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2019 (10) TMI 257 - AT - Income TaxDeemed grant of registration u/sec 12A - non-consideration of the application for registration u/sec. 12A within the time fixed u/sec. 12AA(2) - application for grant of registration u/sec. 12A is pending with the authorities, however, every year exemption u/sec. 11 was granted to the assessee u/sec. 143(3) - HELD THAT - For the assessment year under consideration, the assessee has filed a return of income whereas the CPC, Bangalore processed the return u/sec. 143(1) and considered the entire gross receipts as income liable for tax on the ground that registration number of the Trust was not mentioned in the return form. We find that once the assessee is enjoying the benefit of section 11 by the Department, the subsequent years without scrutiny, it cannot simply reject on the ground that registration number of the Trust is not mentioned. The CPC Bangalore ought to have referred the matter to the Assessing Officer for examination of the entire issue. Without that, the CPC Bangalore added the entire gross receipts as income liable for tax. As in the case of Society for the Promotion of Education Adventure Sport Conservation of Environment 2008 (4) TMI 700 - ALLAHABAD HIGH COURT has held that non-consideration of the application for registration u/sec. 12A within the time fixed u/sec. 12AA(2) would be a deemed grant of registration. - Decided against revenue.
Issues Involved:
1. Whether the assessee-trust is entitled to exemption under Section 11 of the Income Tax Act despite not mentioning the registration number in the return. 2. Whether the application for registration under Section 12A, if not processed within six months, results in deemed registration. Issue-wise Detailed Analysis: 1. Entitlement to Exemption Under Section 11: The assessee, a registered trust, filed its return of income claiming exemption under Section 11 of the Income Tax Act. The Centralized Processing Centre (CPC), Bangalore, processed the return under Section 143(1) and treated the entire gross receipts as taxable income because the registration number was not mentioned in the return. The CPC considered the trust as an "AOP Trust" instead of a "Trust," leading to a tax liability of ?84,07,853. The assessee appealed to the Commissioner of Income Tax (Appeals) [CIT(A)], who directed the Assessing Authority to grant relief by following the Supreme Court's judgment in CIT & Ors. Vs. Society for the Promotion of Education [(2016) 382 ITR 06 (SC)]. The CIT(A) concluded that the trust was deemed registered under Section 12AA(2) since no order refusing registration was passed within six months of the application. The Revenue's appeal to the Tribunal was dismissed, affirming that the trust was entitled to the exemption under Section 11, as the CPC's adjustment was beyond the scope of Section 143(1). 2. Deemed Registration Under Section 12A: The assessee applied for registration under Section 12A on 06/08/1990, and the exemption under Section 11 was granted year after year. The Tribunal noted that the Department had consistently allowed the exemption, indicating a de facto recognition of the trust's registration. The Tribunal referenced the Allahabad High Court's judgment in Society for the Promotion of Education Adventure Sport & Conservation of Environment Vs. CIT & Ors. [(2015) 372 ITR 222 (All.)], which held that non-consideration of the application within the prescribed time results in deemed registration. The Supreme Court upheld this view, clarifying that the deemed registration takes effect six months from the application date. The Tribunal found no evidence of rejection or cancellation of the registration application, thereby confirming the trust's deemed registration under Section 12AA(2). Conclusion: The Tribunal dismissed the Revenue's appeal and the assessee's cross-objection, affirming the CIT(A)'s order. The Tribunal held that the trust was entitled to exemption under Section 11, and the application for registration under Section 12A, if not processed within six months, results in deemed registration. The Tribunal emphasized that the CPC's adjustment was beyond the scope of Section 143(1), and the trust's consistent exemption under Section 11 indicated its deemed registration status. The judgments of the Supreme Court and Allahabad High Court were pivotal in deciding the case in favor of the assessee.
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