Gayatri Gram Vikas Sanstha Vs ITO (ITAT Nagpur)
The Income Tax Appellate Tribunal (ITAT) Nagpur Bench has allowed the appeal filed by Gayatri Gram, challenging the order of the Commissioner of Income Tax (Exemption), Pune. The ITAT ruled that the rejection of Gayatri Gram’s application for registration under Section 80G of the Income Tax Act, 1961, was based on a “technical mistake” in the application clause rather than a substantive evaluation of the trust’s activities.
Background: 80G Exemption and Application Error
Gayatri Gram had applied for final registration in Form 10AB under clause (iii) of the first proviso to sub-section (5) of Section 80G of the Income Tax Act, 1961, on January 23, 2024. This application was for the Assessment Year 2025-26.
Previously, Gayatri Gram had obtained provisional approval on January 10, 2024, under sub-clause (A) of clause (iv) of the first proviso to sub-section (5) of Section 80G. However, the learned CIT(E) subsequently rejected the final application and cancelled the provisional approval. The reason cited for this cancellation was that the assessee had applied under an incorrect section.
The CIT(E) observed that Gayatri Gram’s activities commenced in 1994-95, long before the provisional registration was obtained in January 2024. According to Section 80G(5)(iv) of the Act:
- Sub-clause (A) applies when activities of the trust or institution “have not commenced.”
- Sub-clause (B) applies when activities “have commenced.”
Since Gayatri Gram’s activities had already begun in 1994-95, the CIT(E) concluded that the trust should have filed its application under Section 80G(5)(iv)(B) and not Section 80G(5)(iv)(A). Therefore, the provisional approval granted under the wrong sub-clause was deemed invalid, leading to the rejection of the final application “without going into the merits of the case.”
