Application for Exemption U/S. 10(23C)(VI) – Detailed Discussion

As we all know that earlier application for granting exemption u/s 10(23C)(vi) is applied in Form 56D, which is now omitted w.e.f. 05 November, 2019. Notification No. 60/2019–Income Tax- CBDT amends rules 2C and 2CA related to Application for the purpose of grant of approval for the exemption under sub-clause (iv), sub-clause (v), sub-clause (vi) and sub-clause (via) of clause (23C) of section 10 and Rule 11AA related to Requirements for approval of an institution or fund under section 80G. CBDT Omits Form No. 56D and further revises FORM No. 56 regarding application for grant of the exemption under sub-clauses (iv), (v), (vi) and (via) of clause (23C) of section 10 of the Income-tax Act, 1961.

The amended Rule 2C is as under:

“2C. (1) The prescribed authority under sub-clause (iv), sub-clause (v), sub-clause (vi) and sub-clause (via) of clause (23C) of section 10 shall be the Principal Commissioner or Commissioner whom the Central Board of Direct Taxes may authorise to act in this behalf.

(2) An application for grant of approval for the exemption under sub-clause (iv), sub-clause (v), sub-clause (vi) or sub-clause (via) of clause (23C) of section 10 to any fund or institution, any trust (including any other legal obligation) or institution, any university or other educational institution and any hospital or other institution (hereinafter referred to as ‘the applicant’) shall be made in Form No. 56 and shall be verified by the person who is authorised to verify the return of income under section 140, as applicable to the assesse.

(3) Form No. 56 shall be furnished electronically, —

(i) under digital signature, if the return of income is required to be furnished under digital signature; or

(ii) through electronic verification code in a case not covered under clause (i).

(4) The Principal Director General of Income-tax (Systems) or the Director General of Income-tax (Systems), as the case may be, shall lay down the data structure, standards and procedure of furnishing and verification of Form No. 56 and shall be responsible for formulating and implementing appropriate security, archival and retrieval policies in relation to the said form so furnished.”.

From above newly amended rule, we understood that now the application has to be in electronic form and the verification of the same can be possible either with Digital Signature or through EVC code as per the case may be.

Now, the next question pop up in your mind is must be the documents which are require alongwith the application. So,

The list of documents are as under:

1. Self-certified copy of-

(a) the instrument/ document evidencing the creation or establishment of the fund or institution, trust, university or other educations institutions, hospital or other institutions, being the applicant, such as, memorandum of association, articles of association, trust deed, rules/ regulations of applicant and those of other institutions like schools, hospitals, etc., managed by the applicant, as applicable;

(b) certificate of registration with Registrar of Companies/ Firms/ Societies/ Public Trusts etc, wherever applicable;

(c) accounts and balance sheet (audited accounts and balance sheet along with the audit report, where audit is required under the relevant laws) for the preceding three previous years or since inception, whichever is less; along with a note on the activities as reflected in the accounts and the annual reports with special reference to the appropriation of income towards purposes of the applicant, if applicable;

(d) approval granted under sub-clause (iv), sub-clause (v), sub-clause (vi) or sub-clause (via) of clause (23C) of section 10, if any;

(e) order for cancelling the approval granted under sub-clause (iv), sub-clause (v), sub-clause (vi) or sub-clause (via) of clause (23C) of section 10, if any;

(f) order rejecting the application made earlier for grant of approval under sub-clause (iv), sub-clause (v), subclause (vi) or sub-clause (via) of clause (23C) of section 10, if any;

(g) order granting registration under section 12A or section 12AA, as the case may be, if any;

(h) order cancelling the registration granted under section 12A or section 12AA, if any;

(i) order rejecting the application for grant of registration under section 12A or section 12AA, as the case may be, if any;

(j) where the applicant has been granted approval under section 80G, self-certified copy of the order granting approval under section 80G; and

(k) application in case applied for registration under section 12AA or for approval under section 80G, as applicable.

2. Note on the activities of the applicant.

3. Any other documents if require.

Some other Important points:

1. Making an order accepting/rejecting application made under first proviso for grant of exemption under Section 10(23) sub-clause (iv)/(v)/(vi)/(via) – Within 12 months from end of month in which application was received

2. Making application under fourteenth proviso to section 10(23C) to designated authority by educational/medical institutions, etc., referred to in section 10(23C)(iv)/(v)/(vi)/(via) – On or before 30th September of relevant assessment year

3. The exemption will be for a period of three years and fresh application shall have to be made after the expiry of un-expired period of 3 years which shall also be permanent exemption unless withdrawn.

4. Audit of Accounts is compulsory for such institutions.

5. It is mandatory to file return of income.

CA AMRESH VASHISHT, Meerut

(About the Author– Author was Member of ICAI- Regional Research Committee 2013-14 and ICAI- Committee For Direct Taxes 2011-12 and can be reached at email [email protected] or on phone Phone: 0 1 2 1-2 6 6 1 9 4 6. Cell: 9 8 3 7 5 1 5 4 3 2 having office at 1 1 5, Chappel Street, Meerut Cantt, UP, INDIA)

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(Republished with Amendments by Team Taxguru)