2017 (7) TMI 100 - AT - Income Tax

Registration u/s 12A cancelled - denying the exemption u/s 11 and u/s 12 - assessing the income under the normal provisions of Act - Held that - As find from the copy of the assessment order for the assessment year 2013-14 dated 31.3.2016 that the department has duly allowed the exemption under section 11 and 12 of the Act to the assessee. Thus we are of the view that the deduction under section 11 and 12 of the Act cannot be denied to the assessee especially when the Registration granted by the Commissioner u/s 12A was allowed to be continued meaning thereby that the registration of the trust was continuing retrospectively. Moreover the Revenue itself accepted and allowed deduction u/s 11 and 12 of the Act in the assessment year 2013-14. In view of these facts and circumstances ground no.1 raised by the assessee is allowed.

Summary

Issues involved:
1. Denial of exemption u/s 11 and u/s 12 of the Income Tax Act due to deemed cancellation of registration u/s 12A.
2. Adjudication of the scheme of indigent fund.
3. Exemption u/s 11 of the Income Tax Act.

Issue 1: Denial of exemption u/s 11 and u/s 12 of the Income Tax Act due to deemed cancellation of registration u/s 12A:
The appeal raised concerns against the AO's decision to treat the registration u/s 12A as cancelled, thereby denying exemptions u/s 11 and 12 of the Income Tax Act. The trust in question, a charitable trust, had its object clause amended, requiring re-registration with the Director of Income Tax (Exemptions). The AO concluded that due to non-registration under section 12A post-amendment, the trust couldn't avail benefits under sections 11 and 12, assessing the income at a specified amount. The CIT(A) upheld this decision. However, the DIT(E) later confirmed the registration u/s 12A post-amendment, allowing the benefits under sections 11 and 12. The Tribunal noted that the registration continued retrospectively, with the Revenue accepting deductions under sections 11 and 12 in a subsequent assessment year. Consequently, the Tribunal allowed the appeal, emphasizing that denial of deductions was unwarranted given the circumstances.

Issue 2: Adjudication of the scheme of indigent fund:
The ground related to the scheme of indigent fund, as per the jurisdictional High Court, which was not discussed during the assessment proceedings. The FAA's decision to enhance the assessment based on this issue was deemed unjustified by the Tribunal. As the matter wasn't adequately addressed during the assessment or appellate proceedings, the Tribunal directed the AO to re-examine the issue, ensuring a fair opportunity for the assessee in line with the principles of natural justice.

Issue 3: Exemption u/s 11 of the Income Tax Act:
The revenue's appeal primarily focused on exemption u/s 11 of the Income Tax Act. However, considering the Tribunal's decision in favor of the assessee regarding the exemption u/s 11 in a related appeal, the revenue's appeal was deemed infructuous and subsequently dismissed. The Tribunal allowed the assessee's appeal while dismissing the revenue's appeal, concluding the proceedings.

This comprehensive analysis delves into the core issues addressed in the judgment, highlighting the key legal aspects and decisions made by the Tribunal.