AKSHAT EDUCATION AND CHARITABLE TRUST,ANAND V. THE CIT(EXEMPTION), AHMEDABAD

ITA 456/AHD/2025

AI Insights

The case involves Akshat Education and Charitable Trust, which sought approval under section 80G(5) of the Income-tax Act, 1961, to qualify for tax exemptions on donations. The Commissioner of Income Tax (Exemptions) initially rejected the application, citing that the Trust had previously claimed exemptions under sections 11 and 10(23C), which was interpreted as a bar under section 80G(5)(iv)(B). The Trust appealed this decision, arguing that such a restrictive interpretation was not intended by the legislature and was contrary to the spirit of the law as clarified by recent amendments and circulars. The Tribunal agreed with the Trust's position, emphasizing a purposive interpretation of the law over a hyper-technical one, and noted that the legislative intent was to encourage donations to genuine charitable institutions.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 717128 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-08-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: misc
• Appeal Filed On: 27-02-2025
• Other Referred Cases: Collector, Land Acquisition v. Mst. Katiji [(1987) 167 ITR 471 (SC)], West Bengal Welfare Society v. CIT(E) [ITA Nos. 730 & 731/Kol/2023]
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RIGNESH DAS
• Assessee Lawyers: MEHUL THAKKAR
• Keywords: Condonation of delay; Retrospective amendment; Period of limitation; Charitable institution; Right to appeal; Time period of passing order
• Section: 11; 12; 80G

Judgement Text

" आयकर अपीलीय अिधकरण, अहमदाबाद Ɋायपीठ “ C”, अहमदाबाद । IN THE INCOME TAX APPELLATE TRIBUNAL “ C ” BENCH, AHMEDABAD सुŵी सुिचũा काɾले, Ɋाियक सद˟ एवं ŵी मकरंद वसंत महादेवकर, लेखा सद˟ क े समƗ। ] ] BEFORE Ms SUCHITRA KAMBLE, JUDICIAL MEMBER AND SHRI MAKARAND V. MAHADEOKAR, ACCOUNTANT MEMBER आयकर अपील सं /ITA No.456/Ahd/2025 िनधाŊरण वषŊ /Assessment Year : N.A Akshat Education And Charitable Trust, 5/35, Gosainu Faliyu Asodar, Borsad Road, Asodar, Anand-388307. (Gujarat) बनाम / v/s. The Commissioner of Income Tax, (Exemption), Ahmedabad ̾थायी लेखा सं./PAN: AAETA2211K अपीलाथŎ/ (Appellant) Ů̝ यथŎ/ (Respondent) Assessee by : Shri Mehul Thakkar, AR Revenue by : Shri Rignesh Das, CIT-DR सुनवाई की तारीख/Date of Hearing : 14/08/2025 घोषणा की तारीख /Date of Pronouncement: 19/08/2025 आदेश/O R D E R PER MAKARAND V. MAHADEOKAR, AM: ] ] This appeal by the assessee is directed against the order passed by the Learned Commissioner of Income-tax (Exemptions), Ahmedabad [hereinafter referred to as “Ld. CIT(E)”] dated 14.08.2024, whereby the assessee’s application in Form No. 10AB seeking approval under section 80G(5) of the Income-tax Act, 1961 [hereinafter referred to as “the Act”] was rejected by invoking the provisions of section 80G(5)(iv)(B). Printed from counselvise.com ITA No.456/Ahd/2025 Akshat Education and Charitable Trust Vs. CIT(E) Assessment Year N.A 2 Condonation of Delay 2. At the outset, it is noted that there is a delay in filing the present appeal. As per the Registry, the appeal has been filed with a delay of 119 days beyond the prescribed limitation period, whereas as per the assessee’s computation, the delay is of 137 days. 3. The assessee has filed an application for condonation of delay along with an affidavit of one of its trustees, Shri Bhaktiswaroop Dharmaprasad, explaining the reasons for the delay. It has been submitted therein that the order of the Ld. CIT(E) dated 14.08.2024 was communicated to the registered email ID of the trust, namely [e-mail], which belonged to one of the trustees, Shri Rajendra Rabari. Since Shri Rabari had resigned from the Trust with effect from 05.12.2023, he did not inform the Trust about the passing of the impugned order. The other general-purpose email ID of the Trust, [e-mail], being accessed by multiple staff members, inadvertently missed the said communication. 4. It was further explained that the Trust came to know about the rejection order only on 22.02.2025, while reviewing its tax demand status, and thereafter immediately took steps to file the present appeal on 27.02.2025. Thus, the delay, according to the assessee, was neither deliberate nor attributable to negligence but was caused due to bona fide circumstances beyond its control. It has been pleaded that the assessee has a meritorious case on merits, and unless the delay is condoned, it would suffer irreparable harm and injury by denial of the right to appeal. Printed from counselvise.com ITA No.456/Ahd/2025 Akshat Education and Charitable Trust Vs. CIT(E) Assessment Year N.A 3 5. The Learned Departmental Representative (DR) fairly submitted that he has no serious objection if the delay is condoned, considering the explanation offered by the assessee. 