When 12A and 80G are rejected and NGO appeals to ITD(E) for approval, can an NGO continue to utilize balance funds out of grants received during the 12A and 80G validity period , for the organisation objective / purpose of the grant received?
If 12A registration is rejected, income tax exemption would not be admissible while the organisation can continue to utilise funds for charitable objectives. The organization will have difficulty in raising funds in absence of a valid 12A and will be assessed as an AOP by filing ITR 5. In addition, provisions of tax on accreted income would apply. If the 12A registration is restored based on favorable decision by ITAT, the 11-12 exemption benefit will continue to be available.
CS Sharad Bhargava