2022 (1) TMI 944 - HC - Income Tax

Exemption u/s 11 - Grant of registration u/s 12A - Commissioner held that respondent / assessee had not obtained permission from the Central Board of Direct Taxes while earning income abroad. Thus, it had violated provisions of the Act - ITAT directing the Commissioner of Income Tax (Exemptions) to grant registration under Section 12A if the objectives and activities of the Respondent-assessee are the same as for the assessment year 2020-21?- HELD THAT - Tribunal had taken note of the fact that for the next Assessment Year 2020-21 respondent / assessee has been granted registration by the Commissioner of Income Tax (Exemptions) under Section 12A of the Act which would imply that the Commissioner was satisfied about the charitable nature of assessee s activities. In view of above, Tribunal thought it fit and proper to remand the matter back to the file of the Commissioner of Income Tax (Exemptions) with the direction to grant registration under Section 12A of the Act if the objectives and activities of the respondent / assessee are found to be the same by the Commissioner of Income Tax (Exemptions) while granting registration under Section 12A for the Assessment Year 2020-21. Tribunal has only asked the Commissioner to examine the claim of the respondent / assessee for the assessment year under consideration keeping in mind the factors which prevailed upon the Commissioner in acceding to such claim of the respondent / assessee for the succeeding assessment year on the principle of parity. Such a direction cannot be said to be illegal - No substantial question of law.

Summary

Issues:
1. Registration under Section 12A of the Income Tax Act, 1961 for an educational institution.
2. Rejection of registration application by the Commissioner of Income Tax (Exemptions).
3. Appeal before the Income Tax Appellate Tribunal, Hyderabad.
4. Tribunal's decision and direction to grant registration under Section 12A for the Assessment Year 2019-20.

Analysis:

1. The appellant, the Income Tax Department, appealed against the order of the Income Tax Appellate Tribunal, Hyderabad, regarding the registration under Section 12A of the Income Tax Act, 1961 for an educational institution for the Assessment Year 2019-20.

2. The Commissioner of Income Tax (Exemptions) rejected the institution's registration application primarily because the institution had not filed a return of income and had earned income outside India without obtaining permission from the Central Board of Direct Taxes, thus violating the provisions of the Act.

3. The institution appealed before the Tribunal, which noted that the institution was carrying out educational activities and was formed in 2008. The Tribunal considered the institution's charitable nature and the amendments to the Act, directing the Commissioner to grant registration under Section 12A if the objectives and activities remained the same as for the succeeding assessment year.

4. The Tribunal's decision was based on the fact that the institution had been granted registration for the next Assessment Year 2020-21, indicating satisfaction with the charitable nature of its activities. The Tribunal remanded the matter to the Commissioner for reevaluation based on the principle of parity.

5. The High Court found that the Tribunal's direction to the Commissioner to reexamine the institution's claim for registration for the assessment year under consideration was not illegal. No substantial question of law was identified, leading to the dismissal of the appeal.

6. Consequently, the High Court upheld the Tribunal's decision, declining to entertain the appeal and dismissing it without costs. Any pending miscellaneous applications in the appeal were to be closed as a result of the judgment.