2021 (7) TMI 761 - AT - Income Tax

Exemption u/s 11 read with section 12AA - Cancellation of registration u/s 12AA - HELD THAT - In the present case, the assessing officer denied the benefit of exemption only on the ground of cancellation of registration u/s 12AA without assigning any further reason. In the light of the order of the Coordinate bench of this Tribunal 2014 (8) TMI 305 - ITAT DELHI and it being upheld by the Hon ble High Court 2017 (7) TMI 1388 - ALLAHABAD HIGH COURT , the very basis of denial of benefit u/s 11 of the Act, as adopted by the assessing officer, stands vitiated and non-existent. We uphold the order of the CIT (A) allowing the claim of exemption u/s 11 of the Act. Appeals of the Department stand dismissed.

Summary

Issues:
Appeal against orders dated 26/04/2017 by CIT (A) for AY 2007-08 and 2008-09; Denial of exemption u/s 11; Addition of amount transferred to Infrastructure Development Fund.

Analysis:
The Department filed appeals against the orders passed by the CIT (A) for AY 2007-08 and 2008-09. The primary issue revolved around the denial of exemption u/s 11 of the Income Tax Act and the addition of a specific amount to the Infrastructure Development Fund. The assessing officer had rejected the exemption claim u/s 11 based on the cancellation of registration u/s 12A of the Act during the remand proceedings. However, the CIT (A) allowed the exemption, leading to the Department's appeal before the ITAT.

The ITAT considered the charitable status of the respondent-assessee under section 12A of the Act and the validity of the exemption claim u/s 11. It was noted that the denial of exemption by the assessing officer was solely based on the cancellation of registration u/s 12AA, which was subsequently rectified as per the decision of the Coordinate Bench of the ITAT and the Allahabad High Court. The Coordinate Bench had directed the grant of registration w.e.f. 01/04/2002, which was duly executed by the CIT (Exemption) in 2016.

The ITAT emphasized that the assessing officer failed to present any new evidence to counter the findings of the Coordinate Bench regarding the charitable nature of the assessee's activities. The ITAT also cited various decisions supporting the charitable status of similar authorities, reinforcing the validity of the exemption claim u/s 11. Given the consistency of decisions and the absence of new facts, the ITAT upheld the CIT (A)'s order allowing the exemption u/s 11 for the respondent.

In conclusion, the ITAT dismissed the Department's appeals, affirming the CIT (A)'s decision to grant the exemption u/s 11 to the respondent. The judgment was pronounced on 30th June 2021.