A Trust Is Not Barred From Getting Approval U/S 80G In Future Because It Has Not Opted For It Previously: Kolkata ITAT

The Kolkata ITAT ruled that simply because a trust/charitable institution has not opted for getting benefits under the Income-tax Act, then such institution is not barred in future from applying from registration/approval under the relevant provisions.

The Bench of Sanjay Garg (Judicial Member) & Girish Agrawal (Accountant Member) found that the assessee for the first time started its activity after grant of provisional registration on Sep 15, 2022, on which date the trust received donation, and thereafter applied for final registration on Dec 30, 2022 which was well within the period of six months from the commencement of its charitable activity after the date of provisional registration.

The Bench therefore explained that if the view of the CIT(E) is accepted, then “any trust which is or has been already into charitable activities and has been granted provisional registration, the same will never be entitled for grant of final registration. Such an interpretation of the provisions of Section 80G(5) of the Act will defeat its purpose”. (Para 6)

As per the brief facts of the case, the assessee trust, duly registered u/s 12A(1)(ac)(iii), applied for provisional approval u/s 80G(5)(iv) which was granted by CIT(E) till A.Y 2025-26. Subsequently, the assessee moved an application for final approval u/s 80G(5)(iii). However, the CIT(E) has rejected the said application, referring to clause (iii) of proviso to section 80G(5), and observing that assessee has already commenced its activities in the financial year 2020-21 and that as per Clause (iii) of 1st Proviso to section 80G(5) of the Act, the application for final registration was to be filed within six months from the commencement of its activities. He, therefore, held that the application of the assessee for final registration was time-barred.

Referring to the Co-ordinate Bench decision in case of West Bengal Welfare Society, the Bench reiterated that though the assessee may have commenced its activities prior to applying for provisional approval u/s 80G(5), but that does not mean that once the assessee has commenced its activities or already has been doing charitable activities and it has not opted for getting benefits under the Income-tax Act, then such an assessee trust/charitable institution is barred in future from applying from registration/approval under the relevant provision of the Income-tax Act.

Therefore, taking reasonable construction of the said provision, the Bench elucidated that assessee is well within the prescribed limitation period to apply for the final approval u/s 80G(5) of the Act.

Hence, the ITAT allowed the assessee's appeal and directed the CIT(E) to grant final approval to the assessee u/s 80G(5)(iii) of the Act, if the assessee is otherwise found eligible, irrespective of the date of application.

Counsel for the Appellant/ Taxpayer: Siddharth Jhajharia

Counsel for Respondent/ Department: Abhijit Kundu

Case Title: Diamond Cares verses CIT (Exemption)

Case Number: ITA. No. 877/Kol/2023

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