Extension Of Timeline For Filing Form No.10AB For Recognition U/s.12A Is Deemed Extension For Renewal Of Approval Under Clause (Iii) Of First Proviso To Sec 80G: Chennai ITAT

The Chennai ITAT recently clarified that once the timeline prescribed for filing Form No.10AB for recognition u/s.12A has been extended, the same may be treated as extended for Form No.10AB for renewal of approval/recognition/registration under clause (iii) of the first proviso to section 80G of the Income Tax Act.

The ITAT held so while agreeing with the contention of the assessee that the timeline prescribed under clause (iii) of the first proviso to section 80G(5) should be treated as directory and not mandatory especially considering the transitional nature of the amendment as brought out by the taxation of other laws (relaxation and amendment of certain provisions) Act 2020 (TOLA) for bringing new regime.

The Bench of the ITAT comprising of Mahavir Singh (Vice President) and Manoj Kumar Aggarwal (Accountant Member) observed that “specific provision of clause (iii) to first proviso to section 80G(5) cannot be excluded and or it has not been the intention of the CBDT while issuing the circular. There cannot be a distinction within the same provision without bringing out any exception and even this provision is for the benefit of the donors who are donating money to the charitable trusts for claiming exemption in their returns of income.” (Para 7.8)

As per the brief facts of the case, the Assessee's trust applied Form 10AB under Rule 11AA seeking approval under clause (iii) of the first proviso to sub-section (5) of section 80G. The CIT(Exemption) noted that the assessee had been granted provisional approval in Form No.10AC u/s.80G(5)(iv) for the period commencing 23.09.2021 to the assessment year 2024-25. The CIT(E) noted that as per the provisions of section 80G(5), various time limits have been prescribed within which the assessee is required to apply for approval, depending upon the various categories of trusts/institutions mentioned therein. He noted the fact that in the present case, the assessee is provisionally approved u/s.80G(5)(iv), and therefore, the assessee was required to apply Form No.10AB u/s.80G(5)(iii) within six months before the expiry of the period of the provisional approval or six months of commencement of its activities, whichever is earlier. The CIT(E) further noted that with the advent of a new regime of registration of trusts/institutions seeking registration under the Act, the CBDT on multiple occasions had extended time line in applying Form No.10A or Form No.10AB but the assessee has failed to do so. Hence, the CIT(E) rejected the assessee's application in Form No.10AB u/s.80G(5)(iii) as not-maintainable.

The Bench noted that the timeline prescribed for filing Form No.10AB for registration u/s.12A f the Act in the case of assessee trust has been extended up to 30.09.2023 after considering the genuine hardship faced by charitable institutions vide various CBDT circulars and finally, vide Circular No.6/2023 dated 24.05.2023.

The Bench found that the timeline prescribed for filing Form No.10A for recognition u/s.80G was also extended up to 30.09.2023 by the same circular for trusts filing registration under clause (i) to first proviso to section 80G(5).

The Bench stated that once, the CBDT has extended the timeline for filing Form No.10AB for recognition u/s.12A and also for filing Form No.10A for recognition u/s.80G extended up to 30.09.2023 for trusts filing registration under clause (i) of first proviso to section 80G(5), we find no difference in continuing hardship as recognized by CBDT even in filing Form No.10AB for renewal of recognition u/s.80G under clause (iii) of first proviso to section 80G(5).

The Bench observed that to make the process of registration completely electronic under a 16-digit Unique Registration Number (URN), the new regime was introduced for new as well as existing charitable institutions due to which a new clause (ac) has been inserted in a sub-section (1) of section 12A which states that anything contained in clauses (a) to (ab), the person in receipt of the income who wants to claim the benefit of section 11 & 12 is to make an application in the prescribed form 10A or 10AB and in prescribed manner to the Principal Commissioner or Commissioner, for registration of the trust or institution.

The Bench stated that similar changes have been made in the provisions of section 80G(5), the first and second provisos, for existing and new trusts or entities.

The Bench found that the CBDT considering the difficulties in filing in the electronic mode of filing of Form No.10A or 10AB, in the exercise of powers conferred upon it u/s.119 extended the due date for filing Form No.10A or 10AB up to 30.09.2022 vide Circular No.16/2021.

The Bench observed that there is no dispute about the final registration granted to the assessee trust u/s.12A in Form No.10AD under the new regime vide order dated 13.09.2023. Still, it rejected the assessee's application filed in Form No.10AB u/s.80G dated 17.03.2023 vide order dated 25.09.2023 as the application is a belated one.

Therefore, on finding that the CIT(E) should not have rejected the assessee's application, ITAT allowed the assessee's appeal.

Counsel for Appellant/ Assessee: N. Arjun Raj

Counsel for Respondent/ Revenue: R. Clement Ramesh Kumar

Case Title: Shri Ramajayam Charitable Trust verses Income Tax Officer

Case Number: ITA No.1136/CHNY/2023

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