ITAT Grants Relief to Old Charitable Trust on Section 12A and 80G Application Rejection

The Income Tax Appellate Tribunal (ITAT), Ahmedabad, has ruled in favour of an assessee trust which had mistakenly filed a wrong Form while applying for final registration under section 12A of the Income Tax Act.

The assessee, Shree Kukarwada Kelavni, was a trust registered under section 12A of the Income Tax Act since 1953. Due to the amendments introduced in Section 12A and Section 80G of the Income Tax Act, requiring the Section 12A registered Trust to apply for the renewal of the registrations, the assessee applied for a final registration.

However, when such changes were introduced, there was a lot of confusion among the taxpayers, tax professionals and even the CIT(E) about which form to file. There was also no clarity on whether trusts that were already registered should be granted “provisional registration” or “regular registration” for five years.

The assessee, due to this confusion, filed Form 10AC instead of Form 10AB. The CIT(E), which was supposed to guide the assessee to file the correct Form, treated it as a new trust and granted the assessee a “provisional registration” under section 12A instead of a final/regular registration. When the assessee trust applied for the regular registration under section 12A of the Income Tax Act, the same was rejected for being time-barred.

The assessee had also filed an application seeking approval under Section 80G of the Income Tax Act, which was rejected by the CIT(A) on the grounds that its application under Section 12A was not accepted. Therefore, the assessee approached the ITAT challenging both issues.

The Tribunal noted that the assessee was already registered under section 12A and the CIT(E) was supposed to renew the Trust’s registration for a further five years. The Tribunal noted that the confusion was due to unclear provisions and errors in forms.

The ITAT ruled that the provisional registration earlier granted should be treated as regular registration under Form 10AB. It also clarified that this registration will be treated as if it had been correctly granted from 01/04/2021.

Since the trust’s Section 12A registration was restored, the ITAT also allowed its appeal related to Section 80G approval.