The timeline prescribed for extension of final registration application under first proviso to section 80G(5) is directory in nature and not mandatory: ITAT

Citation: Shri Ramajayam Charitable Trust v. ITO (E)

ITAT: Chennai

ITA no.: 1136/CHNY/2023

Date of order: 8.3.2024

Brief facts

• The assessee trust was incorporated on 14.7.2017 and had been granted provisional approval as on 23.9.2021 under section 80G(5)(iv).

• It filed application under clause (iii) of the first proviso to 80G(5) on 17.3.2023.

• The CIT(E) contended that the assessee was required to file application in Form No.10AB within the time period of 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.

• In the case of the assessee, the date of commencement of activities was 14.7.2017 and the date of filing of application in Form No.10AB was 17.03.2023, which was after the expiry of six months of commencement of its activities. Hence, the CIT held that since he had no power to condone the delay, the assessee’s application had to be rejected.
  

Observations of the High Court

The Tribunal made the following observations:

1. Vide Circular No.16/2021, the CBDT had extended the due date for filing Form No.10A or 10AB up to 30.09.2022 and thereafter to 30.9.2023, vide Circular No.6/2023.

2. However, Circular 6/2023 had extended the timelines for all provisions, including clause (i) to the first proviso to section 80G(5) of the Act, but excluded renewal under clause (iii) of the first proviso to section 80G(5). It was observed that there could not be a distinction within the same provision without bringing out a specific exception.

3. Being a genuine case of hardship, the specific provision of clause (iii) to the first proviso to section 80G(5) would not be excluded otherwise; nor could it have been the intention of CBDT while issuing the circular to exclude it categorically

4. Accordingly, the timeline prescribed under clause (iii) of the first proviso to section 80G(5) of the Act was to be treated as directory and not mandatory

Hence, the Tribunal held that the CIT(E) was not justified in rejecting the assessee’s application for final registration u/s 80G(5) and remitted the matter back to the CIT(E) for re-deciding the issue on merits.