CBDT Clarifies Income Tax Form 10AC for Trusts & Universities

The Central Board of Direct Taxes (CBDT) has allocated a circular in which rules for Form No. 10AC beneath the income tax act 1961 are stated along with some additional compliance.

Finance act 2022 has inserted sub-section (4) in section 12AB of the Income-tax Act, 1961 permitting the Principal Commissioner or Commissioner of Income-tax for investigating if there is any specified violation by the trust or institution enrolled or provisionally enrolled beneath the concerned clauses of sub-section (1) of section 12AB or subsection (1) of section 12AA. The order would get issued for cancellation of the registration or the denial to revoke the enrollment next to the examination by the Principal Commissioner or Commissioner of income tax.

In clause (23C) of section 10 of the Act, some identical provisions are indeed been introduced by replacing the fifteenth proviso of the stated clause as compared to fund or institution trust or institution or any university or additional educational institution or any hospital or other medical institution directed beneath sub-clauses (iv), (v), (vi), (via) of this clause i.e approved beneath the second proviso to the articulated clause. These changes are effective from the date 1st April 2022.

Moreover to the mentioned violations directed above, the power of violations is indeed given beneath sub-rule (5) of rule 17A and sub-rule (5) of rule 2C of the Income-tax Rules, 1962 (the Rules) towards the Principal Commissioner or Commissioner authorized by the Board. It is the circular that is in relation to the cancellation of registration/approval or provisional registration/approval in the case of “specified violation”.

“specified violation” is described for the use of the fifteenth proviso to clause (23C) of section 10 and section 12AB of the Act which has been mentioned in the corresponding clause and section. The mentioned definition inter-alia consists of instances in which any activity of an institution would not be performed as per the conditions mentioned which were approved/ provisionally approved or registered/provisionally registered.

In the circular under the new procedure for the approval/registration of the charitable entities that was shown through Notification, No 19/2021 dated 26.03.2021, the entities asking for re-registration/ approval or provisional registration/ approval (new) are needed to furnish an application in Form 10A (Trust/Societies), moreover, the order providing the enrollment or provisional enrollment or the approval or the provisional approval is incurred inside Form 10AC with respect to the fulfilment of some conditions.

Towards the changes incurred vide Finance Act 2022, the conditions with respect to which there is an allotment of registration/approval or provisional registration/ provisional approval to trusts and institutions required to be amended to align that with the modifications incurred via Finance Act, 2022.

the CBDT circular articulated that In view of the above, it is hereby clarified that the conditions contained in Form No. 10AC, issued between 01.04.2021 till the date of issuance of this Circular, shall be read as if the said conditions had been substituted with the conditions as provided in Table 1 with effect from 1st April 2022,

Because of technical errors, Form No. 10AC has been given in FY 2021- 2022 with the heading Order for provisional registration or “Order for provisional approval” rather than “Order for registration” or “Order for approval”, then all these Forms No. 10AC shall be considered as an Order for registration or approval and, in such cases where Form No. 10AC has been issued, – (a) under section code 01 (applications seeking re-registration).”