Timeline Prescribed for Filing Form No. 10AB for recognition u/s 12 A of Income Tax Act has been Extended up to 30.09.2023: ITAT allows Appeal [Read Order]

The Chennai bench of the Income Tax Appellate Tribunal ( ITAT ) allowed the appeal as the timeline prescribed for filing Form No. 10AB for recognition under section 12A of the Income Tax Act, 1961 has been extended up to 30.09.2023.

The assessee, Teddy Trust filed an application in Form No.10AB on 30.03.2023 seeking registration under clause (iii) of first provision to sub-section (5) of Section 80G of Income Tax Act . It transpired that the assessee trust was incorporated on 04.11.1992 and it commenced its activities on 17.01.1992.

The assessee was granted provisional approval in Form No.10 AC under Section 80G (5) (iv) for the period commencing from 21.10.2022 to AY 2025-26. The first provision to Section 80G (5), provided a timeline for an application to be filed under clause (iii) of first provision to sub-section (5) of Section 80G of Income Tax

As per sub-clause (iii) of this proviso, the assessee was required to file this application at least before 6 months prior to expiry of provisional approval or within 6 months from the date of commencement of its activities, whichever is earlier. The said timeline was mandatory in nature. As against this, the assessee filed application on 30.03.2023 which was much after expiry of 6 months from commencement of its activities. Accordingly, it was held by Commissioner of Income Tax (Exemption) [CIT (E)] that the application was time barred and liable to be rejected.

It was further noted by CIT(E) that the assessee trust was an old trust continuing to exist much before commencement of new regime of registration effective from 01.04.2021 and therefore, it could seek registration under new regime in Form No.10A under Sectio80G(5)(i) itself under which it would have got registration for five years. Instead, the assessee wrongly made an application in Form No.10A under Section 80G (5)(iv) and received provisional approval for 3 years.

Mr. J. Saravanan representing the assessee submitted that the timeline prescribed under clause (iii) of first proviso to Section 80G (5) of the Income Tax Act should be treated as directory and not mandatory especially considering the transitional nature of the amendment as brought out by the taxation of other laws (relaxation and amendment of certain provisions) act 2020 for bringing new regime.

 The two member bench of the tribunal comprising Mahavir Singh ( Vice President) and Manoj Kumar Agarwal ( Accountant member) observed  that the intention of CBDT in its circular clearly reflects their mind that once the timeline prescribed for filing Form No.10AB for recognition under Section 12A of the Income Tax Act has been extended up to 30.09.2023, the same may be treated as extended for forms namely Form No.10AB for renewal of approval/recognition/registration under clause (iii) of first proviso to Section 80G of the Income Tax Act also.

Hence, further accepting the plea of assessee and agreeing with the arguments of counsel for the assessee, the bench remand the matter back to the file of the CIT (Exemption) to decide the issue on merits. Hence, the order of CIT (Exemption) on this issue was set aside and matter was remanded back to the file of the CIT (Exemption) for redeciding the issue on merits as per law.

ITAT set aside the impugned order and direct CIT (E) to consider the application on merits without raising the issue of timeline. Accordingly, the appeal stand allowed for statistical purposes.

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