2023 (3) TMI 47 - AT - Income Tax

Exemption u/s 11 - rejection of its application filed u/s 12 A(1)(ac)(iv) - Income from property held for charitable or religious purposes - CIT(E) rejected the application filed by the assessee u/s 12A(1)(ac)(iv) in terms of 2nd proviso to section 11(7) inter-alia on the basis that the registration granted to the assessee u/s 10(23C) was provisional in nature and therefore same is not identical to the approval granted under section 10(23C) for the purpose of section 11(7) - HELD THAT - CIT(Exemptions) has rejected the submission of the assessee to treat provisional approval under section 10(23C) identical to approval u/s 10(23C) for the purpose of section 11(7) - Therefore in view of the above once the 1st proviso to section 11(7) is not triggered there is no question of the registration granted under section 12A of the Act becoming inoperative. Since there is no dispute regarding the fact that the assessee is still holding registration under section 12A of the Act therefore the issue of the validity of rejection of assessee s application u/s 12A(1)(ac)(iv) of the Act becomes solely academic in the facts of the present case.The grounds raised by the assessee are rendered academic in nature and therefore are dismissed as infructuous. During the hearing it was submitted that the assessee had filed an application in Form 10A as per section 12A(1)(ac)(i) of the Act on 23/11/2022 and consequent thereto registration in Form 10AC has been granted on 01/12/2022 as per section 12AB(1)(a) for the period being assessment years 2022-23 to 2026-27. Our findings in the present appeal will not and cannot have any consequence in case the assessee at any time is found to be at fault for violation of any condition specified under the Act in respect of registration granted to it in which case the Revenue can take appropriate action as per law. Appeal by the assessee is dismissed.

Summary

Issues:
Challenge to impugned order under section 12AB of the Income Tax Act, 1961.

Analysis:
1. The appellant contested the rejection of its registration application under section 12AB of the Act. The grounds included errors by the CIT(Exemptions) in rejecting the application and not considering the provisional approval under section 10(23C)(vi) in Form 10AC. The CIT(Exemptions) was criticized for deeming the application in Form 10AB as invalid and for issuing a rejection letter after the order date, citing the proviso to section 11(7) inapplicable for provisionally approved trusts or institutions.

2. The Tribunal reviewed the case history, noting the restoration of the appellant's registration under section 12A after an earlier withdrawal. The appellant subsequently obtained provisional approval under section 10(23C)(vi) and sought revival of its section 12A registration. The CIT(Exemptions) rejected this application, emphasizing the absence of provisional approval in Form 10AC alongside Form 10AB. The CIT(Exemptions) clarified that provisional approval under section 10(23C) does not equate to registration under section 10(23C) for the purposes of section 11(7).

3. The Tribunal delved into the provisions of section 11(7) of the Act, highlighting the consequences of registration becoming inoperative upon approval under section 10(23C). In this context, the rejection of the appellant's application under section 12A(1)(ac)(iv) was deemed academic due to the ongoing registration under section 12A. Consequently, the grounds raised by the appellant were considered moot and dismissed.

4. During the hearing, it was revealed that the appellant had obtained registration in Form 10AC for assessment years 2022-23 to 2026-27. The Tribunal clarified that its decision in the current appeal would not impact any future actions by the Revenue in case of the appellant's non-compliance with registration conditions. Ultimately, the appeal by the appellant was dismissed, with the order pronounced on 27/02/2023.