SHRI NATH KIDNEY FOUNDATION SOCIETY, JALANDHAR V. THE COMMISSIONER OF INCOME TAX EXEMPTIONS, CHANDIGARH

ITA 372/ASR/2023

• Counselvise Citation: [2024] 101 COUNSELVISE.COM (IT) 6665 (ITAT-AMRITSAR)
• Duration Of Justice: 5 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-06-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 14-04-2024
• Assessment Year: 2023-2024
• Appeal Filed On: 17-12-2023
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VANDANA VIJAY MOHITE
• Keywords: Charitable institution; Period of limitation; Time period of passing order
• Section: 80G; 12A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AMRITSAR. BEFORE DR. M. L. MEENA, ACCOUNTANT MEMBER AND SH. UDAYAN DAS GUPTA, JUDICIAL MEMBER I.T.A. No.372/Asr/2023 Assessment Years: 2023-24 Shrinath Kidney Foundation Society, Jalandhar. [PAN:AAMTS9163L] (Appellant) Vs. CIT (Exemptions) Chandigarh. (Respondent) Appellant by Sh.Aditya Sharma, CA. Respondent by Smt. Vandana Vijay Mohite, CIT. DR Date of Hearing 15.04.2024 Date of Pronouncement 05.06.2024 ORDER Per: Udayan Das Gupta, JM This is an appeal for A.Y. 2023-24 against the CIT(E)’s order dated 18.10.2023, rejecting the application filed by the appellant society for registration under Clause (iii) of first Proviso to sub-section (5) of section 80G of the Act, 1961 as non-maintainable. 2. The assessee has taken the following grounds: I.T.A. No.372/Asr/2023 Assessment Year: 2023-24 2 1. That on the facts and circumstances of the case and the provisions of law, rejection of application of the assessee for grant of approval under clause (iii) of first proviso to sub- section (5) of section 80G of the Income tax Act, 1961 by the Worthy Commissioner of Income Tax (Exemptions) is incorrect and unjustified. 2. That the Worthy Commissioner of Income Tax (Exemptions) has passed the order without affording adequate opportunity to the assessee. 3. The appellant craves permission to raise additional grounds and to amend or alter the foregoing grounds before the appeal is finally decided.” 3. Brief fact of the case are that the assessee is a society registered under the Societies Registration Act, 1860, registered on 11/02/2013. The assessee is engaged in various charitable works like providing medical aid, free medical consultation and treatment, organizing various charitable activities, improving public health and providing medical education, free ambulance facility, free medicines and other social works. 3.1 The assessee obtained provisional registration u/s 12A (1) (ac)(vi) of the Act 61, on 22/10/2022, (in Form 10AC) valid from Asst year 2023-24 to Asst year I.T.A. No.372/Asr/2023 Assessment Year: 2023-24 3 2025-26, and also obtained provisional approval u/s 80G (5) first proviso clause (iv) of the Act 61, (in Form 10AC) valid from 22/10/2022 to Asst year 2025-26. The assessee has been granted final registration by the CIT (Exemptions), u/s 12A (1) (ac)(iii), vide order dated 11/10/2023 (in Form 10AD). 3.2 The assessee (society) also applied for final approval under clause (iii) of first proviso to sub section (5) of Section 80G of the Act 61, on 29/04/2023, in Form 10AB (Rule 17A/11AA/2C of IT Rules ‘62). 3.3 The activity of the assessee has admittedly commenced prior to FY 2020-21 (admittedly from Financial year 2013-14, as per the certificate issued by the Additional Registrar of Societies, Jalandhar). The application for final approval of the assessee under clause (iii) of first proviso to sub section (5) of Section 80G of the Act 61, has been rejected by the Ld. CIT (E), vide order dated 10 th October, 2023, due to the reason that, the assessee has commenced activities before FY 2020-21, and since the assessee was provisionally approved under the first proviso to section 80G(5)(iv) the application for final approval should have been filed within six months of commencement of activities or should have been filed at least six months prior to the date of expiry of provisional approval, whichever is earlier , and as per provisions of the Act the Commissioner has no power to condone the delay in filing the application for final I.T.A. No.372/Asr/2023 Assessment Year: 2023-24 4 approval in Form 10AB, and in the instant case the due date has already expired on 30 th September, 2022. 4. The Ld. AR of the assessee argued that the provisional approval itself has been granted to the assessee on 22/10/2022, and there cannot be any application for final registration without provisional, being granted, and in this case the condition of “six months prior to the expiry of provisional approval” is applicable. 