MAHAVAR SABHA REWARI,REWARI V. COMMISSIONER OF INCOME TAX, EXEMPTIONS, CHANDIGARH

ITA 540/CHANDI/2024

AI Insights

The case involves Mahavar Sabha Rewari, a registered society under the Haryana Registration and Regulation of Societies Act 2012, which appealed against the order of the Commissioner of Income Tax (Exemption) Chandigarh. The CIT(E) had rejected the society's application for permanent registration under section 80G(5) of the Income Tax Act, 1961, on the grounds that it was filed after the stipulated six months from the commencement of charitable activities. The Tribunal considered the society's long-standing engagement in charitable activities and the relevant legislative amendments and circulars, ultimately deciding to remand the matter back to the CIT(E) for a fresh decision.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 22857 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-02-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Assessment Year: 2023-2024
• Other Referred Cases: CIT( E) v. West Bengal Welfare Society Kolkata (ITA/77/2024)
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: BALJEET KAUR
• Assessee Lawyers: GAURAV JAIN
• Keywords: Opportunity of being heard
• Section: 12A; 80G

Judgement Text

" 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘E’, NEW DELHI BEFORE SH. PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER AND SH. SUDHIR KUMAR, JUDICIAL MEMBER ITA No.540/Chandi/2024 Assessment Year: 2023-24 Mahavar Sabha Rewari Jeewali Bazar Near Dholika Kunwa Rewari Haryana PAN No. AABAM1178P Vs. Commissioner of income tax Exemption Chandigarh (APPELLANT) (RESPONDENT) Appellant by Sh. Gaurav Jain, Advocate Respondent by Ms. Baljeet Kaur, CIT. DR Date of hearing: 07/01/2025 Date of Pronouncement: 12/02/2025 ORDER PER SUDHIR KUMAR, JM: This appeal is preferred by the assessee is against the order 15-03-2024 of the Commissioner of Income Tax (Exemption) Chandigarh [hereinafter referred to as “CIT(E)”] rejecting the request for approval pertaining to assessment year 2 2023-24, under section 80G of the Income Tax Act, 1961 [herein after, the Act ]. 2. This appeal was filed by the assessee before the ITAT Chandigarh later on appeal was transferred to the ITAT Delhi by the order of the Hon’ble President ITAT. 3. The brief facts of the case are that appellant/assessee is a registered society under the Haryana Registration and Regulation of Societies Act 2012. The assessee applied for provisional registration under section 80G (5) of the Act on the Form 10A which was granted on 21-01-2023 up to 31-03-2026. Thereafter the assessee applied for permanent registration under clause (iii) of the first proviso of section 80G (5) of the Act in the prescribed Form 10AB of the Income Tax Rules on 27-09- 2023, The CIT(E) rejected the said application as non- maintainable on the reasoning that the said application was filed after six months from the commencement of activities. 3 4. Aggrieved the order of the Ld. CIT(E) the assessee has filed this appeal before the Tribunal. 5. The Ld. AR of the assessee has argued that the clause (iii) of the first proviso of sub section (5) of section 80G of the Act mis- interpreted, because it is not possible for a trust or society engaged in charitable activities for several years, to apply for registration u/s 80G (5) of the Act within six months form the commencement of charitable activities. Now it is mandatory for every charitable institution to obtained a provisional registration u/s 80G(5) of the Act and thereafter for regular registration. How a trust or society engaged in charitable activities over the five years could apply for regular registration u/s 80G(5) after six months from the date of commencement of the charitable activities when they had to seek both provisional registration and thereafter regular registration u/s 80G(5)(iii) of the Act. He further submitted that the appellant/ assessee was incorporated on 13-11-1992, could not apply for permanent 4 registration u/s 80G(5)(iii) of the Act within six months of the commencement of charitable activities, i.e in A.Y.2023-24 in accordance with new provisions of the section 80G(5)(iii) of the Act. 6. The Ld. AR placed reliance on the decision of the Hon’ble Calcutta High Court in case of CIT( E) v. West Bengal Welfare Society Kolkata (ITA/77/2024) where the Hon’ble High Court held as under :- \"6. We note that the la CIT(E) has misconstrued the aforesaid proviso registration 80G(5) of the d the la. CIT(E) provision, an application for final registration cannot be filed Act. As per the ran assessee/trust has been given provisional approval u/s 80G(5)(iv) of the Act. The assessee was granted provisional 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 5 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 ld. 