2016 (7) TMI 1360 - HC - Income Tax

Application for registration under section 12AA declined - Deemed income - charges received by the appellant-Board - whether Tribunal was justified in dismissing the appeal of the appellant without awaiting for the outcome of result of application moved under section 10(23C)(iv) ? - Held that - Tribunal s order not a simpliciter or an absolute order of dismissal. The Tribunal proceeded on the basis that the appellant had not obtained registration under section 12A or under section 10(23C)(iv). The order, however, expressly holds that the Commissioner of Income-tax (Appeals) had rightly declined the exemption under section 12A. It is important to note that the Tribunal held that if the assessee is able to obtain approval under section 10(23C), then the Assessing Officer should consider the matter in the light of such approval. The operative part of the order of the Tribunal in paragraph 19, however, dismisses the appellant s appeals. In view of what was observed in the earlier paragraph, we hold that the dismissal was not absolute. As aforesaid, the Tribunal had directed the Assessing Officer to consider the matter afresh in the event of the appellant obtaining approval even under section 10(23C). In view of the observations in the order of the Tribunal to the effect that in the event of the appellant obtaining approval under section 10(23C), the Assessing Officer should consider the matter in the light of such approval, it is not necessary to remand the matter to the Tribunal. The proper course would be to remand the matter to the Assessing Officer.

Summary

Issues:
1. Liberty to amend the appeals by annexing the complete copy of the impugned order of the Tribunal.
2. Admittance of appeals based on substantial questions of law raised.
3. Tribunal's observations regarding registration under section 12AA and exemption under sections 11 and 12 of the Act.
4. Tribunal's order of dismissal and consideration of approval under section 10(23C).
5. Appellant obtaining exemption under section 10(23C)(iv) with retrospective effect.
6. Necessity of remanding the matter to the Tribunal or Assessing Officer.
7. Disposal of appeals directing the Assessing Officer to consider the matter in light of the exemption granted under section 10(23C).

Analysis:

1. The High Court allowed the liberty to amend the appeals by attaching the complete copy of the Tribunal's order. The appeals were filed against the Tribunal's decision dismissing the appellant's appeals related to assessment years 2006-07 to 2011-12.

2. The appeals were admitted based on substantial questions of law raised, including whether the charges received by the appellant-Board can be deemed as income chargeable to tax and if the Tribunal was justified in dismissing the appeal without waiting for the outcome of an application under section 10(23C)(iv).

3. The Tribunal's observations highlighted that during the registration process under section 12AA, only the aims and objects of an institution are examined for charitable nature. Other issues like non-audit of accounts and fund utilization are assessed during exemption under sections 11 and 12. The Commissioner had not provided findings on the charitable nature of the appellant's objects.

4. The Tribunal's order of dismissal was not absolute but contingent on the appellant obtaining registration under section 12A or section 10(23C)(iv). The Tribunal directed the Assessing Officer to reconsider the matter if approval under section 10(23C) is obtained.

5. Subsequently, the appellant secured exemption under section 10(23C)(iv) with retrospective effect covering the relevant assessment years. This eliminated the need to challenge the order concerning section 12AA.

6. Given the Tribunal's directive for the Assessing Officer to review the matter in case of approval under section 10(23C), there was no need to remand the case to the Tribunal. The appropriate action was to remand it to the Assessing Officer for further consideration.

7. Consequently, the appeals were disposed of instructing the Assessing Officer to reassess the appellant's case for the years 2006-07 to 2011-12 in light of the exemption granted under section 10(23C).