Activity already commenced prior to Provisional Registration cannot be the ground for rejection of Section 80G Registration: Nagpur ITAT
There are various cases wherein the provisional registration under section 12A or under section 80G is denied for the reason that the trust has already commenced its activities.
Technically speaking, the law itself is ill drafted as the trust which otherwise has commenced activities were otherwise not eligible for registration at all. Though the poor drafting has been rectified by amendment by the FA-2023, the trust who has already applied earlier were struggling to get the registration. The only option in such a case was to approach Hon’ble ITAT for getting the relief.
Here is one appeal preferred by me before Hon’ble Nagpur Bench of ITAT wherein it is submitted that if the view of the ld. CIT(Exemption) is accepted to be correct, then no institution which has already been into charitable activities before seeking provisional approval under clause (iv) to First Proviso to section 80G(5) of the Act would ever be entitled to grant of final registration under clause (iii) to First Proviso to section 80G(5) of the Act even after grant of provisional approval, which would make the relevant provisions of section 80G(5) otiose and defeat the object and purpose of these statutory provisions.
Happy to share that the Hon’ble Nagpur bench with Hon’ble Shri V. Durga Rao Sir & Hon’ble K.M.Roy sir has accepted the submission of Assessee and allowed the appeal by 17 page detailed order. The key observation at Para 8, 9 & 10 were as under:
8. In view of above discussion, it is held that after grant of provisional approval, the application cannot be rejected on the ground that the institution had already commenced its activities even prior to provisional registration.
Under such circumstances, the date of commencement of activity will be counted when an activity is undertaking after grant of provisional registration either under clause (i) or clause (iv) to First Proviso to section 80G(5) of the Act.
9. In the case in hand, the assessee admittedly has applied for final registration after grant of provisional registration under clause (iv) to First Proviso to section 80G(5) of the Act and therefore, the application filed by the assessee is within limitation period. The issue is otherwise squarely covered by the decision of the Coordinate Bench of the Tribunal in the case of Vivekananda Mission Asram (supra) and in the case of “West Bengal Welfare Society v. CIT (Exemption)” [IT Appeal Nos. 730 & 731 (Kol.) of 2023, dated 13-9-2023] and further by the decision in the case of “Sri Aurobindo Bhawan Trust v. CIT (Exemption)” [IT Appeal No. 1058 (Kol.) of 2023, dated 20-2-2024.Therefore, the impugned order of the CIT(Exemption) is set aside and the ld. CIT(Exemption) is directed to grant provisional approval to the assessee under clause (iii) to First Proviso to section 80G(5) of the Act, if the assessee is otherwise found eligible. The ld. CIT(A) will decide the application for final registration within three months of the receipt of copy of this order.
10. In the result, the appeal of the Assessee is treated as allowed for statistical purposes.”
The copy of the order is attached herewith:
