2010 (4) TMI 275 - HC - Income Tax

Registration u/s 12A Delay in making application for registration - Market Committee Charitable - ITAT condoned the delay Held that - once on the basis of numerous factors the Tribunal has condoned the delay and has directed registration of the assessee-respondent with effect from 1.4.2002 then the discretion exercised by the Tribunal would not be open to interference merely because the department is holding a contrary view or another view is possible. The Punjab State Agricultural Market Board has already been granted exemption and registration vide order dated 14.3.2005. Moreover, there was a bona fide belief with the assessee-respondent that the benefit of registration would enure to it as well. The charitable nature of the assessee-respondent is undisputed as registration has in any case granted w.e.f. 1.4.2005

Summary

Issues:
Delay in grant of registration under Section 12A of the Income-tax Act, 1961.

Analysis:
The case involved a dispute regarding the delay in granting registration under Section 12A of the Income-tax Act, 1961 to the assessee-respondent Market Committee. The issue arose due to the amendment by the Finance Act, 2002, which excluded Market Committees from the purview of Section 10(20) of the Act from the assessment year 2003-04. The assessee-respondent filed an application for registration under Section 12A of the Act to get its income exempt, which was initially declined for registration with effect from 1.4.2002. The Commissioner later granted registration with effect from 1.4.2005, leading to multiple appeals and reconsiderations (A-1, A-2, A-3, A-5, A-6).

The Tribunal, in its final order dated 31.3.2009, condoned the delay and directed the Commissioner of Income Tax to grant registration to the assessee-respondent with effect from 1.4.2002. The Tribunal considered various factors, including the precedents of other Market Committees being granted registration with effect from 1.4.2002, the charitable nature of the assessee-respondent, and the plausible belief that the benefit of registration would enure to the assessee-Market Committee based on the Punjab State Agricultural Marketing Board's case. The Tribunal also noted that being a Government organization, no prejudice would be caused if registration is granted retrospectively.

The High Court, in its judgment dated April 29, 2010, upheld the Tribunal's decision, emphasizing that the Tribunal's discretion in condoning the delay and directing registration with effect from 1.4.2002 should not be interfered with merely because the department held a contrary view. The Court highlighted the charitable nature of the assessee-respondent, which had already been granted registration w.e.f. 1.4.2005, and concluded that no substantive question of law arose for determination. Therefore, the appeal was dismissed, affirming the Tribunal's decision.