Case Law Details
Diamond Cares Vs CIT (Exemption) (ITAT Kolkata)
Introduction: The Income Tax Appellate Tribunal (ITAT) Kolkata, in the case of Diamond Cares vs. Commissioner of Income Tax (Exemption), delivered a landmark ruling that significantly impacts trusts seeking approval under Section 80G of the Income Tax Act, 1961. This decision, dated January 10, 2024, underscores the tribunal’s interpretation of the application timeline for final approval under Section 80G(5)(iii) and its implications for trusts with pre-existing charitable activities.
Detailed Analysis
The core issue in this appeal was the rejection by the Commissioner of Income Tax (Exemption) (CIT(E)) of Diamond Cares’ application for final approval under Section 80G(5)(iii), citing the provision that requires such application to be filed within six months from the commencement of the trust’s activities. The CIT(E) deemed the application time-barred, basing this decision on the trust’s activities that commenced in the financial year 2020-21.
However, ITAT Kolkata, referencing its earlier decision in the case of West Bengal Welfare Society vs. CIT(E), Kolkata, clarified the interpretation of the proviso to Section 80G(5). It emphasized that the provision allows for an application for final registration after the grant of provisional approval, regardless of when the charitable activities initially commenced. This interpretation opens a pathway for trusts engaged in charitable activities prior to obtaining provisional approval to apply for final approval under Section 80G(5)(iii) within a stipulated timeframe after such provisional approval is granted.
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