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2022 (6) TMI 521 - HC - Income TaxTrust V/S AOP - Eligibility of Exemption u/s 11 - registration granted to the assessee u/s 12AA - HELD THAT - Tribunal while considering the correctness of the said order noted that the only reason why the assessing officer assessed the income of the assessee as an AOP was on the ground that registration granted to the assessee u/s 12AA was cancelled by the CIT. Tribunal further noted the order of cancellation of registration dated 31.12.2008 was set aside by the Tribunal by an order dated 20.03.2009 and, therefore, direction was issued to the assessing officer to assess the assessee as a trust and not as AOP . As submitted that as against the order passed by the Tribunal dated 20.03.2009, the revenue had preferred an appeal before this Court in 2022 (1) TMI 843 - CALCUTTA HIGH COURT and that by judgment the appeal has been dismissed. We find that there is no error in the order passed by the Tribunal directing the assessee to be assessed as a trust and not as AOP . Decided against the revenue.
Issues:
1. Interpretation of Section 11 of the Income Tax Act regarding exemption for a trust. 2. Assessment of income as a trust versus an association of persons (AOP). 3. Consideration of the judgment by the Bombay High Court in a similar case. Analysis: 1. The first issue revolves around the interpretation of Section 11 of the Income Tax Act concerning the exemption for a trust. The revenue challenged the order of the Income Tax Appellate Tribunal, arguing that the Tribunal erred in dismissing the departmental appeal by directing to allow exemption under Section 11 to the assessee trust. The revenue contended that the Tribunal failed to consider the amendment in Section 12AA of the IT Act introduced by the Finance Act of 2010, which allowed for the cancellation of registration of a trust if its activities were not genuine or not in accordance with its object. The substantial question of law raised in this regard was whether the Tribunal's decision was legally correct. 2. The second issue pertains to the assessment of income as a trust versus an association of persons (AOP). The Commissioner of Income Tax (Appeals) had directed the assessing officer to assess the income of the assessee as a trust and not as an AOP. The assessing officer had initially assessed the income as an AOP due to the cancellation of registration granted under Section 12AA of the Act. However, the Tribunal set aside the order of cancellation of registration, leading to the direction to assess the assessee as a trust. The revenue challenged this decision, arguing that the status of the assessee as an AOP was not challenged by the assessee itself. The Tribunal's decision in this regard was a crucial point of contention. 3. The third issue involves the consideration of a judgment by the Bombay High Court in a similar case. The revenue contended that the Tribunal erred in dismissing the departmental appeal without considering the judgment given by the Hon'ble Bombay High Court in a specific case. The Tribunal's failure to take into account the Bombay High Court's judgment was raised as a substantial question of law. However, the High Court, after hearing arguments from both parties, found no error in the Tribunal's decision to assess the assessee as a trust and not as an AOP. The appeal filed by the revenue was subsequently dismissed based on this analysis. In conclusion, the High Court upheld the Tribunal's decision, dismissing the revenue's appeal and answering the questions of law against the revenue. The judgment highlighted the importance of proper interpretation of tax laws and the significance of registration status in determining the assessment of income for entities like trusts.
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