6. We have considered the rival submissions. The Hon’ble Supreme Court in the case of Collector, Land Acquisition v. Mst. Katiji [(1987) 167 ITR 471 (SC)] has held that a liberal approach is to be adopted in condoning delay, so as to advance substantial justice where no negligence, inaction or lack of bona fides can be attributed to the applicant. Keeping in view the reasons explained in the condonation petition and supported by affidavit, and also the fact that the delay was occasioned due to circumstances beyond the control of the assessee, we are satisfied that the assessee was prevented by sufficient cause from filing the appeal within the prescribed time. Accordingly, the delay in filing the appeal is condoned. The appeal is admitted for adjudication on merits. Facts of the Case 7. The appellant is a public charitable trust registered under the Bombay Public Trusts Act, 1950, vide Registration No. E/3082/Anand dated 26.09.2013, and is engaged in running various educational institutions under the name Adharshila Vidhyalaya. On 06.02.2024, the appellant filed an application in Form No. 10AB before the Ld. CIT(E), Ahmedabad, seeking approval under section 80G(5) of the Act. The Ld. CIT(E) issued statutory notices dated 11.06.2024 and 01.07.2024, requiring the assessee to furnish details/documents in support of its application. The assessee, vide Printed from counselvise.com ITA No.456/Ahd/2025 Akshat Education and Charitable Trust Vs. CIT(E) Assessment Year N.A 4 reply dated 19.07.2024, furnished the required details and explained that it satisfied all the conditions prescribed under section 80G(5) of the Act. 8. The Ld. CIT(E), after examining the details, reproduced the provisions of section 80G(5)(iv)(B) which apply to cases where the activities of the institution or fund have not commenced at least one month prior to the commencement of the relevant previous year, or where no part of the income has been excluded under section 10(23C) or sections 11 or 12 for any earlier previous year ending on or before the date of such application. 9. The Ld. CIT(E) noted that the appellant trust had commenced its activities as far back as 26.09.2013 and had been filing returns of income regularly. The Ld. CIT(E) specifically examined the Income-tax Returns (ITRs) of the assessee for different years and recorded that: - For A.Y. 2019-20, the assessee filed ITR-7 and claimed exemption under section 11 to the tune of Rs. 2,53,92,278. - For A.Y. 2020-21, the assessee filed ITR-7 and claimed exemption under section 11 to the tune of Rs. 1,99,48,893. - For A.Y. 2023-24, the assessee filed ITR-7 and claimed exemption under section 10(23C)(via) amounting to Rs. 2,26,63,350. 10. From the above, the Ld. CIT(E) held that the assessee had already claimed exemption/exclusion of income under section 11 and section 10(23C) in earlier years. Consequently, it was observed that the assessee’s case did not fall within the ambit of section 80G(5)(iv)(B). 11. The Ld. CIT(E) reasoned that the legislative intent behind section 80G(5)(iv)(B) is to cover only those institutions where activities have either Printed from counselvise.com ITA No.456/Ahd/2025 Akshat Education and Charitable Trust Vs. CIT(E) Assessment Year N.A 5 not commenced or, if commenced, no exemption under section 11 or section 10(23C) had been claimed prior to the application. Since the assessee trust had already availed such exemptions in earlier years, the application under Form 10AB was held to be non-maintainable. 12. Accordingly, the Ld. CIT(E) rejected the assessee’s application for approval under section 80G(5), treating it as not maintainable. 13. Aggrieved by the order of CIT(E), the assessee is in appeal before us raising following grounds of appeal: 1. That the Ld. CIT (Exemptions) erred in law and on facts in rejecting the appellant's application for registration under Section 80G(5)(iii) merely on the ground that the appellant had claimed exemption under Section 11 or Section 10(23C) in earlier years, without properly interpreting the provisions of the Act. 2. That the Ld. CIT (Exemptions) misinterpreted the scope and applicability of Section 80G(5)(iv)(B) by holding that prior claims of exemption under Section 11 or Section 10(23C) make the trust ineligible for 80G approval, whereas the statute never intended such interpretation. 3. That the Ld. CIT (Exemptions) failed to appreciate the appellant's compliance with all other conditions prescribed under Section 80G(5), thereby making the rejection order legally unsustainable. 4. The appellant craves leave to add, alter or delete any ground either before or in the course of hearing of the appeal. 