CBDT ISSUES CLARIFICATION REGARDING FORM NO 10AC

Finance Act, 2022 has inserted sub-section (4) in section 12AB of the Income-tax Act, 1961 (the Act) allowing the Principal Commissioner or Commissioner of Income-tax to examine if there is any “specified violation” by the trust or institution registered or provisionally registered under the relevant clauses of sub-section (1) of section 12AB or sub­section (1) of section 12AA. Subsequent to examination by the Principal Commissioner or Commissioner of Income-tax, an order is required to be passed for either cancellation of the registration or refusal to cancel the registration.

Similar provisions have also been introduced in clause (23C) of section 10 of the Act by substituting the fifteenth proviso of the said clause with respect to fund or institution trust or institution or any university or other educational institution or any hospital or other medical institution referred under sub-clauses (iv), (v), (vi), (via) of this clause and which have been approved or provisionally approved under the second proviso to the said clause.

These amendments are effective from 1st April, 2022.

In addition to the specified violations referred above, the power of cancellation has also been granted under sub-rule (5) of rule 17A and sub-rule (5) of rule 2C of the Income-tax Rules, 1962 ( the Rules) to the Principal Commissioner or Commissioner authorized by the Board.

This Circular only relates to cancellation of registration/approval or provisional registration/approval in the case of “specified violation”.

The Central Board of Direct Taxes (CBDT) has issued a circular clarifying that:

1. Conditions for grant of registration under sections 12AB, 10(23C), and 80G
The Board has listed down the revised conditions that should be followed by the trust or institution seeking:

a) Re-registration and provisional registration under section 12AB,
b) Re-approval and provisional approval under section 10(23C), and
c) Re-approval and provisional approval under section 80G

The conditions contained in Form No. 10AC, issued between 01.04.2021 till the date of issuance of Circular, i.e., 03-06-2022, shall be read as if the said conditions had been substituted with the conditions as provided by the board with effect from 1st April 2022.

2. Provisional registration/approval to be deemed as registration/approval
The Board has clarified that if due to technical glitches, Form No. 10AC has been issued during FY 2021-2022 with the heading “Order for provisional registration” or “Order for provisional approval” instead of “Order for registration” or “Order for approval”, then all such Form No. 10AC shall be considered as an “Order for registration or approval”.