2015 (12) TMI 888 - AT - Income Tax

Grant of registration u/s 12AA - grievance of the assessee since the assessee has applied for registration on 18.12.2009, the CIT should have granted registration w.e.f. 1.4.2009 as per sub-clause (ii) of proviso to section 12A(1)(a) and secondly the condition imposed by the CIT for grant of registration u/s 12AA of the Act by requiring the assessee to get itself registered u/s 43(1) of the Andhra Pradesh Charitable & Hindu Religious Institutions and Endowments Act, 1987 - Held that - As per clause (ii) of the first proviso to section 12A (1)(a) of the Act in a case where the application for registration is not filed before the commissioner before the expiry of a period of 1 year from the date of creation of the trust or the establishment of the institution, then the registration shall be granted from the first day of financial year in which the application is made. However, as per the second proviso the clause shall not apply in relation to any application made on or after the first day of June, 2007. Similarly, sub-section 2 of section 12A of the Act which was inserted into the statute from 1.6.2007 mandates that in a case where application for registration is made after the first day of June, 2007, the provisions of section 11 & 12 shall apply in relation to the income of such trust or institution from the assessment year immediately following the financial year in which such application is made. Therefore, in view of the clear statutory provision as contained u/s 12A(2) of the Act which is applicable to applications for registration made after 1.6.2007 we do not find any infirmity in the order of the CIT in granting registration for the assessment year 2010-11. Therefore, assessee s contention in this respect cannot be accepted. Requirement of registration u/s 43(1) of the Andhra Pradesh Charitable & Hindu Religious Institutions and Endowments Act, 1987 is concerned, we are not able to agree with the view of the CIT in this regard. Law is now fairly well settled that for registration u/s 12A of the Act the society is not required to be registered u/s 43(1) of the Andhra Pradesh Charitable & Hindu Religious Institutions and Endowments Act, 1987. Further, it is a fact on record that the assessee had applied for registration u/s 43(1) of the Andhra Pradesh Charitable & Hindu Religious Institutions and Endowments Act, 1987 before the Assistant Commissioner, Endowments Department. However, assessee s application for registration was not acted upon and the assessee was informed that as there is a ban on new registrations, assessee s application cannot be accepted. That being the case, when the authorities are not granting registration under the Andhra Pradesh Charitable & Hindu Religious Institutions and Endowments Act, 1987, registration u/s 43(1) cannot be made a condition precedent for getting registration u/s 12AA of the Act. Assessee cannot be expected to perform an impossible act. Non-registration u/s 43(1) of the Andhra Pradesh Charitable & Hindu Religious Institutions and Endowments Act, 1987 will not be a bar for the assessee in getting exemption u/s 11 of the Act when there is no such restriction put u/s 11, 12 & 13 of the Act. In view of the aforesaid we direct the CIT to grant registration u/s 12AA of the Act to the assessee without insisting upon registration u/s 43(1) of Andhra Pradesh Charitable & Hindu Religious Institutions and Endowments Act, 1987.

Summary

Issues:
1. Grant of registration u/s 12A of the Income-tax Act.
2. Condition imposed by CIT for registration u/s 12AA of the Act subject to registration u/s 43(1) of the Andhra Pradesh Charitable & Hindu Religious Institutions and Endowments Act, 1987.

Analysis:
1. The appeal was against the order granting registration u/s 12A to the assessee with a condition related to registration u/s 43(1) of another Act. The assessee applied for registration on 18.12.2009, initially rejected by CIT, then reinstated by ITAT for reconsideration. CIT granted registration w.e.f. 1.4.2010, subject to registration u/s 43(1) of Andhra Pradesh Act. Assessee contended the registration should have been granted from 1.4.2009 and objected to the condition imposed by CIT. The ITAT analyzed the statutory provisions and held that the registration granted by CIT for the assessment year 2010-11 was in line with the law, as per the provisions of section 12A(2) applicable to applications made after 1.6.2007. The ITAT dismissed the contention regarding the registration date. The income earned by the assessee in 2009-10 would be eligible for exemption u/s 11, subject to conditions.

2. The second issue was the requirement of registration u/s 43(1) of the Andhra Pradesh Act as a condition for registration u/s 12AA of the Income-tax Act. The ITAT disagreed with CIT's view, stating that registration u/s 43(1) was not mandatory for registration u/s 12A. The assessee had applied for registration u/s 43(1) but was informed of a ban on new registrations. The ITAT cited a previous case where it was held that non-registration u/s 43(1) would not bar exemption u/s 11. The ITAT ruled that registration u/s 12AA could not be subject to the condition of registration u/s 43(1) of the Andhra Pradesh Act. It directed the CIT to grant registration u/s 12AA without insisting on registration u/s 43(1).

In conclusion, the ITAT allowed the assessee's appeal, upholding the registration granted by CIT for the assessment year 2010-11 and removing the condition of registration u/s 43(1) of the Andhra Pradesh Act for registration u/s 12AA of the Income-tax Act.