2011 (8) TMI 979 - HC - Income Tax

Grant registration to assessee under Sections 12 AA(i)(b) (ii) - Held that - It appears that the assessee is a statutory authority which was established under the U.P. Industrial Area Development Act, 1976. Other authorities which were established under the same Act were granted registration under section 12A of the Act but the same was denied to the assessee. On the basis of parity , we are of the view that the assessee is also entitled for the registration. It makes no difference that the assessee has not yet started functioning being charitable institution. Registration is required before starting business as per the ratio laid down in the case of M/s Bihar State Forest Development Corporation vs. CIT 1996 (9) TMI 96 - PATNA High Court . In view of above, we see no reason to interfere with the impugned order passed by the Tribunal who has rightly directed CIT to grant registration to the assessee. The same is hereby sustained. No substantial question of law emerges.

Summary

Issues:
Grant of registration under Sections 12 AA(i)(b)(ii) of the Income Tax Act, 1961 to an authority established under the U.P. Industrial Area Development Act, 1976.

Analysis:
The appeal before the Allahabad High Court was filed by the department under Section 260-A of the Income Tax Act, 1961 against the decision of the Income Tax Appellate Tribunal directing the Commissioner of Income Tax (CIT) to grant registration to the assessee under Sections 12 AA(i)(b)(ii) of the Act. The assessee, a statutory authority established under the U.P. Industrial Area Development Act, 1976, had applied for registration under section 12 A of the Income Tax Act, which was initially refused by the CIT on the grounds of the authority being run on commercial lines. The Tribunal, however, directed the CIT to grant registration, citing similar instances where registration was granted to other authorities established under the same Act with similar objects and functions.

Upon hearing the counsels for both parties and examining the facts, the High Court noted that there was parity in the treatment of other authorities established under the U.P. Industrial Area Development Act, 1976, which were granted registration under section 12 A of the Act. The Court emphasized that the assessee being a charitable institution did not need to have started functioning to be eligible for registration, as per the precedent set in the case of M/s Bihar State Forest Development Corporation vs. CIT. The Court upheld the Tribunal's decision, stating that there was no reason to interfere with the order directing the CIT to grant registration to the assessee, as no substantial question of law emerged.

In conclusion, the High Court dismissed the appeal in limine, affirming the Tribunal's decision to grant registration to the assessee under Sections 12 AA(i)(b)(ii) of the Income Tax Act, 1961.