2021 (6) TMI 574 - AT - Income Tax

Exemption u/s 11 denied - registration under section 12AA granted or not? - AO disallowed the deduction of expenses by taking view that assessee failed to produce the evidence regarding registration u/s 12AA - HELD THAT - We find that the assessee claim was not considered on merit in absence of production of registration under section 12AA of the Act and considering the fact that the assessee was granted registration dated 26.06.2018, though it is effective from 15.10.2017. The contention of the assessee throughout the assessment proceedings and at the first appeal as well as before this Tribunal is that assessee-trust is registered under section 12A and the revenue authorities have not examined their own record nor refuted the contention of the assessee that the registration number provided by the assessee in its references are not corrected. As before moving fresh application, the assessee filed application under the provisions of Right to Information Act (RTI), for seeking the copy of registration certificate granted initially. The assessee has also placed on record the reply of CPIO and the order of First Appellate Authority under RTI. Moreover, on further filing fresh application for registration under section 12AA, the assessee was granted fresh registration. The grounds of appeal raised by the assessee required fresh consideration by the ld.AO in view of the decisions of Mayur Foundation 2004 (12) TMI 48 - GUJARAT HIGH COURT . Therefore, the appeal is restored back to the file of ld.AO to consider the claim of assessee afresh by considering the various decisions as referred above and pass the order afresh in accordance with law without being influence of any of our observation. The assessee is also directed to provide complete details, evidences and information to the ld.Assessing Officer. Appeal of the assessee is allowed for statistical purpose.

Summary

Issues Involved:
1. Whether the assessee trust should be considered as registered under section 12AA of the Income Tax Act.
2. Whether the expenses amounting to ?13,13,184/- incurred on the objects of the trust should be allowed.

Issue-wise Detailed Analysis:

1. Registration under Section 12AA of the Income Tax Act:
The primary issue revolves around whether the assessee trust is registered under section 12AA of the Income Tax Act. The trust claimed it was granted registration under section 12AA in 1974, but the original certificate was destroyed in a flood in 2006. The Assessing Officer (AO) disallowed the deduction of expenses, stating the trust failed to produce evidence of registration. The Commissioner of Income Tax (Appeals) [CIT(A)] upheld this view. The Tribunal noted that the assessee had regularly filed returns and claimed exemptions under section 11, which were always granted. The Tribunal also considered that the trust had obtained fresh registration under section 12AA on 15.03.2017, and there was no change in the trust's objects or activities. The Tribunal referred to the Proviso under section 12A(2) of the Act, which allows for a liberal interpretation to avoid genuine hardship, and cited various case laws supporting the assessee's position. The Tribunal concluded that the appeal is a continuation of the original assessment proceedings, and the assessee is entitled to the benefit under section 11 of the Act, restoring the matter to the AO for fresh consideration.

2. Allowance of Expenses Incurred on the Objects of the Trust:
The second issue concerns the disallowance of expenses amounting to ?13,13,184/- incurred on the objects of the trust. The AO disallowed these expenses due to the lack of evidence of registration under section 12AA. The Tribunal noted that the assessee had consistently claimed and was granted exemptions in previous years. The Tribunal emphasized that the assessee's registration was never canceled or revoked and that the trust's activities remained unchanged. The Tribunal directed the AO to reconsider the claim of expenses afresh, taking into account the decisions of higher judicial authorities and the fresh registration obtained by the assessee.

Conclusion:
The Tribunal restored the appeal to the AO for fresh consideration, directing the AO to examine the claim of registration and expenses in light of the Tribunal's observations and relevant case laws. The assessee was also instructed to provide complete details and evidence to the AO.

Order:
The appeal of the assessee was allowed for statistical purposes, and the order was announced on 9 June 2021 in the Virtual Court hearing.