2022 (3) TMI 128 - AT - Income Tax

Exemption u/s 11 denied - Registration u/s. 12A - According to assessee since it was having registration u/s. 12A of the Act from 16.11.2015, so according to it, it should get the benefit of section 11 HELD THAT - It is undisputed that due to late receipt of the order from Ld. CIT(E) granting Section 12A registration the assessee could not mention the same in its return of Income. Therefore that omission of fact cannot be the reason for not giving the benefit u/s. 11/12/13 of the Act. Since the assessee has been granted registration u/s. 12A of the Act with effect from 16.11.2015 i.e. much before the return of income was in fact filed, according to me the assessee is entitled to the benefit u/s. 11/12/13 of the Act unless the AO during scrutiny is able to find out that there is misrepresentation in respect of its claim of voluntary donation/application of its income etc. It has to be borne in mind that once section 12A registration has been granted to an assessee, then income has to be computed under Chapter III of the Act. With this caveat/observation, we find that there was a mistake apparent on the face of the record and, therefore, we allow the appeal of the assessee and direct the AO to grant benefits u/s. 11/12/13

Summary

Issues:
Appeal against order of Ld. CIT(A) for AY 2016-17 - Mistake apparent on the face of the record - Registration u/s. 12A of the Act - Benefit of section 11 of the Act - Non-mention of registration in return of income - Rectification application u/s. 154 - Dismissal of appeal by Ld. CIT(A) - Entitlement to benefits u/s. 11/12/13 of the Act.

Analysis:

1. Appeal Dismissal by Ld. CIT(A):
The appeal was filed against the order of Ld. CIT(A) for AY 2016-17. The grounds of appeal raised by the assessee primarily revolved around the contention that the Ld. CIT(A) erred in dismissing the appeal despite the rectification petition filed within the prescribed time limit. The assessee argued that the mistake was apparent from the records, particularly regarding the trust's approval under section 14A, which was verifiable at the time of processing u/s 143(1). The Ld. CIT(A) was criticized for not allowing certain claims related to taxable income and corpus donations, leading to the appeal before the Tribunal.

2. Registration u/s. 12A and Benefit under Section 11:
The crux of the issue lay in the registration of the assessee Trust under section 12A of the Act. The Trust was established on 16.11.2015 and applied for registration on the same day, which was granted on 05.05.2016. However, when the return of income was filed on 19.04.2016, the registration was not reflected, resulting in the CPC not granting any tax relief u/s. 11 of the Act. The assessee contended that despite the late mention of registration, it should be entitled to the benefits under sections 11/12/13 of the Act. The Tribunal acknowledged the mistake in not mentioning the registration in the return but held that the assessee should receive the benefits as per the law since the registration was granted before the return filing.

3. Rectification Application and Tribunal Decision:
The assessee's rectification application u/s. 154 was dismissed by the AO, leading to the appeal before the Ld. CIT(A) and subsequently before the Tribunal. The Tribunal, after considering the facts and circumstances, noted the establishment of the Trust and the delayed registration under section 12A. It emphasized that once the registration was granted, the income had to be computed under Chapter III of the Act. The Tribunal found a mistake apparent on the face of the record due to the late reflection of registration and directed the AO to grant benefits u/s. 11/12/13 of the Act to the assessee, thereby allowing the appeal and ruling in favor of the assessee.

In conclusion, the Tribunal's decision highlighted the significance of timely mentioning registration under section 12A in the return of income to avail benefits under the Income Tax Act. The judgment emphasized the entitlement of the assessee to benefits u/s. 11/12/13 despite the delayed reflection of registration, ultimately allowing the appeal and directing the AO to grant the applicable benefits in accordance with the law.