2010 (2) TMI 382 - HC - Income Tax

Charitable Purposes- The respondent assessee which is a society registered on June 19, 1992, under the provisions of the Societies Registration Act, is running educational institutions, namely, schools and colleges at Guwahati and was treated as a society existing solely for educational purposes and hence was granted exemption under section 10(22) of the Act, since its inception up to the assessment year 1998-99, i.e., till the said provision was omitted from the statute. The respondent assessee, thereafter, claimed and was allowed exemption under section 10(23C)(iiiad) of the Act up to the assessment year 2001-02, since the amount of annual receipts of the said society did not exceed Rs. 1 crore. The respondent assessee, thereafter, filed an application dated March 23, 2004 on March 30, 2004, under section 12A of the Act before the Commissioner of Income-tax (in short CIT ), for grant of registration of the society for the assessment years 2002-03 and 2003-04. The respondent assessee also filed a separate application under section 10(23C)(vi) of the Act before the Chief Commissioner of Income-tax (in short CCIT), for according approval as an educational institution, for the purpose of getting the exemption under the provisions of the Act. The said applications were filed since the amount of annual receipts of the society exceeded Rs. 1 crore. The Tribunal directed the commissioner to grant registration to the assessee under section 12A of the Act for the assessment year 2002-03.Held that- no order has been passed by the Commissioner in respect of the assessment year 2002-03, while granting the registration for the assessment year 2003-04. The assessee was found to have satisfactorily explained the delay in filing the application on March 30, 2004 seeking registration under section 12A of the Act in respect of the assessment year 2002-03. Moreover the authority is required to adopt a pragmatic approach while dealing with an application seeking condonation of delay in making the prayer for registration under section 12A. The assessee was entitled to registration u/s 12A for the assessment year 2002-03.

Summary

Issues:
1. Delay in filing application for registration under section 12A of the Income-tax Act, 1961.
2. Competency of Commissioner of Income-tax to entertain a second petition under section 12A.
3. Entitlement for registration under section 12A with retrospective effect.

Issue 1: Delay in filing application for registration under section 12A of the Income-tax Act, 1961:

The appellant, a society running educational institutions, applied for registration under section 12A for the assessment years 2002-03 and 2003-04. The Commissioner of Income-tax issued a notice questioning the delay in filing the application. The respondent explained the delay due to pending applications and previous exemptions. The Commissioner registered the society under section 12AA for 2003-04 but rejected the 2002-03 application. The Appellate Tribunal allowed the appeal, emphasizing the satisfactory explanation for the delay. The Tribunal considered the grounds for delay valid, as the society demonstrated its educational purpose and lack of profit motive. The Commissioner's failure to pass an order for 2002-03 was rectified by the Tribunal, recognizing the cogency of the explanations provided.

Issue 2: Competency of Commissioner of Income-tax to entertain a second petition under section 12A:

The rejection of the society's subsequent application for 2002-03 registration was based on the belief that two orders under section 12AA cannot be issued. However, the second application merely reiterated the earlier one, which had not received a decision for 2002-03. The Appellate Tribunal correctly upheld the application, as rejecting it would lead to unnecessary proceedings. The Tribunal stressed the need for a pragmatic and liberal approach in dealing with delay condonation requests for registration under section 12A.

Issue 3: Entitlement for registration under section 12A with retrospective effect:

The Tribunal's decision to grant registration under section 12A for 2002-03 was supported by the society's valid explanations for the delay. The rejection of the subsequent application was unfounded, as it mirrored the original request that had not been decided upon. The Tribunal's ruling prevented unnecessary delays and multiple proceedings, ensuring a fair and efficient process. No substantial legal questions were found in the appeal, leading to its dismissal without costs.

This detailed analysis of the judgment highlights the issues of delay in filing applications, the authority's competency in handling multiple petitions, and the entitlement for registration under the Income-tax Act, providing a comprehensive overview of the legal proceedings and decisions.