No Requirement of Commencement of activity for registration if Trusts already engaged in Charitable Activity: ITAT [Read Order]

In a recent case, the Pune bench of the Income Tax Appellate Tribunal ( ITAT ) has held that there is no requirement for commencement of activity for registration if trusts are already engaged in charitable activity. The Commissioner of Income Tax ( Exemption ) has rejected the application of T B Lulla Charitable Foundation, the assessee filed in Form 10AB for approval u/s 80G of the Act, 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 application filed by the assessee is hereby rejected without going into the merits of the case and the provisional approval granted on 09/07/2021 under clause (iv) for the first proviso to section 80G(5) of the Income Tax Act, 1961. The Commissioner of Income Tax ( Exemption ), Pune in the case of the Assessee held that the Activities of the Assessee had commenced, hence the Assessee was liable to make an application for Approval under section 80G of the Act to file the present application within six months from the date of provisional approval i.e. on or before 08.01.2022 whereas the present application filed by the assessee on 08.04.2023 i.e.beyond the time limit allowed under clause (iii) of the first proviso to section 80G(5) of the Income Tax Act, 1961, the CIT(E) held it to be time-barred.

The new provision for Registration was introduced by Finance Act, 2020. There was an amendment in the registration procedure by the Finance Act, 2020. For the first time the Finance Act, of 2020 introduced the concept of “Provisional Approval”. Also due to the amendment, all the existing Trust/Institutions that already have registration under section 12AA or 80G(5) were asked to reapply 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.  A two-member bench comprising of Shri Satbeer Singh Godara, Judicial Member and Dr Dipak P Ripote, Accountant Member observed that “However, the CIT(E) has not discussed whether the Assessee fulfils all other conditions mentioned in the section as he rejected it on technical ground. Therefore, in these facts and circumstances, we hold that the Assessee had made the application in form 10AB within the prescribed time limit and hence it is a valid application.”

The ITAT directed the CIT(E) to treat the application filed within the statutory time and verify the assessee’s eligibility as per the Act. The CIT(E) shall grant opportunity to the assessee. Assessee shall be at liberty to file all the necessary documents before the CIT(E).

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