14. Before us, the Learned Authorised Representative (AR) reiterated the facts and submitted that the assessee is engaged in imparting education by running various schools under the name Adharshila Vidhyalaya. The Trust had commenced its activities in 2014 upon receiving school opening permission on 21.05.2014. The AR submitted that although the appellant had been claiming exemption under section 11 and section 10(23C) in earlier Printed from counselvise.com ITA No.456/Ahd/2025 Akshat Education and Charitable Trust Vs. CIT(E) Assessment Year N.A 6 years, it had never obtained approval under section 80G(5) of the Act. The Trust was initially granted provisional approval under section 80G(5) for the period from 22.06.2022 to A.Y. 2025-26. Pursuant to this, the appellant moved an application in Form 10AB on 06.02.2024 seeking final approval under section 80G(5) of the Act. 15. It was contended that the appellant had no choice but to apply under sub-clause (B) of clause (iv) of the first proviso to section 80G(5), since clauses (i) to (iii) of the proviso were not applicable in its case. Attention was invited to the amendments made by the Finance Act, 2023 effective from 01.10.2023, which specifically recognised that trusts which had already commenced their activities could seek approval under clause (iv)(B). The AR further contended that the Ld. CIT(E) misdirected himself in law by rejecting the application merely on the ground that the assessee had already claimed exemption under section 11 and section 10(23C) in prior years. It was argued that such a restrictive interpretation would render clause (iv)(B) redundant, because any trust which had commenced activities and claimed exemption in earlier years would forever be debarred from obtaining 80G approval, which was never the intention of the Legislature. In support of this proposition, reliance was placed on CBDT Circular No. 1/2024 dated 23.01.2024, which explained the legislative intent of the Finance Act, 2023 amendments. The AR referred in particular to para 15.5.3(f) of the circular, which clarified that trusts and institutions under the 80G regime, which had already commenced their activities, shall make an application for regular approval under sub-clause (B) of clause (iv) without being disqualified on account of having claimed exemption under section 11 or section 10(23C) in the past. The AR also drew attention to the Memorandum to the Finance Printed from counselvise.com ITA No.456/Ahd/2025 Akshat Education and Charitable Trust Vs. CIT(E) Assessment Year N.A 7 Bill, 2024, which further clarified this position by dropping the restrictive condition of “not having claimed exemption” with effect from 01.10.2024. 16. The AR submitted that even if the assessee’s application is not treated as maintainable under sub-clause (B) of clause (iv) of the first proviso to section 80G(5), the same may at least be treated as maintainable under clause (iii) of the first proviso. It was urged that the CIT(E) may be directed to examine the application on merits under that clause instead of rejecting it as non-maintainable. 17. In support, reliance was placed on the decision of the Kolkata Bench of the Tribunal in West Bengal Welfare Society v. CIT(E) [ITA Nos. 730 & 731/Kol/2023], where the Tribunal held that even if activities had commenced prior to provisional approval, the assessee could still apply for final registration under section 80G(5) within the statutory timeline. The Co- ordinate Bench in that case had restored the matter to the file of CIT(E) to decide afresh on merits. The appeal of the Revenue against that decision was dismissed by the Hon’ble Calcutta High Court. 18. In conclusion, the AR prayed that the impugned order passed by the Ld. CIT(E) be quashed and the application for final approval under section 80G(5) be treated as maintainable. It was urged that the matter be restored to the file of the Ld. CIT(E) for fresh adjudication on merits, in the light of the compliance made by the assessee with all statutory requirements. On the other hand, the Learned Departmental Representative (DR) strongly supported the order passed by the Ld. CIT(E). Printed from counselvise.com ITA No.456/Ahd/2025 Akshat Education and Charitable Trust Vs. CIT(E) Assessment Year N.A 8 19. We have carefully considered the rival submissions and perused the material placed on record. The primary controversy before us lies in the narrow interpretation adopted by the Ld. CIT(E) in treating the assessee’s application under section 80G(5)(iv)(B) as non-maintainable on the ground that the assessee had claimed exemption of its income under section 11/10(23C) in earlier assessment years. 20. It is not in dispute that the assessee is a registered public charitable trust under the Bombay Public Trusts Act, 1950, engaged in imparting education, and that it had been granted provisional approval under section 80G(5) for the period from 22.06.2022 to A.Y. 2025-26. It is also undisputed that the assessee had duly filed application in Form No. 10AB dated 06.02.2024 seeking final approval as mandated under the law. The assessee has complied with notices issued and has placed on record audited accounts, activity reports and other documents to demonstrate compliance with statutory requirements. 