In a significant ruling, the Income Tax Appellate Tribunal (ITAT), Mumbai Bench, has restored the approval application under Section 80G of the Income Tax Act,1961 filed and directed the Commissioner of Income Tax (Exemption) to reconsider the application based on the corrected Form 10AB.
The appeal, filed by the assessee, Salaam Social Medical Services Foundation, a non-profit organization challenged the rejection of its 80G approval application by the Commissioner of Income Tax (Exemption) , CIT(E) on 5th September 2024. The rejection was based on the grounds that the applicant had failed to regularize its provisional registration under Section 12A, and thus, did not meet the necessary prerequisites for 80G approval.
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The foundation had been granted provisional registration under Section 12A of the Income Tax Act, valid from FY 2021-22 to FY 2023-24. However, instead of applying for regularization of the provisional 12A registration, the organization mistakenly filed a second provisional registration application for the period 2024-25 to 2026-27, which led to the CIT(E)’s conclusion that the foundation did not possess a valid 12A registration. As per Section 80G, only organizations with valid 12A registration or those covered under specific provisions of Section 10 are eligible for 80G approval.
Despite this, the ITAT found that the foundation had filed a corrected Form 10AB seeking final registration under Section 12A, which was pending before the CIT(E). The Tribunal noted that the assessee had acted in good faith by filing the corrected application and, in light of the pending final registration, the issue of 80G approval should be reconsidered once the final 12A registration was granted.
Comprehensive Guide of Law and Procedure for Filing of Income Tax Appeals, Click Here
Two Member Bench of Amit Shukla (Judicial Member) and Girish Agrawal (Accountant Member), while restoring the matter to the CIT(E), emphasized that the error in filing the second provisional registration application should not derail the foundation’s eligibility for 80G approval. The Tribunal instructed the CIT(E) to first adjudicate the pending application for final registration under Section 12A and, thereafter, decide the 80G application in accordance with the law.
This decision ensures that the non-profit organization’s application for 80G approval will be fairly considered once its registration under Section 12A is finalized. The assessee’s appeal was thus allowed for statistical purposes, with the matter remitted back for further adjudication.
This ruling highlights the importance of filing the correct forms for tax-exempt status and registration, particularly for non-profit organizations seeking to avail of the benefits under Sections 12A and 80G of the Income Tax Act,1961.
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