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2024 (8) TMI 534 - AT - Income TaxRejection the provisional registration u/s. 12AB invoking provisions of section 13(1)(b) - HELD THAT - The provisions of Section 13 of the Act can be invoked only at the time of assessment and not at the time of grant of registration u/s 12A of the Act. Our view is further supported by the decision of Bayath Kutchhi Dasha Oswal Jain Mahajan Trust 2016 (9) TMI 8 - GUJARAT HIGH COURT wherein on the issue of denial of grant of registration u/s 12A of the Act by invoking Section 13(1)(b) of the Act, it was categorically held that the provisions of Section 13 would be attracted only at the time of assessment and not at the time of grant of registration. Thus, the matter is restored to the file of CIT (Exemptions), for de-novo consideration, after giving due opportunity of being heard and with the direction not to disentitle the assessee for grant of registration only on the grounds as mentioned in its order for rejecting the application filed by the assessee trust. Appeal filed by the assessee is allowed for statistical purposes.
Issues Involved:
1. Rejection of provisional registration under section 12AB of the Act. 2. Interpretation of provisions under section 13(1)(b) in the context of grant of registration under section 12A. 3. Applicability of judicial precedents in similar cases to the current scenario. Issue 1: Rejection of provisional registration under section 12AB of the Act: The appeal was filed against the order passed by the Ld. Commissioner of Income Tax (Exemption), rejecting the provisional registration of the Assessee under section 12AB of the Act. The Assessee contended that the trust's objectives were not restricted to benefit a particular religious community or caste, despite initial misclassification of activities as "charitable" instead of "religious cum charitable." However, the CIT dismissed the application for final registration, citing a Supreme Court judgment and concluding that the trust's objects were indeed limited to the benefit of a particular religious community, rendering it ineligible for exemption under section 11 of the Act. Issue 2: Interpretation of provisions under section 13(1)(b) in the context of grant of registration under section 12A: The Assessee argued that the provisions of section 13(1)(b) should only be considered at the time of assessment and not for denying registration under section 12A. The ITAT referred to various decisions, including the case of Bhojalram Leuva Patel Seva Samaj Trust, emphasizing that section 13(1)(b) can be invoked only during assessment and not at the time of registration. The ITAT also cited other cases where it was held that the denial of registration under section 12A based on section 13(1)(b) should be assessed only during the assessment process, not at the registration stage. The ITAT's view was supported by a decision of the jurisdictional High Court, which specified that the provisions of Section 13 should be invoked only during assessment and not at the time of registration. Issue 3: Applicability of judicial precedents in similar cases to the current scenario: The ITAT relied on various judicial precedents to support its decision. It referenced cases like Bhojalram Leuva Patel Seva Samaj Trust, Jamiatul Banaat Tankaria, Malik Hasmullah Islamic Educational and Welfare Society, and St. Joseph Academy to establish that the provisions of section 13 should be considered during assessment and not for denying registration under section 12A. The ITAT's decision was further reinforced by a judgment of the jurisdictional High Court, emphasizing that the denial of registration under section 12A based on section 13(1)(b) should only occur during assessment and not at the registration stage. Consequently, the ITAT allowed the appeal for statistical purposes and directed the matter to be reconsidered by the CIT (Exemptions) without disentitling the assessee for registration solely on the grounds mentioned in the previous rejection order. This detailed analysis of the judgment highlights the issues involved, the arguments presented by the parties, the legal interpretations applied by the ITAT, and the reliance on judicial precedents to arrive at the final decision.
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