2014 (5) TMI 389 - AT - Income Tax

Rejection of registration u/s 12AA of the Act Held that - The DIT(E) is not justified in directing the assessee to obtain registration from the Competent Authority of Government of Andhra Pradesh u/s. 43 of the A.P. Charitable & Hindu Religious Institutions & Endowments Act, 1987 and furnish a copy of such order of registration in his office for record, within a period of 6 months from the date of receipt of the impugned order - There is no provision u/s. 12AA of the Act to seek registration from the Competent Authority of Government of Andhra Pradesh u/s. 43 of the A.P. Charitable & Hindu Religious Institutions & Endowments Act, 1987 so as to grant registration u/s. 12AA of the Act by the DIT(E) - the DIT(E) is directed to grant registration u/s 12AA of the Act Decided in favour of Assessee.

Summary

Issues:
1. Registration u/s 12AA of the Income Tax Act, 1961 - Grant of registration to a trust.
2. Imposition of a new condition by the Director of Income Tax (Exemptions) while granting registration.
3. Legality of imposing conditions not specified under the relevant provisions of the Act.

Issue 1: Registration u/s 12AA of the Income Tax Act, 1961 - Grant of registration to a trust:
The appeal was against the order of the Director of Income-tax (Exemptions), Hyderabad, who initially refused to register the trust under section 12AA of the Act. The Income Tax Appellate Tribunal, Hyderabad, directed the Director to grant registration to the assessee-trust, which was challenged by the Director by imposing a new condition regarding obtaining registration from the Competent Authority of Government of Andhra Pradesh under a different Act.

Issue 2: Imposition of a new condition by the Director of Income Tax (Exemptions) while granting registration:
The Director, while granting registration, imposed a condition requiring the trust to obtain registration from the Competent Authority of Government of Andhra Pradesh under a different Act and furnish a copy of such order within a specified period. This condition was based on certain legal precedents cited in the order, which the assessee contended was improper and not in accordance with the provisions of section 12AA of the Income Tax Act.

Issue 3: Legality of imposing conditions not specified under the relevant provisions of the Act:
The Income Tax Appellate Tribunal held that there is no provision under section 12AA of the Act to seek registration from the Competent Authority of Government of Andhra Pradesh under a different Act. The Tribunal emphasized that the Director was not justified in imposing such a condition, especially after being directed by the Tribunal in an earlier order to grant registration under section 12AA. The Tribunal ruled that the Director cannot override its order and expunged the condition imposed by the Director, ultimately allowing the appeal of the assessee.

In conclusion, the judgment by the Income Tax Appellate Tribunal, Hyderabad, in this case addressed the issues surrounding the grant of registration to a trust under section 12AA of the Income Tax Act, the imposition of a new condition by the Director of Income Tax (Exemptions) while granting registration, and the legality of imposing conditions not specified under the relevant provisions of the Act. The Tribunal emphasized that the Director was not justified in imposing a condition requiring registration under a different Act and ruled in favor of the assessee, expunging the improper condition and allowing the appeal.