The Writ Petition involves trustees of charitable trusts seeking relief through a common order due to identical claims, with the issue revolving around the extension of time for filing applications under tax laws, ultimately resulting in the impugned clause being deemed unconstitutional and directing the respondents to consider the applications within a specified timeframe.

• In the realm of legal battles concerning charitable trusts and their tax approvals, a recent case sheds light on the intricate nuances of administrative decisions and constitutional rights. This article delves into the details of the writ petition filed by trustees representing various charitable trusts, the factual matrix underlying the case, counter-arguments presented by the respondents, submissions by both parties, and the court's deliberations leading to its verdict.

A. The Writ Petition:

• The writ petitioners, acting as trustees of charitable trusts, collectively sought relief through their petitions. Given the similarity in the claims made by these trusts, the court consolidated the cases and proceeded with a common hearing.

B. The Factual Matrix:

• The case revolves around the procedural requirements for tax approvals under the Income-Tax Act, 1961. The petitioner trust, established with charitable and educational objectives, encountered challenges in complying with the amended provisions related to provisional and regular registrations under various sections of the Act.

• The petitioner trust's failure to meet the extended deadlines for filing the necessary forms led to the rejection of its application for approval under Section 80G(5) of the Act. The petitioners challenged the constitutionality of Circular No.6 of 2023, which extended the time limit but omitted the provision for approval under Section 80G(5) for new trusts.

C. The Counter:

• In response to the writ petitions, the respondents argued that the distinction between existing and new trusts was justified due to differences in procedural requirements. However, they failed to provide substantial reasons for the differential treatment. The court expressed skepticism regarding the conscious decision behind the omission in the circular.

D. The Submissions:

• The petitioners contended that the classification made by the respondents lacked reasonable grounds and violated Article 14 of the Constitution. They argued that the extension of time by the respondents implied a vested right for the petitioner trusts, which would be jeopardized without Section 80G approval.

• The respondents countered, asserting the discretionary nature of time extensions and the legality of differentiating between existing and new trusts. They cited legal precedents to support their arguments.

E. The Point for Consideration:

• The court identified the key issue: whether the classification made by the respondents regarding the extension of time for trust approvals was reasonable and constitutional.

F. The Discussion and Findings:

• Upon thorough examination, the court found the omission in Circular No.6 of 2023 arbitrary and unconstitutional. The differential treatment lacked a rational basis and failed to serve the intended purpose of mitigating hardship. The court cited legal principles to emphasize the importance of reasonable classification under Article 14.

G. The Result:

• In its verdict, the court declared the impugned clause of the circular illegitimate and directed the respondents to reconsider the petitioner trusts' applications within a specified timeframe. The judgment reaffirmed the principles of fairness and equality under the Constitution.

• In conclusion, this case underscores the significance of procedural fairness and legal reasoning in administrative decisions. It sets a precedent for upholding constitutional rights and ensuring equitable treatment in matters of public interest.

Topic-Sri Nrisimha Priya Charitable Trust Versus Central Board of Direct Taxes, Commissioner of Income Tax (Exemptions),

Court: Madras High Court

Date: 02/04/2024

Team Taxonation