FI Foundation Vs CIT (Exemptions) (ITAT Chandigarh)
Income Tax Appellate Tribunal (ITAT), Chandigarh bench, has provided relief to FI Foundation, a charitable trust, by setting aside an order from the Commissioner of Income Tax (Exemptions) [CIT(E)] that had rejected the trust’s application for final registration under Section 80G of the Income-tax Act, 1961. The CIT(E) had dismissed the application solely on the grounds of it being filed beyond the prescribed time limits.
FI Foundation had initially been granted provisional registration under Section 80G on August 24, 2023. Subsequently, the trust applied for final registration in Form 10AB on September 4, 2023. The CIT(E), however, rejected this application, holding that it was filed outside the timelines stipulated by the law and relevant circulars.
Before the ITAT, the assessee argued that the application for final registration was indeed filed within the legally mandated period. They contended that the relevant provision requires the application for final registration to be submitted at least six months prior to the expiry of the provisional registration or within six months of the commencement of activities, whichever is earlier. The trust asserted that since provisional registration was granted on August 24, 2023, filing the application for final registration on September 4, 2023, was well within the six-month window before the expiry of the provisional registration period.
The assessee further clarified that while they had commenced activities prior to seeking provisional registration, the requirement to apply within six months of commencing activities would not apply in this scenario, as that period had already lapsed before they even obtained provisional approval. They could only apply for final registration after receiving the provisional one.
In support of their arguments, the assessee relied on a decision by the Kolkata bench of the ITAT in the case of Anudip Foundation for Social Welfare vs CIT(Exemptions). This precedent, along with others like Tomorrow’s Foundation vs. CIT(Exemption) and Vivekananda Mission Asram vs. CIT, supported the view that an assessee granted provisional registration is eligible to apply for final registration irrespective of having commenced activities earlier, and the clock for the six-month window related to commencement of activities would effectively start after the grant of provisional registration if activities had begun prior to it.
The Departmental Representative, while initially referencing a CBDT Circular (No. 07/2024 dated April 25, 2024) that provided an extended time limit for filing fresh applications in certain rejection cases, fairly conceded that in light of the tribunal being seized of the matter, it would be appropriate to have the case examined on its merits by the CIT(E). The circular itself mentioned that applications rejected solely due to being time-barred or filed under the wrong section could be refiled within the extended date (which had expired by the time of the ITAT hearing).
The ITAT, after considering the submissions and the judicial precedents, found merit in the assessee’s contention that the application for final registration was filed within the prescribed time limit relative to the grant of provisional registration. The tribunal reiterated that the requirement to apply within six months of commencing activities is not applicable when activities began before provisional registration was obtained. Applying the ratio of the co-ordinate bench decisions, the ITAT held that the assessee was entitled to apply for final registration after receiving provisional approval, and the application was not time-barred on this count.
The tribunal also took note of the CBDT circular and the Revenue’s stance, observing that the intent was to allow deserving cases to be considered on their merits despite initial rejections based on timeliness or procedural errors.
In its order, the ITAT set aside the CIT(E)’s decision and remitted the matter back for fresh examination. The tribunal directed the CIT(E) to admit the application for final registration as being filed within the stipulated period and to decide the application on its merits in accordance with the law. The ITAT urged the CIT(E) to dispose of the matter expeditiously, preferably within two months. The tribunal’s ruling ensures that the trust’s application for final 80G registration will now be considered on its substantive eligibility rather than being rejected on procedural grounds related to filing deadlines, aligning with the broader objective of facilitating genuine charitable activities.
FULL TEXT OF THE ORDER OF ITAT CHANDIGARH
