application to be filed on or before 30.11.2023, extended to 30.06.2024).

2.7 The Tribunal considered the amended proviso to section 80G(5)(iv) (reproduced in the order) and interpreted it to mean that, where the activities of the institution or fund have commenced, the statute now permits an application for approval to be filed at any time after commencement of such activities.

2.8 On this interpretation, the Tribunal held that, as of 01.10.2024, the legal position no longer barred an application merely on the ground that it was filed beyond six months from commencement of activities or beyond the earlier prescribed timelines.

Conclusions:

2.9 In light of the amendment effective from 01.10.2024, the assessee's application dated 15.10.2024 could not be treated as delayed or time-barred.

2.10 The rejection of the application by the Commissioner (Exemption) on the sole ground of delay was unsustainable.

Issue 3: Consequential relief and remand

Interpretation and reasoning:

2.11 Since the only ground for rejection was delay in filing, and such delay was held to be non-existent in law under the amended provision, the Tribunal considered it appropriate to set aside the impugned order.

2.12 The Tribunal noted that other aspects of the application-such as genuineness of activities and compliance with conditions under section 80G(5)-were not adjudicated on merits by the Commissioner (Exemption) in the impugned order.

Conclusions:

2.13 The impugned order rejecting the application under section 80G(5) was set aside.

2.14 The matter was remanded to the file of the Commissioner (Exemption) with a direction to decide the application for approval under section 80G(5) afresh, in accordance with law and on the basis of facts, after affording reasonable opportunity of hearing to the assessee.

2.15 The assessee was directed to cooperate, comply with notices, and furnish requisite documents/information without seeking adjournments, failing which the Commissioner (Exemption) would be at liberty to pass an appropriate order as per law.

2.16 The appeal was allowed for statistical purposes.

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