21. The Ld. CIT(E), however, rejected the application relying strictly on the wording of section 80G(5)(iv)(B), holding that since the assessee had already claimed exemption under section 11/10(23C), the application was outside the scope of maintainability. In our considered view, this approach is unduly restrictive and does not give effect to the true intent of the legislation. 22. The Finance Act, 2023 substituted clause (iv) of the first proviso to section 80G(5) with effect from 01.10.2023, and CBDT Circular No. 1/2024 dated 23.01.2024 has clarified that institutions which have already Printed from counselvise.com ITA No.456/Ahd/2025 Akshat Education and Charitable Trust Vs. CIT(E) Assessment Year N.A 9 commenced activities shall make an application for regular approval under sub-clause (B) of clause (iv). Importantly, para 15.5.3(f) of the Circular makes it explicit that such institutions are to be examined on merits for grant of approval and that the fact of having claimed exemption in earlier years cannot by itself operate as a bar. Further, the Memorandum explaining the provisions of the Finance Bill, 2024 also confirms that the restrictive condition of “not having claimed exemption” has been dropped with effect from 01.10.2024, thereby reinforcing the intention that charitable institutions already in operation must not be denied approval on hyper- technical grounds. This amendment is remedial and clarificatory in nature, intended to remove an anomaly, and therefore must be read as having retrospective effect. In our opinion when a provision is amended to cure a defect or to remove hardship in implementation, such amendment is declaratory in nature and has retrospective applicability. Viewed in this light, the rejection of the assessee’s application as “non-maintainable” was misconceived. The amendment brought by Finance Act, 2024 only clarifies what was implicit even earlier, namely, that claiming exemption in prior years does not debar a trust from seeking approval under section 80G(5). The legislative intent is to encourage donations to genuine charitable institutions, and hyper-technical construction must give way to purposive interpretation. 23. We also take note of the decision of the Coordinate Bench in West Bengal Welfare Society v. CIT(E) [ITA Nos. 730 & 731/Kol/2023], where in similar circumstances the Co-ordinate Bench held that rejection of the application as non-maintainable was misconceived, and directed the matter to be restored to the file of the CIT(E) for adjudication on merits. The said Printed from counselvise.com ITA No.456/Ahd/2025 Akshat Education and Charitable Trust Vs. CIT(E) Assessment Year N.A 10 view has been affirmed by the Hon’ble Calcutta High Court. The ratio of that decision squarely applies to the facts of the present case. In view of the above legal position, we are unable to sustain the reasoning of the Ld. CIT(E). The rejection of the application as non-maintainable overlooks the legislative intent, the CBDT Circular as well as judicial precedents. The assessee having already been granted provisional approval, and having fulfilled the procedural compliances, its application for final approval could not have been brushed aside on the sole ground of earlier claims of exemption under section 11/10(23C). 24. Accordingly, we hold that the impugned order passed by the Ld. CIT(E) is not sustainable in law and is liable to be quashed. We direct that the application for final approval under section 80G(5) filed by the assessee shall be treated as maintainable, and the matter is restored to the file of the Ld. CIT(E) to examine the application afresh on merits, in accordance with law, after affording due opportunity of hearing to the assessee. The impugned order of the Ld. CIT(E) is quashed, 25. In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced in the Open Court on 19thAugust, 2025 at Ahmedabad. Sd/- Sd/- (SUCHITRA KAMBLE) JUDICIAL MEMBER (MAKARAND V.MAHADEOKAR) ACCOUNTANT MEMBER (True Copy) Ahmedabad, Dated 19/08/2025 Manish, Sr. PS Printed from counselvise.com ITA No.456/Ahd/2025 Akshat Education and Charitable Trust Vs. CIT(E) Assessment Year N.A 11 आदेश की Ůितिलिप अŤेिषत/Copy of the Order forwarded to : 1. अपीलाथŎ / The Appellant 2. ŮȑथŎ / The Respondent. 3. संबंिधत आयकर आयुƅ / Concerned CIT 4. आयकर आयुƅ ) अपील ( / The CIT(Exemption)-Ahmedabad 5. िवभागीय Ůितिनिध , आयकर अपीलीय अिधकरण , राजोकट/DR,ITAT, Ahmedabad, 6. गाडŊ फाईल /Guard file. आदेशानुसार/ BY ORDER, सȑािपत Ůित //True Copy// सहायक पंजीकार (Asstt. Registrar) आयकर अपीलीय अिधकरण, ITAT, Ahmedabad Printed from counselvise.com "