2007 (2) TMI 252 - AT - Income Tax

Summary

Issues Involved:
1. Registration under section 12A of the Income-tax Act, 1961.
2. Effective date of registration under section 12A.
3. Delay in filing the application for registration under section 12A.
4. Applicability of section 10(22) and section 10(23C)(iiiad) of the Income-tax Act, 1961.
5. Jurisdiction and authority of the Commissioner of Income-tax (CIT) to grant or deny registration.
6. Legal precedents and their applicability to the case.

Issue-wise Detailed Analysis:

1. Registration under section 12A of the Income-tax Act, 1961:
The assessee, a registered society running educational institutions, applied for registration under section 12A on 30-3-2004, seeking registration with effect from the financial year 2001-02. The CIT granted registration with effect from 1-4-2003 but rejected the application for earlier years.

2. Effective date of registration under section 12A:
The assessee contended that the CIT erred in not granting registration with effect from 1-4-2001. The CIT's view that granting registration from an earlier date would result in two orders under section 12AA was challenged. The Tribunal held that the CIT could have modified the first order to grant registration from 1-4-2001.

3. Delay in filing the application for registration under section 12A:
The CIT required the assessee to explain the delay in filing the application for registration. The assessee explained that it was under the bona fide belief that its income was exempt under section 10(22) and section 10(23C)(iiiad) until the assessment year 2001-02. The Tribunal found that the CIT did not properly consider the reasons for the delay and directed the CIT to re-examine the issue.

4. Applicability of section 10(22) and section 10(23C)(iiiad) of the Income-tax Act, 1961:
The assessee's income was exempt under section 10(22) until the assessment year 1998-99. For the assessment years 1999-2000 to 2001-02, the exemption was claimed under section 10(23C)(iiiad). The aggregate annual receipts for the assessment years 2002-03 and 2003-04 exceeded the prescribed limit, making the society eligible for exemption under section 10(23C)(vi).

5. Jurisdiction and authority of the Commissioner of Income-tax (CIT) to grant or deny registration:
The CIT's order dated 1-10-2004 granted registration with effect from 1-4-2003. However, the second application for registration with effect from 1-4-2001 was not disposed of. The Tribunal held that the CIT should have considered the second application and granted registration from the earlier date, if justified.

6. Legal precedents and their applicability to the case:
The Tribunal referred to the decision in Society of Divine Providence v. Union of India [1999] 235 ITR 339 (MP), which required the CIT to provide cogent reasons for refusing registration. The Tribunal directed the CIT to reconsider the application, taking into account the reasons provided by the assessee and the pending application with the Chief Commissioner of Income-tax.

Separate Judgments:
- The Accountant Member opined that the CIT should have modified the first order and granted registration with effect from 1-4-2001.
- The Judicial Member held that the assessee should be granted registration for the intervening period of assessment years 2002-03 and 2003-04.
- The Third Member (President) concurred with the Judicial Member, stating that the order dated 1-10-2004 should be read as effective from 1-4-2001 instead of 1-4-2003.

Conclusion:
The appeal was allowed, and the Tribunal directed the CIT to grant registration under section 12A for the assessment years 2002-03 and 2003-04, effective from 1-4-2001. The Tribunal emphasized the need for the CIT to consider the reasons for the delay and to provide a fair and just decision based on the merits of the case.