2018 (5) TMI 950 - AT - Income Tax

Entitlement to claim benefit u/s. 11 - no registration was granted by the income tax department to claim exemption u/s 11 - Held that - CIT(A) was of the opinion that assessments for all these A.Ys. 2008-09 to 2012-13 are pending with the authorities precisely before CIT(A), thereby, held the first proviso as inserted through Finance Act, 2014 w.e.f. 01.10.2014 is applicable to the present case. We find the issue is identical to facts of case decided by the Cochin Tribunal in the case of SNTP Yogam vs ADIT (E) 2016 (3) TMI 1110 - ITAT COCHIN which held that the insertion of first proviso to sub-section 2 to section 12A of the Act and effect thereto is retrospective in nature. An assessment proceeding which is pending in appeal before the appellate authority should be deemed to be assessment proceedings pending before the assessing officer within the meaning of that term as envisaged under the proviso. It follows there-from that the assessee which obtained registration u/s 12AA of the Act during the pendency of appeal was entitled for exemption claimed u/s 11 of the Act. CIT(A) was of the correct opinion that assessments for all these A.Ys. 2008-09 to 2012-13 are pending with the authorities precisely before CIT(A), thereby, held the first proviso as inserted through Finance Act, 2014 w.e.f. 01.10.2014 is applicable to the present case - Decided in favour of assessee.

Summary

Issues:
1. Reopening of the case by the AO based on lack of registration under sections 12A or approval under section 10(23)(c)(vi) of the Income Tax Act.
2. Denial of exemption under section 11 of the Act by the AO.
3. Grant of registration under section 12A and benefit under section 11 by the CIT(A) for previous assessment years.
4. Dispute regarding the application of the first proviso to subsection 2 of section 12A of the Act.
5. Interpretation of the retrospective nature of the amendment to section 12A introduced by the Finance Act, 2014.
6. Consideration of legal claims in first appellate proceedings.

Analysis:
1. The AO reopened the case due to the lack of registration under sections 12A or approval under section 10(23)(c)(vi) of the Income Tax Act. The assessee claimed exemption under section 11 of the Act, but the AO denied the benefit and determined the income of the assessee.
2. The CIT(A) granted registration under section 12A to the assessee, allowing the benefit under section 11 for the relevant assessment years. The CIT(A) held that the registration granted retrospectively covered the earlier assessment years where the proceedings were pending.
3. The dispute centered around the application of the first proviso to subsection 2 of section 12A of the Act. The CIT(A) invoked this proviso to grant the benefit of exemption under section 11 to the assessee for the previous assessment years.
4. The Cochin Tribunal's decision in a similar case supported the retrospective nature of the amendment to section 12A introduced by the Finance Act, 2014. The Tribunal emphasized the importance of a liberal interpretation to avoid hardship in genuine cases.
5. The Tribunal highlighted that legal claims can be entertained in first appellate proceedings as part of the assessment process, with the power of the Commissioner of Income-tax being co-terminus with that of the assessing officer.
6. Ultimately, the Tribunal upheld the CIT(A)'s decision, stating that the assessee was entitled to claim the benefit under section 11 of the Act for the relevant assessment years. The revenue's appeals were dismissed, affirming the grant of registration and exemption to the assessee.

This detailed analysis of the judgment showcases the progression of the case, the application of relevant provisions, and the final decision reached by the Tribunal.