TaxTMI 
TaxTMI 
2026 (8) TMI 453
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....elay, as your esteemed Tribunal has the power and jurisdiction to condone such delays. 4. The Trust respectfully submits that the delay was neither deliberate nor intentional but purely due to unavoidable circumstances, and therefore deserves to be condoned in the interest of justice. 5. The Learned CIT(E), Pune, failed to consider the documents and photographs submitted by the Appellant as evidence of genuine charitable activities. 6. The appellant craves leave to add/ alter/ amend any of the grounds of appeal." Findings & Analysis : 2. We have heard both the parties and perused the records. In this case, Assessee had filed application in Form No. 10AB for approval under section 80G(5) of the Act, on 07.02.2025. Ld.Commissioner of Income Tax(Exemption)[ld.CIT(E)] noted that Assessee had started activities on 01.04.2022. Therefore, ld.CIT(E) rejected the assessee's application u/s. 80G(5) of the Act, stating that as per Clause-iii of Section 80G(5) time limit to file application was within six months from the date of commencement of activities or within six months from the date of provisional approval. In this case, provisional approval was rece....
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....into the merits of the case." 3.1 Thus, the only limited question before us is whether the application of the assessee was time barred or not? 3.2 To decide this question, we have to first understand the relevant statutory provisions of the Income Tax Act. 4.1 The relevant part of Section 80G(5) of the Income tax Act is reproduced here as under : 80G. (1) In computing the total income of an assessee, there shall be deducted, in accordance with and subject to the provisions of this section,- (i) ... (ii) ..... (2) The sums referred to in sub-section (1) shall be the following, namely :- (a) ........ (b) .............. (c) ..................... (d) ............. (4) ............................ (5) This section applies to donations to any institution or fund referred to in sub-clause (iv) of clause (a) of sub-section (2), only if it is established in India for a charitable purpose and if it fulfils the following conditions, namely :- (i) where the institution or fund derives any income, such income would not be liable to inclusion in its total income under the provisions of sec....
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....n application in the prescribed form and manner to the Principal Commissioner or Commissioner, for grant of approval,- (i) where the institution or fund is approved under clause (vi) [as it stood immediately before its amendment by the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020], within three months from the 1st day of April, 2021; (ii) where the institution or fund is approved and the period of such approval is due to expire, at least six months prior to expiry of the said period; (iii) where the institution or fund has been provisionally approved, at least six months prior to expiry of the period of the provisional approval or within six months of commencement of its activities, whichever is earlier; (emphasis supplied) [(iv) in any other case, where activities of the institution or fund have- (A) not commenced, at least one month prior to the commencement of the previous year relevant to the assessment year from which the said approval is sought; (B) commenced and where no income or part thereof of the said institution or fund has been excluded from the total income on account ....
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....endment in the registration procedure by Finance Act, 2020. For the first time the Finance Act, 2020 introduced the concept of "Provisional Approval". Also due to the amendment, all the existing Trust/Institutions which were already having registration u/s. 12AA or 80G(5) were asked to re-apply for registration as per the amendment brought in 2020 and a date was specified before which all those Trust/Institutions already having Registration was required to make a fresh application as per the amendment procedure. 7. In this background we have to interpret the relevant provisions. To interpret the provisions, we shall refer to the Budget Speech of the Hon'ble Finance Minister. 7.1 The Hon'ble Supreme Court in the case of K P Varghese Vs. ITO [1981] 131 ITR 597 (SC) has observed as under regarding use of Speech of a Minister as a tool in interpretation: Quote, " Now it is true that the speeches made by the Members of the Legislature on the floor of the House when a Bill for enacting a statutory provision is being debated are inadmissible for the purpose of interpreting the statutory provision but the speech made by the mover of the Bill explaining the reason for....
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....onths prior to expiry of provisional registration or within six months of start of activities, whichever is earlier" 9. Thus, these amendments were introduced to simply the procedure of registration of Charitable Trusts/Institutions. The amendment made to simplify a procedure cannot be interpreted in a way that it causes prejudice to the Trust/institutions. 10. Thus, when we read the Budget Speech of the Hon'ble Finance Minister 2020 and the Memorandum of Finance Bill, 2020 together, it becomes clear that the concept of Provisional registration was mainly to facilitate the registration of newly formed Trust/Institutions which have not yet begun the activities. The parliament in its wisdom has decided to differentiate between the Trust which were newly formed and the trust which were already doing charitable activities. In the second category of cases, there are again two possibilities, one trust was already doing charitable activities and was already having Registration u/s. 12AA or 80G(5) of the Act, such trust were directed to re-apply for registration under new procedure on or before 30th August, 2020 but due to Covid-19 this date was subsequently extended. There is Se....
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....on. This interpretation leads to absurd situation. 11.1 In this context, we will like to refer to observations of the Hon'ble Supreme Court in the case of K P Varghase(supra), where in Hon'ble Supreme Court observed as under : Quote, "It is a well-recognised rule of construction that a statutory provision must be so construed, if possible, that absurdity and mischief may be avoided. There are many situations where the construction suggested on behalf of the revenue would lead to a wholly unreasonable result which could never have been intended by the Legislature. Take, for example, a case where A agrees to sell his property to B for a certain price and before the sale is completed pursuant to the agreement and it is quite well known that sometimes the completion of the sale may take place even a couple of years after the date of the agreement - the market price shoots up with the result that the market price prevailing on the date of the sale exceeds the agreed price at which the property is sold by more than 15 per cent of such agreed price. This is not at all an uncommon case in an economy of rising prices and in fact we would find in a large number of cases w....
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.... construction that where the plain literal interpretation of a statutory provision produces a manifestly absurd and unjust result which could never have been intended by the Legislature, the Court may modify the language used by the Legislature or even 'do some violence" to it, so as to achieve the obvious intention of the Legislature and produce a rational construction -" Unquote. 11.2 Thus, as observed by the Hon'ble Supreme Court, that the statutory provision shall be interpreted in such a way to avoid absurdity. In this case to avoid the absurdity as discussed by us in earlier paragraph, we are of the opinion that the words, "within six months of commencement of its activities" has to be interpreted that it applies for those trusts/institutions which have not started charitable activities at the time of obtaining Provisional registration, and not for those trust/institutions which have already started charitable activities before obtaining Provisional Registration. We derive the strength from the Speech of the Hon'ble Finance Minister and the Memorandum of Finance Bill, 2020. 11.3 The Finance Act, 2024 has amended Section 80G(5) of the Act. The relevant provis....