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 6 registration u/s 12A of the Act, therefore, the application of the assessee for registration u/s 80G(5) is also restored to the ld. CIT(E) subject to the observations made above\" 7. The Ld. DR has submitted that amendments introduced by the finance Act (No.2),2024 w.e.f.01-10-2024 by the legislature because the legislature was fully aware of the difficulties faced by charitable societies/trusts. The amendments introduced by the finance Act (No.2) ,2024 as under:- \"80G. (1) In computing the total income of an assessee, there shall be deducted, in accordance with and subject to the provisions of this section, (5) This section applies to donations to any institution or fund referred to in sub-clause (iv) of clause (a) of sub- section (2), only if it is established in India for a charitable purpose and if it fulfils the following conditions, namely: - 7 Provided that the institution or fund referred to in clause (vi) shall make an application in the prescribed form and manner to the Principal Commissioner or Commissioner, for grant of approval, - (i) where the institution or fund is approved under clause (vi) (as it stood immediately before its amendment by the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020], within three months from the 1st day of April, 2021; (ii) where the institution or fund is approved and the period of such approval is due to expire, at least six months prior to expiry of the said period; (iii) where the institution or fund has been provisionally approved, at least six months prior to expiry of the period of the provisional approval or within six months of commencement of its activities, whichever is earlier; [or] (iv) where activities of the institution or fund have- 8 (A) not commenced, at least one month prior to the commencement of the previous year relevant to the assessment year from which the said approval is sought; (B) commenced at any time after the commencement of such activities:]\" 8. Reliance has placed on the following decisions: i. Allied Motors (P.) Ltd. 224 ITR 677 (SC) ii. Calcutta Export Company : 404 ITR 654 (SC) iii. Bhanot Construction & Housing Ltd. 261 Taxman 262 (Del.HC) iv. West Bengal Welfare Society V. CIT(E) ITA No(s) 730 & 731/KOl/2023 v. Adarsh Paramedical Welfare, Association v. CIT(E) vi. South Asia Foundation India V. CIT(E) ITA No.1903/Del/2024 dated 27.11.2024 9. The Allied Motors (P.) Ltd: 224 ITR 677 (SC) the Hon’ble Supreme Court observed as under :- 9 10 11 10. Reliance also placed the decision of the co-ordinate bench Delhi in the case of Adarsh Paramedical Welfare Association ITA No. 2836/Del/2023 and South Asia Foundation India v, CIT(E) ITA No. 1903/Del/2024. The Ld AR drew our attention to the Circular No. 7/2024 dated 25th April,2024 by which the CBDT had extended the due date for filing form 10A and 10AB under the Act till 30-06-2024. 11. The Ld. CIT -DR supported the order of the Ld CIT( E ) and sought for the dismissal of the appeal. 12 12. We have heard both the parties and perused the material available on the record. We find force in the argument of the Ld. AR that harmonious interpretation of the section 80G(5) of the Act in this case which the appellant is engaged in the charitable activities since long cannot be done in the above mentioned facts and circumstances. The CBDT has issued the circulars from time to time to ease out difficulties and hardships of the trusts/ societies and to overcome anomalies of the section 80G(5) of the Act. The CBDT, vide Circular No.7/2024 dated 25-04-2024 has extended the due date for filling form 10 A and 10 AB till 30-06-2024. 13. From the above discussion and following the decision of the co-ordinate bench we are of the considered opinion that the Ld CIT( E) has not deal the matter keeping view the facts in entirely and objective of the section 80G(5) of the Act, being welfare legislations. Therefore considering the provisions of section 80G(5) of the Act and the circular no 7/2024 of the CBDT, we are of considered view that the application filed by 13 the appellant under Form No. 10 AB of the Income Tax Rules should have been treated as filed within the prescribed time. Therefore, we restore the matter back to the learned CIT( E ) to decide as a fresh after giving the opportunity of being heard to the appellant. 14. In the result the appeal of the assessee is allowed for statistical purposes. Order pronounced in the open court on 12.02.2025. Sd/- Sd/- ( PRADIP KUMAR KEDIA ) (SUDHIR KUMAR) ACCOUNTANT MEMBER JUDICIAL MEMBER *Neha,Sr. PS * Date: 12.02.2025 Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI "