Requirement Of 'Commencement Of Activity' Does Not Apply To Trusts Already Started Charitable Activity Before Obtaining Provisional Registration: Pune ITAT

Finding that the Assessee Trust had applied for registration within the time allowed under the Income Tax Act, the Pune ITAT directed the CIT(E) to treat the application being filed within statutory time after verifying assessee's eligibility for deduction u/s 80IA(4) as per act.

The Bench comprising of Satbeer Singh Godara (Judicial Member) And Dipak P. Ripote (Accountant Member) observed 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.” (Para 11.2)

As per the brief facts of the case, the Assessee's return was selected for scrutiny, wherein the CIT(E) has rejected the application of the assessee dated 08/04/2023 filed in Form 10AB for approval u/s 80G, only on one ground that the application has been filed beyond six months of commencement of activities and hence held it as time barred.

The Coram noted that the Assessee had received the Provisional Approval u/s 80G(5) vide orders dated 09/07/2021 for period from A.Y.2021-22 to A.Y.2023-24 and dated 22/09/2022for period from A.Y.2023-24 to A.Y.2025-26. The assessee has approval u/s.12A(1)(ac) dated 30.01.2019.

The Bench observed from the Memorandum of Finance bill that it is not mandatory that every charitable trust/institution has to apply for registration u/s.80G(5). However, there is no bar in the Act that such trust or institutions cannot apply for registration u/s.80G in the new procedure.

The Coram explained by the plain reading of sub-clause (iii) of the Proviso to Section 80G(5) that the Institution which have provisional registration have to apply at-least six months prior to expiry of the provisional registration or within Six months of commencement of activities, whichever is earlier.

The Bench further explained that for the existing Trust/Institution, the time limit for applying for Regular Registration is within six months of expiry of Provisional registration if they are applying under sub clause (iii) of the Proviso to Section 80G(5). This will be the harmonious interpretation.

Therefore, the ITAT allowed the assessee's appeal for statistical purposes, observing that the assessee has made the application in form 10 AB within the prescribed time limit.

Counsel for Appellant/ Taxpayer: Deepa Khare

Counsel for Respondent/ Department: Rakesh Jha

Case Title: T B Lulla Charitable Foundation verses The CIT Exemption

Case Number: ITA No.1220/PUN/2023

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