Mahavar Sabha Rewari vs. CIT (Exemption), Chandigarh [ITA No. 540/Chandi/2024, AY 2023-24]
In a recent decision dated 12th February 2025, the Income Tax Appellate Tribunal (ITAT) Delhi Bench ‘E’ delivered a crucial judgment in the case of Mahavar Sabha Rewari vs. CIT (Exemption), Chandigarh [ITA No. 540/Chandi/2024, AY 2023-24]. The ruling addresses a key procedural issue relating to the timelines for filing Form 10AB under Section 80G(5) of the Income Tax Act, 1961, particularly for long-standing charitable institutions.
Background: The Case of Mahavar Sabha Rewari
Mahavar Sabha Rewari, a society registered under the Haryana Registration and Regulation of Societies Act, 2012, has been active in charitable activities since its incorporation in 1992. The society was granted provisional registration under Section 80G(5)(iv) via Form 10A on 21st January 2023, valid up to 31st March 2026.
Subsequently, the society applied for permanent registration under Clause (iii) of the first proviso to Section 80G(5) using Form 10AB on 27th September 2023. However, the CIT (Exemption) rejected the application as “non-maintainable,” citing that it was filed beyond six months from the commencement of the society’s activities.
Assessee’s Arguments: A Call for Harmonious Interpretation
The Authorized Representative (AR) for the assessee contended that Clause (iii) of Section 80G(5) was misinterpreted. It is practically impossible for a society operating for several years to comply with the “six months from commencement of activity” condition under the amended rules. The AR emphasized that:
- The assessee society has been active since 1992.
- Provisional registration is now a prerequisite before applying for permanent registration.
- As per the structure, a trust cannot simultaneously comply with both provisional and permanent registration timelines if it has been operational for decades.
Reliance was placed on the Calcutta High Court ruling in CIT(E) v. West Bengal Welfare Society, which clarified that the six-month timeline begins post-provisional registration, not from the original commencement of charitable activities.
Revenue’s View: Stick to the Text, But Amendments Are Noted
The Departmental Representative (DR) referred to amendments introduced by the Finance Act (No.2), 2024, effective 01.10.2024, and cited multiple precedents including:
- Allied Motors (P.) Ltd. v. CIT (224 ITR 677)
- Calcutta Export Company (404 ITR 654)
- South Asia Foundation India v. CIT(E) (ITA No. 1903/Del/2024)
The DR argued for a strict reading of the statutory timeline but acknowledged the CBDT Circular No. 7/2024 dated 25.04.2024, which extended the deadline for filing Forms 10A and 10AB to 30th June 2024 due to practical challenges.
ITAT Delhi’s Verdict: Procedural Fairness Prevails
The ITAT observed that the CIT (Exemption) had not considered the facts and circumstances in their entirety. Noting the legislative intent behind Section 80G(5) as a welfare provision, the Bench held that:
- A harmonious interpretation is required, especially for older institutions applying under the new procedural framework.
- The CBDT Circular and recent High Court decisions clarify that the six-month timeline must be interpreted flexibly.
- The assessee’s application via Form 10AB was effectively within the prescribed time, considering these factors.
The matter was restored to the CIT (Exemption) for fresh adjudication, with directions to offer the assessee an opportunity of being heard.
Conclusion
This ruling by the ITAT Delhi provides a major relief to charitable societies and trusts established before the revamped procedural requirements under Section 80G(5). It emphasizes that procedural rigidity should not defeat substantive justice, especially in cases involving welfare legislation.
Key Takeaways:
- Provisional registration is now a mandatory step before applying for final approval under Section 80G.
- Older institutions should not be penalized for timelines that were not applicable when they commenced operations.
- The CBDT Circular No. 7/2024 and related case law support a liberal interpretation of procedural deadlines.