2022 (5) TMI 768 - AT - Income Tax

Exemption u/s 11 - grant of Provisional Registration instead of Regular Registration under section 12AB - HELD THAT - In the present case, it has not been disputed that the assessee trust was duly registered under section 12AA of the Act. Thus, the only provision applicable to the assessee trust for the purpose of applying for registration is section 12A(1)(ac)(i) - section 12AB(1)(a) of the Act provides that where an application is made under section 12A(1)(ac)(i) the Principal Commissioner or Commissioner shall pass an order in writing registering the trust or institution for a period of 5 years. However, in the present case, the assessee trust being registered under section 12AA and thus rightly made an application under section 12A(1)(ac)(i) of the Act, was granted Provisional Registration in Form 10 AC subject to certain conditions. It is pertinent to note that section 12AB(1)(c) deals with granting of Provisional Registration to the trust or institution for a period of 3 years from the assessment year from which registration is sought. The said section is applicable in cases where application is made under section 12A(1)(ac)(iv) of the Act. It is also not disputed that the Provisional Registration would be granted for a period of 3 years to the charitable institutions which are yet to start their activities. However, in the present case, the assessee trust was already holding certificate dated 30.10.2009 issued under section 12AA of the Act. We noticed that section 12AB(1)(a) of the Act, which deals with grant of Regular Registration for a period of 5 years does not authorise the Principal Commissioner or Commissioner to impose any conditions for grant of such registration. We further noticed that though the impugned order granted Provisional Registration subject to certain conditions, however, same was granted for a period of 5 assessment years i.e. from assessment year 2022-23 to assessment year 2026-27. We also noticed that the impugned order for provisional registration in Form 10AC was issued under section 12A(1)(ac)(i) of the Act, which provision merely deals with making an application for registration. We are of the considered opinion that application filed by the assessee trust under section 12A(1)(ac)(i) was not properly considered for grant of registration under section 12AB of the Act. Accordingly, we direct the designated authority under section 12AB to de novo consider the application of the assessee trust under section 12A(1)(ac)(i) of the Act and grant the registration as per law. As a result, grounds raised by the assessee are allowed for statistical purpose.

Summary

Issues:
1. Appeal against Provisional Registration instead of Regular Registration under section 12AB of the Income Tax Act, 1961.

Analysis:
The appellant, a Public Charitable Trust registered under the Bombay Public Trust Act, challenged the Provisional Registration granted by the DIT (CPC) in Form 10AC, seeking Regular Registration for 5 years as per section 12AB. The appellant contended that the conditions imposed for registration were unwarranted and contrary to the Act. The key point of contention was the grant of Provisional Registration instead of Regular Registration.

The relevant provisions of the Act were analyzed, focusing on section 12A(1)(ac)(i) and section 12AB. Section 12A outlines conditions for the application of sections 11 and 12, emphasizing the requirement of registration under section 12AB for claiming benefits. Section 12AB details the procedure for fresh registration, specifying the duration of registration and the criteria for granting it.

It was noted that the appellant trust was registered under section 12AA, necessitating the application for registration under section 12A(1)(ac)(i). However, despite eligibility for Regular Registration under section 12AB(1)(a) for 5 years, the appellant was granted Provisional Registration in Form 10AC. This discrepancy raised concerns as Provisional Registration is typically for new charitable institutions yet to start activities, not for established trusts.

The Tribunal concluded that the application was not properly considered for Regular Registration under section 12AB. Consequently, the designated authority was directed to reevaluate the application and grant registration as per the law. The appeal by the appellant was allowed for statistical purposes, affirming the need for a thorough review of the registration process to ensure compliance with the statutory provisions.

In summary, the judgment highlighted the importance of adhering to the prescribed procedures for registration under the Income Tax Act, emphasizing the need for clarity and consistency in the registration process to uphold the rights of charitable trusts and institutions.