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2018 (1) TMI 595 - AT - Income TaxExemption u/s 11 - Benefit of registration u/s. 12AA denied - AO completed the assessment u/s. 144 by denying exemption for non production of copy of registration from the prescribed authority - Held that - Going by the principle of purposive interpretation of statues, an assessment proceeding which is pending in appeal before the first appellate authority should be deemed to be assessment proceedings pending before the assessing officer within the meaning of that term as envisaged under the proviso. It follows there-from that the assessee which obtained registration u/s 12AA of the Act during the pendency of appeal was entitled for exemption claimed u/s 11 of the Act. CIT-A was justified in directing the AO to give the benefit of registration u/s. 12AA of the Act to the assessee for the A.Y under consideration. Accordingly, we uphold the impugned order of the CIT-A. However, it is pertinent to note that the assessment was completed u/section 144 of the Act and it is needless to mention that it is open to the AO to make assessment afresh in accordance with law. The grounds raised by the revenue are dismissed.
Issues Involved:
1. Delay in filing the appeal by the Revenue. 2. Grant of exemption under Section 10(23C) of the Income Tax Act. 3. Application of the first proviso to Section 12A(2) inserted by Finance Act (No.2) 2014. 4. Validity of the CIT(A)’s direction to grant benefit of registration under Section 12AA. Detailed Analysis: 1. Delay in Filing the Appeal: The Revenue filed the appeal with a delay of 14 days due to administrative difficulties. The Revenue submitted a petition to condone the delay, which was not objected to by the Assessee. The Tribunal found the reasons for the delay to be bona fide and justified, and thus condoned the delay, proceeding to hear the appeal on its merits. 2. Grant of Exemption Under Section 10(23C): The Assessing Officer (AO) denied the claim of exemption under Section 10(23C) due to the Assessee's failure to submit the order of registration under Section 12AA. Consequently, a sum of ?64,49,997 was disallowed. The Assessee challenged this before the CIT(A), who directed the AO to grant the benefit of registration under Section 12AA for the assessment year in consideration. 3. Application of the First Proviso to Section 12A(2): The Assessee argued that the application for registration under Section 12AA was made on 12/02/2012 and granted on 15/05/2014, effective from 01/04/2011. The Assessee contended that the benefit of registration should apply to preceding years as well, as per the first proviso to Section 12A(2) inserted by Finance Act (No.2) 2014, effective from 01/10/2014. The Assessee cited judgments supporting that assessment proceedings are not complete if pending before appellate authorities, thus qualifying for the benefit of registration. 4. Validity of the CIT(A)’s Direction to Grant Benefit of Registration Under Section 12AA: The Revenue argued that the CIT(A) erred in directing the AO to grant the benefit of registration under Section 12AA, as the assessment was not pending when the first proviso to Section 12A(2) became effective. The Assessee countered that the assessment was pending before the CIT(A) when the application for registration was made, and thus the benefit should be granted as per the proviso. The Tribunal noted that the CIT(A) based his decision on the judgments of ITAT Kolkata and the Hon’ble Gujarat High Court, which held that appellate proceedings are part of assessment proceedings and that the benefit of registration should be granted if the application was pending during the assessment. Conclusion: The Tribunal upheld the CIT(A)’s direction to grant the benefit of registration under Section 12AA for the assessment year in consideration. It was noted that the insertion of the first proviso to Section 12A(2) is retrospective, and assessment proceedings pending in appeal should be deemed as pending before the AO. The Tribunal dismissed the Revenue’s appeal, affirming that the CIT(A) was justified in directing the AO to grant the benefit of registration under Section 12AA. The AO is permitted to make a fresh assessment in accordance with the law. Order: The appeal filed by the Revenue is dismissed. The order was pronounced in the open Court on 10-01-2018.
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