CBDT’s Circular Not Extending Time for Filing Application for Sec. 80G Approval for New Trust is Arbitrary | HC

Case Details: Sri Nrisimha Priya Charitable Trust vs. Central Board of Direct Taxes - [2024] 161 taxmann.com 209 (Madras)

Judiciary and Counsel Details

• Sanjay V. Gangapurwala & D. Bharatha Chakravarthy, JJ.
• Suhrith Parthasarathy for the Petitioner. 
• AR.L. Sundaresan and V. Mahalingam for the Respondent.

Facts of the Case

The petitioner, a charitable trust, was granted provisional approval under section 80G(5) by filing Form No. 10A. Subsequently, the petitioner applied for regular approval by filing Form No. 10AB. The application was filed beyond the due date as per the provisions of section 80G(5).

The Central Board of Direct Taxes (CBDT) issued a circular extending the due date for filing Form No. 10AB for regular approval under section 80G(5) only for the existing trusts and not new ones.

The petitioners filed a writ petition before the Madras High Court challenging the CBDT’s circular.

High Court Held

The High Court held that when the impugned circular was issued, the CBDT stated that the reason was to mitigate genuine hardship faced by the trusts in the digital filing of the respective forms. It was essential to note that the only reason shown for exercising the powers was that these trusts faced hardship since they could not apply on time.

No discrimination or differentiation was made between the existing trusts and the new trusts at the first instance when the circular was issued. When the reason stated by the Board was to mitigate genuine hardship, no reason whatsoever is mentioned to omit “the clause (i) of the first proviso to sub-section (5) of Section 80G of the Act” in respect of the new trusts applying under Form No. 10AB alone.

There is no reason whatsoever to leave out the new trusts with respect to approval under Section 80G alone. The differential treatment is not based on any substantial distinction that is real and pertinent to the object of the circular. The discrimination is artificial.

The relevant paragraph only reiterated the eligibility of dedication and the amendments made to Section 115TD of the Finance Act, 2023. Thus, the impugned clause of the circular was declared illegitimate, arbitrary, and ultra vires the Constitution of India.