2019 (3) TMI 1888 - AT - Income Tax

Exemption u/s 11 - application for registration under section 12A of the Act has been granted by the Commissioner on a later date - Assessee submits that it has been granted registration u/s 12AA of the Act vide order dated 18.08.2015 and therefore, the benefit of exemption u/s 11 should be granted to it for the year under consideration in view of the proviso inserted to sub-section (2) of section 12A - HELD THAT - The assessee was granted registration on 18.08.2015 i.e. the date on which appellate proceedings were pending before the CIT(A). In number of judicial precedents, it has been held that the proceedings before the CIT(A) are continuation of assessment proceedings and once the assessee has been granted registration, then the conditions prescribed in the proviso to section 12A(2) of the Act need to be applied and the assessee in such circumstances, is entitled to the exemption under sections 11 and 12 of the Act. Accordingly, we hold so. In such facts and circumstances, we direct the Assessing Officer to allow the aforesaid benefit of exemption under sections 11 and 12 of the Act to the assessee in the present case and determine the tax liability accordingly. In the facts of the case before us, the assessee has received 12A registration certificate, which is dated 18.08.2015. The CIT(A) has acknowledged the same and copy of the said certificate is also available before us. In such circumstances, the ratio laid down by the Delhi Bench of Tribunal in Bulandshahr Development Authority 2017 (12) TMI 915 - ITAT DELHI is not applicable to the facts of the present case. Accordingly, we reverse the order of CIT(A) in this regard and direct the Assessing Officer to allow exemption under sections11 and 12 of the Act, in view of proviso to section 12A(2) - Decided in favour of assessee.

Summary

Issues involved:
- Exemption under section 11 of the Income-tax Act, 1961 for a charitable trust.
- Application of proviso to section 12A(2) of the Act regarding registration under section 12AA.

Analysis:

Issue 1: Exemption under section 11
- The appellant, a charitable trust, filed appeals against orders of CIT(A) for different assessment years. The trust was denied exemption under section 11 as it was not registered under section 12A of the Act. The trust argued that it had been granted registration under section 12AA on 18.08.2015, entitling it to exemption under section 11. The CIT(A) upheld the denial of exemption citing lack of registration during the relevant assessment year.
- The appellant contended that since registration was granted during the pendency of the assessment proceedings, it should be eligible for exemption under sections 11 and 12. Citing precedents, the appellant argued that the proceedings before the CIT(A) are a continuation of assessment proceedings. The tribunal agreed, directing the Assessing Officer to allow the exemption under sections 11 and 12 and determine the tax liability accordingly.

Issue 2: Proviso to section 12A(2) regarding registration under section 12AA
- The proviso under section 12A(2) allows for exemption under sections 11 and 12 for income derived from property held under trust if registration under section 12AA is granted during pending assessment proceedings. The appellant's registration under section 12AA on 18.08.2015 was argued to entitle it to exemption under sections 11 and 12 for the relevant assessment years.
- Citing judicial precedents and the specific proviso, the tribunal held that the appellant, having been granted registration during the pendency of assessment proceedings, should be allowed the exemption under sections 11 and 12. The tribunal reversed the CIT(A)'s decision and directed the Assessing Officer to grant the exemption as per the proviso to section 12A(2).

Conclusion:
- The tribunal allowed all the appeals of the appellant, granting exemption under sections 11 and 12 based on the registration under section 12AA during the pendency of assessment proceedings. The decision emphasized the importance of registration and the applicability of the proviso to section 12A(2) in determining eligibility for exemption under the Income-tax Act, 1961.