2015 (4) TMI 1205 - AT - Income Tax

Registration U/s 12AA rejected - treating the application for registration u/s 12AA as time-barred - Held that - Where application is made after first day of June 2007 then the benefit of sections 11 & 12 is available only with reference to the assessment year immediately following the financial year in which such application is made. This means that the benefit of sections 11 & 12 is not available to the earlier years for which the application is made. Therefore, in view of the above clear legal position and also concession made by Ld. Counsel for the assessee, the additional ground raised by the assessee is dismissed. As far as the other grounds are concerned, we find that it is settled law that at the time of registration, the concerned authority is required to examine only the aims and objects of a particular institution and if the same are found to be of charitable nature, the registration should be granted. The other issue like non audit of accounts, non application of 85% of the funds for charitable purposes etc. can be examined only at the time of assessment when exemption is being granted u/s 11 & 12 of the Act. In the case before us, the Ld. Commissioner has not recorded any findings, how the objects of the assessee are not charitable. He has considered various other issues like non audit of accounts, the non application of 85% of the funds for charitable activities etc. which are not relevant for grant of registration, therefore, in the interest of justice, we set aside the order of Ld. Commissioner and remit the matter back to the file of Ld. Commissioner for reexamination of the issue and decide the same in accordance with law.

Summary

Issues:
1. Rejection of Registration U/s 12AA of the Income Tax Act, 1961.
2. Classification of Activities as General Public Utility.
3. Compliance with Basic Conditions for Registration.
4. Utilization of Income for Charitable Purposes.
5. Invocation of Proviso to Section 2(15) of the Act.
6. Application for Registration U/s 12AA Considered Time-Barred.
7. Dismissal of Appeal by CIT(Appeals) Pending Registration U/s 12AA and Approval U/s 10(23C)(iv).

Analysis:
1. The assessee's appeal challenged the rejection of registration U/s 12AA by the CIT, Panchkula. The Commissioner found non-compliance with audit requirements, lack of evidence on fund utilization, and misclassification of activities. The Tribunal admitted an additional legal ground for consideration.
2. The Tribunal clarified that registration should focus on an institution's charitable aims and objects. The Commissioner erred by considering issues like audit and fund utilization at the registration stage. The matter was remitted for reexamination.
3. The Finance Act 2007 amended Section 12A, disallowing condonation of delays post-June 2007. The Tribunal dismissed the additional ground raised by the assessee based on this legal provision.
4. In another set of appeals, the CIT(Appeals) dismissed the appellant's appeal due to income exceeding taxable limits and lack of approval under Section 10(23C)(iv). The Tribunal upheld the denial of exemption for various years due to contradictory claims by the assessee.
5. The Tribunal affirmed that exemption under Section 12A is not retroactive post-June 2007, leading to the denial of exemption for earlier years. The CIT(A) rightly declined exemption for the relevant assessment years, unless approval under Section 10(23C) is obtained.
6. The appeals related to the denial of exemption were dismissed, while the appeal challenging the rejection of registration U/s 12AA was allowed for statistical purposes. The Tribunal directed consideration of the matter based on any subsequent approval under Section 10(23C).