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2018 (12) TMI 1465 - HC - Income TaxCharitable institution - exemption u/s 11 - delay in filing the application for registration under Section 12A - deemed registration under Section 12A for reason of the delay in consideration by virtue of Section 12AA(2) - Held that - We are not convinced that the mere delay would have affected the registration being granted. Clause (a) of Section 12A provides an application to be filed in the prescribed form and in the prescribed manner to the Commissioner before the first day of July, 1973 or before the expiry of a period of one year from the date of creation of the trust or the establishment of the institution. The proviso also makes it clear that if there is a delay occasioned and the Commissioner is satisfied that there were sufficient reasons for not having filed an application within the time provided under clause (a), then the registration would be applicable from the date of creation of the trust or establishment of the institution. Even if the delay is not condoned for reason of no satisfactory explanation having been offered, the registration; if enabled, would be applicable from the first day of the financial year in which the application is made. What assumes relevance is the fact that the assessee herein was entitled to exemption under Section 10(20) by virtue of its registration as a local authority and the same was taken away by an amendment of 13.11.2002, which came into effect from 01.04.2003; when the exemption was withdrawn. We notice that there has been a delay of about 3 years. The need for registration as a trust carrying on activities of charitable purposes arose only for reason of the exemption having been withdrawn. The assessee which was enjoying exemption from income-tax from its inception was suddenly faced with the prospect of being made liable under the taxing statute. This would have required considerable research and as was rightly pointed out by the assessee, the Ports, all over the Country had been suddenly deprived of their exemption and had filed applications under Section 12AA with considerable delay. Taking all these aspects into account; we find that the explanation offered is satisfactory and the delay has to be necessarily condoned. We agree with the Tribunal on the condonation of delay. We answer the questions framed against the Revenue and in favour of the assessee upholding the order of the Tribunal, condoning the delay in filing the application under Section 12AA and directing the registration to be granted as a trust established for the purpose of charitable purpose, eligible for exemption under Section 11 & 12A of the Income Tax Act. We however, deem it fit not to answer the question framed with respect to the deemed grant of registration on the delay occasioned in passing a final order on the application under Section 12AA since we find the delay having been satisfactorily explained. We also answer the additional questions framed by us, though not arising from the order of the Tribunal following Berger Paints 2004 (2) TMI 4 - SUPREME COURT in favour of the assessee and against the Revenue.
Issues Involved:
1. Whether the Tribunal was correct in directing the Commissioner to condone the delay in filing the application for registration under Section 12A of the Income Tax Act, 1961, and also in directing the grant of registration under Section 12A. 2. Whether the Tribunal was correct in entertaining the additional ground of a deemed grant of registration under Section 12A, especially when it was raised at the appellate stage. 3. Whether the Revenue could have continued the prosecution of the instant appeal in the circumstances of the Revenue having acceded to a similar Major Port being registered under Section 12A under the orders of another Income Tax Appellate Tribunal. Detailed Analysis: 1. Condonation of Delay and Grant of Registration under Section 12A: The court examined the facts and circumstances leading to the delay in filing the application for registration under Section 12A. The assessee, a port trust, was initially registered as a 'local authority' and availed exemption from income tax under Section 10(20) of the IT Act. However, due to an amendment in the definition of 'local authority', the assessee was no longer eligible for this exemption. Consequently, the assessee applied for registration as a charitable institution under Section 2(15) of the IT Act to claim exemption under Section 11. The Commissioner initially declined the registration due to an inordinate delay of about 42 years from the date of the trust's creation. However, the Tribunal allowed the appeal, noting that similar delays had been condoned in other cases across the country. The court agreed with the Tribunal, emphasizing that the delay was satisfactorily explained and should be condoned. 2. Deemed Grant of Registration under Section 12A: The court noted that the application under Section 12AA was made on 09.06.2006, and the order was passed on 10.08.2007, exceeding the six-month period mandated by Section 12AA(2). The Commissioner refused the registration after fourteen months, citing no satisfactory explanation for the delay. The Tribunal reversed this decision, noting that the delay in consideration could lead to a deemed registration under Section 12AA(2). The court, however, chose not to address this issue directly, as it found the delay satisfactorily explained and condoned, thus rendering the question of deemed registration moot. 3. Continuation of Prosecution by the Revenue: The court examined whether the Revenue could continue the appeal given that it had acceded to a similar Major Port being registered under Section 12A by another Income Tax Appellate Tribunal, following the dictum in Berger Paints India Ltd. v. Commissioner of Income Tax, Calcutta. The court noted that the Mormugao Port Trust, a similarly situated entity, was granted registration under Section 12AA by the Panaji Bench of the Income Tax Appellate Tribunal. The Committee on Disputes had directed that the case be treated as withdrawn. The court found that the Department's stance in pursuing the appeal against the Cochin Port Trust while withdrawing the case against the Mormugao Port Trust was unjustified. The court emphasized that the principles laid down in Berger Paints India Ltd. applied, and the Revenue could not take different stances in similar cases without just cause. Conclusion: The court dismissed the appeal, upholding the Tribunal's order to condone the delay and grant registration under Section 12AA. The court also emphasized the principles laid down in Berger Paints India Ltd., finding that the Revenue's inconsistent stances in similar cases were unjustified. The court did not address the issue of deemed registration due to the satisfactory explanation for the delay. The appeal was dismissed with no order as to costs.
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