4.1 He further files a written submission in this regard which is reproduced for easy reference: “The assessee's case for approval under section 80G is within the time specified under law. The worthy CIT (Exemptions) has remarked that the Commissioner has no power to condone the delay. The assessee submits that there is no delay in filing the application. Clause (iii) of First Proviso to sub section (5) of section 80G provides two time limits: a) six months prior to the expiry of Provisional approval b) within six months of commencement of its activities whichever is earlier. In case of existing assessee's who were not approved under section 80G under old procedure of registration, the time limit of six months from commencement of activities does not apply. Such a stipulation has been mandated for newly formed I.T.A. No.372/Asr/2023 Assessment Year: 2023-24 5 institution which may start their activities upon obtaining provisional approval and once commenced, the final approval must be applied within 6 months of such commencement. Therefore, in case of the appellant, the condition of "six months prior to the expiry of provisional approval" is applicable. Under the new procedure of registration introduced by the Finance Act, 2020, any institution which desires itself to get approval under section 80G (5) should first have provisional approval under clause (iv) of first proviso to sub section (5) of section 80G. The worthy CIT (Exemptions) has observed that the due date to apply in this case has expired on 30/09/2022. The worthy CIT (E) has ignored the fact that provisional registration was granted to the assessee on 22/10/2022 which was after the extended due date for application as interpreted by the worthy CIT (Exemptions).” 4.2 In support of his contention, he relies upon the judgments of the Kolkata ITAT in the case of West Bengal Welfare Society, ITA No: 730 and 731/Kol/ 2023, Asst Year 2023-24; Relevant portion is reproduced as below: “6. We note that the Id. CIT(E) has misconstrued the aforesaid proviso to section 80G (5) of the Act. As per the provision, an application for final / registration cannot be filed until and unless an assessee/trust has been given provisional approval u/s 80G(5)(iv) of the Act. The assessee was granted provisional I.T.A. No.372/Asr/2023 Assessment Year: 2023-24 6 approval on 30.11.2022 only, and within a few days i.e. on 03.12.2022, the assessee applied for final registration u/s Clause (iii) of 1st Proviso to section 80G (5) of the Act. Though the assessee might have commenced its activities prior to grant of provisional registration but that does not mean that the assessee in that event will be precluded from applying for final registration even after the grant of provisional registration. The assessee as per statutory provision could not have, directly applied for final registration without grant of provisional registration. The aforesaid proviso, therefore, is to be read as that after the grant of provisional registration, if the assessee has not commenced its activities, he may apply for registration within six months of the commencement of its activities or within the six months prior to the expiry of the period of provisional approval, whichever is earlier. In any case, the assessee is eligible to apply for final registration only after the grant of provisional approval. Therefore, we hold that there is no delay on the part of the assessee in filing application in the prescribed form for grant of final registration under Clause (iii) of 1st Proviso to section 80G (5) of the Act. However, since we have restored the matter to the Id. CIT(E) for decision afresh on merits on the application for final registration u/s 12A of the Act and since the registration u/s 80G (5) is dependent upon the registration u/s 12A of the Act, therefore, the application of the I.T.A. No.372/Asr/2023 Assessment Year: 2023-24 7 assessee for registration u/s 80G (5) is also restored to the Id. CIT(E) subject to the observations made above.” In some of the other judgments relied upon by the assessee, the Honb’le Tribunal, in all the cases has taken an almost similar view in the matter: (a) Tomorows Foundation, ITA No 367/Kol/2024 ITAT, Kolkata Bench 160 taxmann.com174, (b) Bhamashah Sundarlal Daga Charitable Trust ITA 278/Jodhpur , ITAT Jodhpur Bench 158 taxmann.com 712, (c) Go Gram Eco Foundation , ITA No 504/JP/2023, Jaipur Bench , order dated 28/11/2023, (d) CIT – 1982 Charitable Trust , ITA No: 827/Chny / 2023 , ITAT , Chennai Bench, 160 taxmann.com475. 5. We find that in the instant appeal, that the assessee society has applied for final approval on 29/04/2023, after grant of provisional approval on 22/10/2022, under clause (iii) to first proviso to section 80G(5) of the Act 61, which is within six months prior to the expiry of provisional approval, and respectfully following the views of the coordinate Bench, in the matter, we hold that the application filed by the assessee is within limitation period, and the order of the CIT(Exemption) , I.T.A. No.372/Asr/2023 Assessment Year: 2023-24 8 dated 10 th October, 2023, is set aside, with a direction to decide the issue of registration u/s 80G of the Act in accordance with law from the date on which the assessee has made an application for permanent registration. 6. In the result, the appeal of the assessee bearing ITA No. 372/Asr/2023 is allowed for statistical purposes. Order pronounced in the open court on 05.06.2024 Sd/- Sd/- (Dr. M. L. Meena) (UDAYAN DAS GUPTA) Accountant Member Judicial Member AKV Copy of the order forwarded to: (1)The Appellant (2) The Respondent (3) The CIT (4) The CIT (Appeals) (5) The DR, I.T.A.T. True Copy By order I.T.A. No.372/Asr/2023 Assessment Year: 2023-24 9 Date Initia l 1. Draft dictated on 06.06.24 Sr.PS/ PS 2. Draft placed before author 06.06.24 Sr.PS/ PS 3. Draft proposed & placed before the Second Member JM/A M 4. Draft discussed/approved by Second Member JM/A M 5. Approved Draft comes to the Sr. P.S./P.S. Sr.PS/ PS 6. Kept for pronouncement on Sr.PS/ PS 7. File sent to the Bench Clerk Sr.PS/ PS 8. Date on which file goes to the Head Clerk 9. Date on which file goes to the AR 10. Date of dispatch of Order