2022 (10) TMI 105 - AT - Income Tax

Assessment of trust - Grant of Provisional Registration instead of Regular Registration under section 12AB - HELD THAT - As the assessee trust was already holding certificate dated 11/08/1989 issued under section 12A of the Act. We find that section 12AB(1)(a) of the Act, which deals with grant of Regular Registration for a period of 5 years does not authorize the Principal Commissioner or Commissioner to impose any conditions for grant of such registration. We further find 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 find 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. In view of the above, 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. Delay in filing appeals by the assessee.
2. Provisional Registration granted instead of Regular Registration under section 12AB of the Income Tax Act, 1961.

Analysis:
1. Delay in filing appeals by the assessee:
The appeals filed by the assessee were found to be time-barred by 326 days. However, considering that the registration was granted during the Covid period and the relaxation granted by the Supreme Court, the delay in filing the appeals was condoned, and they were admitted for adjudication.

2. Provisional Registration granted instead of Regular Registration under section 12AB:
The assessee, a public Charitable Trust, had applied for registration under section 12A(1)(ac)(i) of the Act and u/s.80G of the Act. The impugned order granted provisional registration in Form No.10AC subject to conditions, which the assessee challenged. The Principal Commissioner or Commissioner should pass an order registering the trust for a period of 5 years under section 12AB(1)(a) of the Act when an application is made under section 12A(1)(ac)(i). However, in this case, Provisional Registration was granted, which is usually for new charitable institutions yet to commence activities.

3. Legal Provisions and Analysis:
Section 12A(1)(ac) of the Act sets conditions for trust or institution income to be eligible under section 11 and 12. Section 12AB(1) outlines the procedure for fresh registration, stating that under sub-clause (i), the trust should be registered for a period of five years. In this case, the assessee trust was registered under section 12A, making section 12A(1)(ac)(i) applicable. The Provisional Registration granted was for a period of 5 assessment years, not in line with the Act's provisions.

4. Conclusion:
The Tribunal found that the application under section 12A(1)(ac)(i) was not properly considered for grant of registration under section 12AB. Therefore, the designated authority was directed to reconsider the application and grant registration as per law. The appeals were allowed for statistical purposes.

In conclusion, the Tribunal's decision focused on the correct application of provisions under the Income Tax Act, ensuring that the assessee's trust receives the appropriate registration as per law.