2017 (9) TMI 1705 - HC - Income Tax

Restoring of registration u/s. 12A - assessee contended that the exemption under Section 11 has to be allowed on restoration of such registration - Held that - We do not think that such ifs and buts would permit the Revenue to get over a presently binding order of the Tribunal. That order of restoration of registration binds the Revenue. That order has not been quashed and set aside by this Court. The Appeal is merely admitted. To our mind, the question as proposed in the present matter is not a substantial question of law. So long as the law does not oblige entertaining of an Appeal of the Revenue proposing the above question, we do not think we should entertain it. There is a difference and vast as it is, between an order being subjected to challenge and the challenge having succeeded. In the later case, the order is wiped out because then it is quashed and set aside. Today, a challenge is merely pending. That cannot be equated to the challenge succeeding. That hurdle is yet to be crossed. If that is not crossed, the initial order of restoration of registration continues to bind the Revenue. As a result of the above discussion, we do not find that the questions proposed are substantial questions of law

Summary

Issues:
Challenge to order of Income Tax Appellate Tribunal dated 31st July, 2014 regarding restoration of registration under Section 12A of the Income Tax Act, 1961.

Analysis:
The respondent claimed to be a charitable trust founded to propagate education, registered under Section 12A of the IT Act. However, the Assessing Officer noted the cancellation of registration under Section 12AA(3) and treated the assessee as an Association Of Persons for assessment year 2009-2010. A show cause notice was issued, and upon unsatisfactory explanation, the Assessing Officer finalized the assessment. The assessee appealed to the Tribunal, which canceled the order of cancellation of registration and restored the trust's status as a charitable trust, claiming exemption under Sections 11 and 12 of the IT Act.

The Revenue challenged the Tribunal's order, raising questions of law regarding the restoration of registration and the applicability of exemptions under Section 11. The High Court noted that the Revenue's appeal against the restoration order was pending and not yet successful. The Court emphasized that the Tribunal's order of restoration binds the Revenue until quashed by the Court, and the mere pendency of an appeal does not negate the binding nature of the order. Consequently, the Court found the questions raised by the Revenue not substantial, dismissing the appeal without costs.

In conclusion, the High Court upheld the Tribunal's decision to restore the registration of the charitable trust, emphasizing that the pending appeal by the Revenue does not nullify the binding effect of the restoration order. The Court dismissed the Revenue's appeal, stating that the questions raised were not substantial until the appeal challenging the restoration order is successful.