2014 (9) TMI 959 - AT - Income Tax

Registration under section 12AA denied - Held that - Commissioner rejected the application of the assessee on the failure of the assessee to produce certain material which was called for by letter dated July 10, 2007. This Tribunal is of the opinion that the assessee apparently complied with the requirement of the Commissioner and registration was also granted from financial year 2010-11. Therefore, giving one more opportunity to the assessee to produce all the details that may be required by the Commissioner may not prejudice the interests of the Revenue. This Tribunal is of the considered opinion that giving one more opportunity to the assessee to produce necessary details/materials before the Commissioner would definitely promote the cause of justice. Accordingly, without expressing any opinion on the merit of the application filed for registration under section 12AA the impugned order of the Commissioner dated September 26, 2007 is set aside and the issue of registration under section 12AA of the Act is remanded back to the file of the Commissioner. It is made clear that if it is found to have collected any capitation fees for admission of students, i.e., collection of any money over and above the prescribed fee fixed by the committee nominated by the State Government for admission of students the assessee is not entitled for registration under section 12AA and also not entitled for exemption under sections 11, 12 and 10(23C) of the Act. - Decided in favour of assessee for statistical purposes

Issues Involved:
1. Registration under section 12AA of the Income-tax Act as a charitable institution.
2. Regular assessment made by the Assessing Officer as confirmed by the Commissioner of Income-tax (Appeals).
3. Delay in filing the appeal before the Tribunal.

Detailed Analysis:

Issue 1: Registration under Section 12AA of the Income-tax Act as a Charitable Institution

The assessee-trust, running educational institutions, applied for registration under section 12AA on May 30, 2007, which was rejected on September 26, 2007. The assessee was advised to file another application on July 30, 2007, which became redundant and was dismissed as "application withdrawn" due to a simultaneous application for approval under section 10(23C). A third application on March 31, 2010, was also rejected. A fourth application on December 1, 2010, was successful, granting registration effective from the financial year 2010-11.

The assessee filed writ petitions and review petitions before the Kerala High Court, which were dismissed, and the High Court allowed the filing of fresh applications. The Commissioner reposted the hearing but rejected the application again on October 24, 2011, as the registration was already granted based on the application filed on March 31, 2010. The Tribunal condoned the delay of 2353 days in filing the appeal due to the assessee prosecuting wrong remedies bona fidely before other forums. The Tribunal found that the assessee was vigilant in prosecuting the proceedings for approval under section 12AA and condoned the delay, admitting the appeal.

Issue 2: Regular Assessment Made by the Assessing Officer as Confirmed by the Commissioner of Income-tax (Appeals)

The appeal in I.T.A. No. 75/Coch/2013 pertains to the regular assessment for the assessment year 2007-08. The Tribunal opined that the decision on the application for registration under section 12AA would impact the assessment year 2007-08. Therefore, the Tribunal set aside the order of the lower authorities and remitted the issue back to the Assessing Officer to reconsider the assessment in light of the order that may be passed by the Commissioner regarding the registration under section 12AA. The Tribunal emphasized that if the assessee collected any capitation fees, it would not be entitled to registration under section 12AA and exemptions under sections 11, 12, and 10(23C).

Issue 3: Delay in Filing the Appeal Before the Tribunal

The Tribunal considered the delay of 2353 days in filing the appeal due to the assessee prosecuting wrong remedies before the wrong forums. Citing the Madras High Court's judgment in CIT v. K. S. P. Shanmugavel Nadar, the Tribunal found that prosecuting a wrong remedy before the wrong forum constitutes a reasonable cause for the delay. Consequently, the Tribunal condoned the delay and admitted the appeal.

Conclusion:

The Tribunal allowed the appeals in I.T.A. No. 75/Coch/2013 and I.T.A. No. 221/Coch/2014 for statistical purposes, remanding the issues back to the respective authorities for reconsideration. The appeal in I.T.A. No. 384/Coch/2013 was dismissed. The order was pronounced in open court on September 12, 2014.

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