ITAT Calcutta Allows Exemption Registration To Income Tax Bar Association, Sets Aside CIT Order

The Calcutta Bench of Income Tax Appellate Tribunal (ITAT) has allowed the exemption registration to the income tax bar association as the registration application was not time-barred.The bench of Rajpal Yadav (Vice President) and Sanjay Awasthi (Accountant Member) has observed that the procedure adopted by the CIT (Exemption) was incorrect to grant a provisional certificate to the assessee at the first stage and then to deny the regular certificate under Section 80G(5)(iii) of the Income Tax Act. Section 80G of the Income Tax Act provides tax exemptions for donations made to specified charitable institutions and funds. The appellant/assessee is a registered society under the Registrar of Firms, Societies, and Non-Trading Corporations, West Bengal. It is also affiliated with the West Bengal Bar Council. It was established in the year 1924, before the enactment of the Income Tax Act of 1961. The society has been enjoying registration under Section 12A of the Income Tax Act. It was also granted a certificate for exemption under Section 80G(5)(vi) of the Income Tax Act. The amendments were notified to the Income Tax Act regarding the award of registration under Section 12A and certification under Section 80G(5), effective April 1, 2021, as per the Taxation and Others Law (Relaxation and Amendment of Certain Provisions) Act, 2020.The assessee has filed an application for grant of registration under Section 80G(5)(iv) of the Income Tax Act in Form No. 10AC. The application was allowed for a period from September 23, 2021, to April 25, 2024–25. The assessee filed the application in Form No. 10AB under Rule 17A of the Income Tax Rules, 1962, for grant of regular registration under Section 80G(5)(iii) of the Income Tax Act. The application of the assessee has been rejected by the commissioner. The Commissioner was of the view that the time limit for grant of registration under Section 80G(5)(iii) of the Income Tax Act ought to have been moved to Form 10AB of the Income Tax Act, at least six months prior to the expiry of the period of the provisional approval or within six months of the commencement of its activities, whichever is earlier. Initially, provisional registration was granted to the assessee. But the CIT (Exemption) observed that since the assessee has commenced its activities and the application for regular registration has been moved beyond six months of the commencement of activities, the application is not maintainable. CIT (Exemption) rejected the application of the assessee and denied the regular registration under Section 80G(5)(iii) of the Income Tax Act. He further cancelled the provisional registration granted to the assessee.The assessee association filed the appeal. The President of the Bar Association, S.K. Tulsiyan, contended that the appellant institution, being an existing institution, is duly approved under Section 12AA of the Act, and its donation enjoyed exemption under Section 80G of the Income Tax Act. Due to the insertion of section 12AB(l)(a) by the Taxation and Others Law (Relaxation and Amendment of Certain Provisions) Act, 2020, w.e.f. 01.04.2021, the appellant-institution was entitled to be registered for a period of five years up to A.Y. 2025–26. Likewise, due to the insertion as per Proviso 1 to Section 80G(5), the appellant had applied for exemption under Section 80G and was granted exemption from April 1, 2021, until March 31, 2024, being the A.Ys 2021-22 to 2024-25. As per the requirement of Section 80G(5) provisos (i) to (iii), i.e., six months before the date of expiry of the approval, the appellant was to make an application to the CIT seeking renewal of permanent exemption, which was duly done and was well within time.The department pointed out that CBDT has extended the time limit for filing the application in Form No. 10A/10AB from time to time since the inception of the new scheme of grant of registration under Section 12A/80G. CIT (Exemption) failed to comprehend the true procedure required to be followed. unnecessary and huge litigation has been generated on account of the failure of the authorities to comprehend the new scheme.The institutions that were already approved under Section 80G(5)(vi) on the date of amendment brought to Section 80G of the Act by the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020, have to re-apply for fresh registration under Clause (i) of the First Proviso to Section 80G(5), and those institutions have to be granted provisional registration for five years by the CIT (Exemption) without any inquiry. The prescribed date for final application for approval under Clause (i) of the First Proviso to Section 80G(5) was stipulated as three months from the 1st day of April 2022. However, the CBDT from time to time extended the date for filing the application under Clause (i) to the First Proviso to Section 80G(5), and finally the date was extended up to September 30, 2023. The tribunal, while allowing the...

ITAT Calcutta Allows Exemption Registration To Income Tax Bar Association, Sets Aside CIT Order

Mariya Paliwala

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