Circular No. 07/2024-A Detailed Analysis

Circular No. 07/2024 [F. No.173/25/2024-ITA-I] Dated 25th April, 2024: A Detailed Analysis

The Central Board of Direct Taxes (CBDT), Government of India, Ministry of Finance, Department of Revenue, issued Circular No. 07/2024 on 25th April, 2024. This circular pertains to the extension of the due date for filing of Form No. 10A/10AB under the Income-tax Act, 1961.

Background

The CBDT had previously extended the due date for filing Form 10A/10AB multiple times to mitigate genuine hardships of the taxpayers. The last such extension was made by Circular No. 06/2023, extending the date to 30th September, 2023.

Extension of Due Date

Considering the representations received by CBDT requesting for further extension of due date for filing of such Forms beyond the last extended date of 30th September, 2023, and with a view to avoid genuine hardships to taxpayers, CBDT has extended the due date of filing Form 10A/ Form 10AB up to 30th June, 2024, in respect of certain provisions of section 10 (23C)/ section 12A/ section 80G/ and section 35 of the Act.

Practical difficulty before extension-

The real difficulty lies in cases where final registration of the assessee gets rejected for the reason that application in Form 10AB is not filed within a period of 6 months from the date of commencement of activity or before 6 months from the end of validity of provisional registration. There exists no separate provisions for applying for fresh registration after rejection of previous registration as such applications are allowed only when no income or part thereof of the said trust or institution has been excluded from the total income on account of applicability of sub-clause (iv) or sub-clause (v) or sub-clause (vi) or sub-clause (via) of clause (23C) of section 10, or section 11 or section 12, for any previous year ending on or before the date of such application, at any time after the commencement of such activities.

The Act has tried to rationalise the provisions to a large extent but still the provisions remain complicated. New provisions for directly applying for final registration had been inserted vide Finance Act 2023 but they still fail to address the core issue. The new provisions inserted for obtaining fresh registrations directly is reproduced asunder-

“5.3 In order to ensure rationalisation of the provisions, it is proposed to allow for direct final registration/approval in such cases. To achieve this, following amendments are proposed:

• (a) The trusts and institutions under the first regime shall be allowed to make application for the provisional approval only before the commencement of activities under proposed sub-clause (A) of clause (iv) of the first proviso to clause (23C) of section 10 of the Act.

• (b) Similarly trusts and institutions under the second regime shall be allowed to make application for the provisional registration only before the commencement of activities under proposed item (A) of sub-clause (vi) of clause (ac) of sub-section (1) of section 12A of the Act.

• (c) Similarly trusts and institutions under section 80G regime shall be allowed to make application for the provisional approval only before the commencement of activities under proposed sub-clause (A) of clause (iv) of the first proviso to sub-section (5) of section 80G of the Act.

• (d) The trusts and institutions under first regime, which have already commenced their activities, shall make application for a regular approval under sub-clause (B) of clause (iv) of the first proviso to clause (23C) of section 10 of the Act.

• (e) The trusts and institutions under second regime, which have already commenced their activities, shall make application for a regular registration under item (B) of sub-clause (vi) of clause (ac) of sub-section (1) of section 12A of the Act.

• (f) The trusts and institutions under section 80G regime, which have already commenced their activities, shall make application for a regular approval under the proposed sub-clause (B) of clause (iv) of the first proviso to sub-section (5) of section 80G of the Act.

• (g) Such application shall be examined by the Principal Commissioner or Commissioner as per the procedure provided under clause (ii) of the second proviso to clause (23C) of section 10 of the Act for the trusts and institutions under the first regime, under clause (b) of sub-section (1) of section 12AB of the Act for the trusts and institutions under the second regime and under clause (ii) of the second proviso to sub-section (5) of section 80G of the Act.

• (h) Where the Principal Commissioner or Commissioner is satisfied about the objects and genuineness of the activities and compliance of other requirements provided in law, registration or approval in such cases shall be granted for 5 years.

• (i) The Principal Commissioner or the Commissioner shall pass and order granting or rejecting such applications within 6 months calculated from the end of the month in which such application was received.”

Special Provisions prescribed in the above circular-

CBDT further clarifies that, if any such existing trust, institution or fund had failed to file Form 10A for AY 2022-23 within the extended due date, and subsequently, applied for provisional registration as a new entity and received Form 10AC, can also now avail this opportunity to surrender the said Form 10AC and apply for registration for AY 2022-23 as an existing trust, institution or fund, in Form 10A till 30th June 2024.

It is also clarified that those trusts, institutions or funds whose applications for re-registration were rejected solely on the grounds of late filing or filing under wrong section code, may also submit fresh application in Form 10AB within the aforesaid extended deadline of 30th June, 2024.

Conclusion

The applications as per Form 10A/ Form 10AB shall be filed electronically through the e-filing portal of Income Tax Department. This extension is a significant relief for taxpayers, particularly trusts, institutions, and funds, providing them with additional time to comply with the filing requirements under the Income-tax Act, 1961.