2016 (10) TMI 527 - AT - Income Tax

Benefit of section 11 & 12 - whether CIT(A) has erred in allowing benefit of section 11 & 12 when no registration was granted under section 12AA and failed to appreciate the fact that filing of application does not amount to deemed granting of registration? - Held that - The ld. CIT(A) has taken due note of the fact correctly that if such application does not stand rejected or accepted within six months of filing thereof, it shall be considered as accepted. - Decided against revenue

Summary

Issues:
Appeal against allowing benefit under sections 11 and 12 of the Income Tax Act, 1961 without registration under section 12AA.

Analysis:
The Department filed appeals against the CIT(A)'s decision to grant benefits under sections 11 and 12 of the Income Tax Act, 1961, without registration under section 12AA. The AO assessed the assessee Society as AOP and raised demands for two assessment years. The CIT(A) allowed the benefits for both years, leading to the Department's contention that no registration was granted under section 12AA, and filing an application does not imply deemed registration. The AO's observations highlighted the alleged concealment by the assessee regarding the application for registration, questioning its authenticity and timing. The CIT(A) disagreed with the AO, emphasizing the deemed acceptance provision under section 12AA(2) if no response is received within six months of filing. Citing the decision in a similar case upheld by the Supreme Court, the CIT(A) justified the deemed registration and benefit under sections 11 and 12. The CIT(A) directed the registration to be granted to the assessee.

The AO's doubts regarding the authenticity and timing of the application for registration were addressed by the CIT(A) through the legal provisions allowing deemed registration under section 12AA(2) and relevant judicial precedents. The CIT(A) emphasized the obligation on the AO to verify the application status and the consequences of non-response within six months. Referring to a Supreme Court judgment, the CIT(A) supported the assessee's claim of deemed registration and subsequent entitlement to benefits under sections 11 and 12. The CIT(A) also highlighted a similar case where deemed registration was granted, further supporting the assessee's position. Ultimately, the CIT(A) upheld the orders granting benefits and directed immediate registration for the assessee.

Therefore, the judgment revolved around the interpretation of the provisions of the Income Tax Act regarding registration under section 12AA, the concept of deemed registration, and the obligation of the assessing officer to verify and act upon registration applications within the stipulated timeframe. The CIT(A) relied on legal provisions and judicial precedents to support the assessee's claim for benefits under sections 11 and 12, ultimately dismissing the Department's appeals and directing the immediate registration of the assessee.