2017 (4) TMI 666 - HC - Income Tax

Eligibility to exemption under section 11(1)(a) - Held that - The revenue is not in a position to point out that there is any change in the constitution of the assessee. It is required to be noted that in the present case the dispute is with respect to A.Y. 2007-08. For the earlier assessment year i.e. A.Y. 2006-07 and even subsequent assessment year i.e. A.Y. 2009-10, the assessee has been allowed exemption under section 11(1)(a) of the Act. Under the circumstances, it cannot be said that the learned tribunal has committed any error in deleting disallowance made by the A.O. on the exemption claimed by the assessee under section 11(1)(a) of the Act. Now, so far as the submission on behalf of the revenue relying upon the decision of the Division Bench of this Court in the case of Gujarat State Board of School Textbooks (2016 (11) TMI 71 - GUJARAT HIGH COURT) that the registration under section 12AA of the Act and exemption under section 11 of the Act both are distinct and different and/or separate and therefore, the learned tribunal has materially erred in observing that as the assessee is already granted registration under section 12AA of the Act and therefore, is entitled to the exemption under section 11 of the Act is concerned, it is required to be noted that the impugned judgement and order passed by the learned tribunal is not solely based upon the aforesaid finding. As observed hereinabove, previously for the A.Ys. 2006-07 and 2009-10 in the case of the very assessee exemption under section 11(1)(a) of the Act has been granted pursuant to the order passed by the learned ITAT. Under the circumstances, keeping the aforesaid question open present appeal deserves to be dismissed.

Summary

Issues:
1. Whether the Appellate Tribunal erred in allowing deduction under section 11 of the Income Tax Act without a trust deed?
2. Whether the re-opening of assessment for A.Y. 2007-08 was valid?

Analysis:
1. The appellant challenged the ITAT's decision allowing deduction under section 11 of the Income Tax Act without a trust deed. The assessment was reopened due to the absence of a trust deed. The AO disallowed the exemption claimed under section 11(1)(a) and added the amount to the total income. The CIT(A) set aside the AO's order, stating the assessee had registration under section 12AA and previous years' decisions favored the assessee. The ITAT upheld the CIT(A)'s decision. The appellant argued that the assessee was not entitled to the exemption due to being a charitable institute (AOP). However, the Court found no pending appeal before the High Court for previous years and no change in the assessee's constitution, leading to dismissal of the appeal.

2. The second issue revolved around the validity of reopening the assessment for A.Y. 2007-08. The AO reopened the assessment, disallowing the exemption under section 11(1)(a) based on the assessee's status as a charitable institute (AOP). The CIT(A) found the reassessment bad in law as it was a change of opinion. The ITAT upheld the CIT(A)'s decision, leading to the appellant's challenge. The Court noted that previous years' decisions favored the assessee, and no pending appeal existed before the High Court. As there was no change in the assessee's constitution, the Court upheld the ITAT's decision, dismissing the appeal.

In conclusion, the Court dismissed the appeal, finding no reason to interfere with the ITAT's decision. No substantial question of law arose from the case, leading to the appeal's dismissal.