Form No.10AB provisional approval timing clarified: delay in filing condoned and application remitted for merits review.

Interpretation of the provisional approval time limit: trusts that began activities before grant of provisional approval and before the provisional regime must be assessed by the six months before expiry filing rule rather than a six months from commencement rule, since literal application would bar long standing trusts and defeat legislative purpose. The application record showed no adverse findings on genuineness and was rejected solely for delay; accordingly delay is condoned and the rejection is set aside. The matter is remitted to the assessing authority to examine eligibility and genuineness of activities on merits after hearing.

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Issues: Whether rejection of the assessee's Form No.10AB as time-barred under clause (iii) of the first proviso to section 80G(5) is sustainable where the trust commenced activities prior to grant of provisional approval and prior to introduction of the provisional approval regime, and whether the delay in filing should be condoned.

Analysis: The proviso's six-month-from-commencement limb is intended for newly constituted trusts that commence activities after provisional approval; for trusts carrying on activities prior to grant of provisional approval and prior to introduction of the provisional regime, the operative time-limit is filing at least six months prior to expiry of provisional approval. Applying this principle, a literal application of the six-month-from-commencement requirement to long-standing trusts would bar them unfairly from regular approval and frustrate legislative intent. The record shows no adverse findings on genuineness of activities and the CIT(E) rejected the application solely on the ground of delay. In such circumstances, condonation of delay is appropriate to allow examination on merits of eligibility and compliance with statutory conditions.

Conclusion: The rejection of the application solely on the ground of delay is not sustainable; the delay in filing Form No.10AB is condoned; the impugned order is set aside and the matter is restored to the CIT(E) to examine eligibility and genuineness of activities in accordance with law after affording opportunity of hearing.

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