Sir Chhotu Ram Educational And Cultural Society vs. Commissioner of Income Tax, I.T.A.No.2481/DEL/2024
In a significant judgment that provides relief to several charitable institutions, the Income Tax Appellate Tribunal (ITAT) Delhi Bench in I.T.A. No. 2481/Del/2024 held that where a trust’s activities commenced prior to the enactment of the new 80G regime, it cannot be penalized for not filing the final registration application within six months of commencement.
The case involved Sir Chhotu Ram Educational and Cultural Society, which commenced activities in May 1993. The trust had applied for provisional registration under Section 80G(5) of the Income-tax Act in April 2022, which was valid up to March 2024. The final registration application was filed in September 2023, within six months prior to expiry, but well beyond six months of commencement of activities.
The Commissioner of Income Tax (Exemptions), Chandigarh rejected the application solely on technical grounds, stating that the final application was not made within six months of commencement of activities, as per clause (iii) of the first proviso to Section 80G(5).
Key Observations by ITAT:
- The Tribunal acknowledged that strict adherence to the six-month rule in such cases results in an impossibility, as the trust began operations long before the new regime came into force.
- Relying on legal doctrines including “doctrine of impossibility” and “legitimate expectation”, the Tribunal held that the law must not impose impossible burdens on assessees.
- The Bench emphasized harmonious construction of Section 80G(5), observing that the second limb (6 months from activity commencement) is impractical for older institutions.
- The ITAT directed the CIT(E) to re-examine the application without being bound by the six-month activity commencement clause.
Implication:
This ruling opens the door for hundreds of legacy trusts and institutions that were operational before the 2021 changes in the 80G framework. It ensures a fair interpretation of procedural compliance, especially when applying rigid timelines would defeat the legislative intent.
Conclusion:
In allowing the appeal, the ITAT Delhi reinforced the principle that procedural technicalities should not override substantive justice, particularly where compliance is made impossible by retrospective legislative changes.