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2021 (3) TMI 115 - AT - Income TaxExemption u/s 11 - Registration u/s 12AA and 80G(5)(vi) denied - Charitable activity u/s 2(15) - HELD THAT - Under the amended law as are applicable in the instant case, once the ld. CIT(E) is satisfied about the objects and the genuineness of the activities of the trust and the sufficient compliance of other law for time being in force as are material for the purpose of achieving its objects, the provisions of sections 11 and 12 shall apply from the assessment year following the financial year in which such application is made. In the instant case, the assessee has made an application on 04.02.2020 and in light of the aforesaid provisions, we find that where the registration has been granted by the ld CIT(E) after satisfying himself about the objects and genuineness of its activities, the provisions of sections 11 and 12 shall apply in the case of the assessee from 01.04.2020 i.e. from A.Y 2020-21 onwards. It is a case where the ld. CIT(E) has sought certain explanation/clarification from the assessee trust regarding its objects vide show cause dated 11.09.2020 which has been suitably explained by the assessee by way of its affidavit dated 22nd September, 2020 and basis such clarification, ld. CIT(E) was satisfied about the charitable nature of the objects of the assessee foundation and therefore, once, the objects have been found to be charitable in nature, there is no discretion left with the ld CIT(E) to restrict the applicability of provisions of section 11 and 12 from date of furnishing of such affidavit and rather, as per the provisions of sub-section 2 to section 12A, the provisions of section 11 and 12 shall apply from 01.04.2020 i.e. from A.Y 2020-21 onwards and the assessee shall be entitled to claim exemption under section 11 and 12 from A.Y 2020-21. In any case, the requirements of proviso to Section 2(15) remain mandatory in nature and the compliance thereof has to be examined by the AO on a yearly basis including that for A.Y 2020-21 while framing the assessment as per law. In the result, the ld. CIT(E) is directed to grant registration u/s 12AA effective from A.Y 2020-21 instead of A.Y 2021-22. Following the aforesaid discussions, the ld. CIT(E) is also directed to grant registration u/s 80G(5)(vi) effective from A.Y 2020-21 instead of A.Y 2021-22 - Appeal of assessee allowed.
Issues Involved:
1. Granting registration under Section 12AA of the Income Tax Act. 2. Granting approval under Section 80G(5)(vi) of the Income Tax Act. Detailed Analysis: Issue 1: Granting Registration under Section 12AA The assessee contested the decision of the CIT(Exemptions) to grant registration under Section 12AA effective from the Assessment Year (A.Y.) 2021-22 instead of A.Y. 2020-21. The application for registration was filed on 04.02.2020, making the assessee eligible for registration from A.Y. 2020-21 as per Section 12A(2). The assessee argued that the CIT(E) does not have the discretion to defer the effective date of registration once the application is filed within the stipulated time. During the hearing, the assessee's representative highlighted that the CIT(E) issued a notice on 14.07.2020, requesting 26 documents/clarifications, which were promptly provided by 17.08.2020. A subsequent notice on 11.09.2020 led to the submission of an affidavit on 22.09.2020, after which the CIT(E) granted approval effective from A.Y. 2021-22. The assessee argued that the affidavit could have been made a condition for approval rather than a reason to defer it. The Tribunal noted that Section 12AA requires the CIT(E) to satisfy himself about the objects and genuineness of the trust's activities. The provisions of Section 12A(1) and 12A(2) were examined, which stipulate that for applications made after 01.06.2007, the provisions of Sections 11 and 12 apply from the A.Y. immediately following the financial year in which the application is made. The Tribunal found that the CIT(E) had no discretion to delay the effective date of registration once satisfied with the trust's objects and activities. The Tribunal concluded that the CIT(E) should have granted registration effective from A.Y. 2020-21, as the application was made on 04.02.2020. The Tribunal directed the CIT(E) to grant registration under Section 12AA effective from A.Y. 2020-21. Issue 2: Granting Approval under Section 80G(5)(vi) Similar to the issue of Section 12AA registration, the assessee contested the CIT(E)'s decision to grant approval under Section 80G(5)(vi) effective from A.Y. 2021-22 instead of A.Y. 2020-21. The application for approval was filed on 05.02.2020, making the assessee eligible for approval from A.Y. 2020-21. The Tribunal's analysis and conclusions regarding the effective date of approval under Section 80G(5)(vi) mirrored those for Section 12AA. The Tribunal found that the CIT(E) should have granted approval effective from A.Y. 2020-21, as the application was made on 05.02.2020. Conclusion: The Tribunal directed the CIT(E) to grant both the registration under Section 12AA and the approval under Section 80G(5)(vi) effective from A.Y. 2020-21 instead of A.Y. 2021-22. Both appeals filed by the assessee were allowed. Order Pronounced: The order was pronounced in the open court on 01/03/2021.
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