2024 (2) TMI 1395 - AT - Income Tax

Rejection of application for final registration u/s 12A(1)(ac)(iii) - time limit for applying for final registration - CIT(Exemptions) observed that the assessee earlier was granted provisional registration in Form 10AC which was valid till A.Y 2026-27. He therefore held that the application of the assessee being premature was not maintainable - HELD THAT - The assessee-institution has been granted registration u/s 12AB(1)(a) of the Act for five years vide order dated 28.05.2021 which is valid from A.Y 2022-23 to A.Y 2026-27. As per the provisions of section 12A(1)(ac)(iii) the assessee-institution is supposed to apply for final registration after grant of provisional registration u/s 12AB of the Act. A persual of provisions of section 12A(1)(ac)(iii) of the Act would reveal that where the trust or the institution was provisionally registered u/s 12AB of the act the application for final registration can be made at least six months prior to the expiry of the period of provisional registration or within six months of the commencement of its activity whichever is earlier which means that the application for final registration has to be made at the earliest possible event i.e. either within six months of the commencement of the activities or at least six months prior to the expiry of the provisional registration. The aforesaid provision does not mean that there is any bar on the applicant to move an application before the period of six months from the expiry of the provisional registration. What has been provided is that the application must be made before the expiry of six months from the date of expiry of final registration. There is no bar in moving the application at the earliest possible event rather i.e. it is expected from the assessee-trust to do so. In view of this the impugned order of the ld. CIT(Exemptions) is set aside and the matter is restored to the ld. CIT(Exemptions) to consider the application of the assessee for final registration and grant the same if the same is otherwise so admissible to the assessee. Appeal of the assessee is treated as allowed for statistical purposes.

Summary

Issues:
- Rejection of application for final registration u/s 12A(1)(ac)(iii) of the Income Tax Act.
- Interpretation of provisions of section 12A(1)(ac)(iii) regarding the timing of applying for final registration.

Analysis:
The appeal was filed against the rejection of the assessee's application for final registration under section 12A(1)(ac)(iii) of the Income Tax Act. The CIT(Exemptions) rejected the application as premature, citing the earlier provisional registration granted to the assessee. The tribunal noted that the assessee was granted registration under section 12AB(1)(a) for five years, valid from A.Y 2022-23 to A.Y 2026-27. The relevant provision of section 12A(1)(ac)(iii) requires the application for final registration to be made after provisional registration under section 12AB. The tribunal clarified that the application for final registration can be made at least six months before the expiry of provisional registration or within six months of activity commencement, whichever is earlier. There is no restriction on applying before the six-month period from the expiry of provisional registration. The tribunal set aside the CIT(Exemptions)'s order and directed a reconsideration of the application for final registration.

The tribunal emphasized that the provision does not prohibit applying before the six-month period from the expiry of provisional registration. It highlighted the expectation for the applicant to apply at the earliest possible event, either within six months of activity commencement or at least six months before the expiry of provisional registration. The tribunal clarified that the application should be submitted before the six-month period from the expiry of provisional registration. The decision allowed the appeal for statistical purposes, overturning the rejection of the application for final registration.

In conclusion, the tribunal's judgment addressed the rejection of the application for final registration under section 12A(1)(ac)(iii) and provided a detailed interpretation of the timing requirements for submitting the application. The tribunal clarified that there is no restriction on applying before the six-month period from the expiry of provisional registration and directed a reconsideration of the application by the CIT(Exemptions).