2017 (1) TMI 1006 - HC - Income Tax

Exemption u/s 11 - assessee has not mentioned registration number and date in the ITR-7 - registration under Section 12AA - Held that - As under amended provision, as is applicable in relevant assessment year, not only making of application for registration of trust is necessary but even registration of trust as such is a condition provided in statute. Thus, until and unless registration is granted no exemption can be claimed only on the basis that application has been submitted for registration. In the present case, despite the fact that admittedly no registration certificate has been issued to respondent till date, still exemption has been granted by authorities below. This is not consistent with requirement of Section 12A(1), as is applicable for relevant assessment year with which we are concerned.- Decided in favour of Revenue.

Summary

Issues:
1. Delay condonation in filing the appeal
2. Justification of ITAT in quashing the order under Section 263 and confirming the order under Section 143(3)
3. Authentication of registration under Section 12AA
4. Grant of registration as a condition for exemption under Section 11
5. Interpretation of Section 12A(1) post-amendment by Finance Act, 2007
6. Requirement of registration for claiming exemption
7. Consistency with Section 12A(1) in granting exemptions

Analysis:
1. The judgment begins by condoning the delay in filing the appeal and registering it with a regular number while retaining the old number for reference. The court proceeds to hear the appeal with the consent of both parties.

2. The appeal under Section 260-A of the Income Tax Act, 1961 challenges the ITAT's decision regarding the order under Section 263 and Section 143(3). The substantial questions of law raised pertain to the justification of ITAT's actions in quashing the Commissioner's order and authenticating the registration under Section 12AA.

3. The court notes that the respondent had applied for registration under Section 12A(1) but had not been granted registration by the Commissioner. The amended provision of Section 12A(1) post the Finance Act, 2007, clearly states that registration of the trust is a necessary condition for availing exemptions under Sections 11 and 12.

4. The respondent claimed exemption despite not being granted registration, which goes against the statutory requirement. The court emphasizes that until registration is granted, no exemption can be claimed solely based on the application for registration.

5. The judgment interprets the amended provision of Section 12A(1) and highlights that both the application and registration of the trust are essential conditions for claiming exemptions. The court refers to a departmental circular emphasizing that the grant of registration is a prerequisite for income tax exemption.

6. Based on the above analysis, the court rules in favor of the Revenue and against the respondent, setting aside the ITAT's decision. The appeal is allowed, affirming the requirement of registration for claiming exemptions under the Income Tax Act, 1961.