2022 (11) TMI 1103 - AT - Income Tax

Exemption u/s. 11 - Exemption denied treating the assessee as AOP instead of charitable trust - CIT granted registration u/s. 12A - applicability of proviso to sub-section (2) of section 12A - HELD THAT - Registration granted u/s. 12A of the Act in response to the application dated 19-02-2009, is not application to the year under consideration i.e. A.Y. 2008-09. Applicability of proviso to sub-section (2) of section 12A - Admittedly the said proviso was introduced in Finance Act, 2014 w.e.f. F.Y. 2014-15 (A.Y. 2015-16). Since, the assessment year under consideration is A.Y. 2008- 09, the CIT(A) held the said proviso is not applicable on the facts on hand. Recording the separate finding on the same, but however, we agree with the findings of the CIT(A) which were reproduced here-in-above. Therefore, we do not find any infirmity in the order of CIT(A) regarding the non-applicability of proviso to sub-section (2) of section 12A of the Act. Benefit of getting exemption u/s. 11 should be extended to the prior assessment years which are pending before the AO - CIT(A) answered the same by holding that no assessment for the year under consideration was pending before the AO as it was already completed on 28-12-2010. As discussed above that the CIT-IV, Pune granted registration in pursuance to the order of Tribunal on 26-03-2013 relevant to the assessment year i.e. A.Y. 2009-10, but not applicable to the year under consideration. Therefore, when there is no registration u/s. 12A of the Act for the year under consideration, the assessee is not entitled to claim benefit of exemption u/s. 11 of the Act. Therefore, find no infirmity in the order of CIT(A) in confirming the order of AO in denying the exemption u/s. 11 of the Act in the absence of registration u/s. 12A of the Act. Thus, the grounds raised by the assessee fails and are dismissed.

Summary

Issues:
Whether the CIT(A) was justified in confirming the order of AO in denying exemption u/s. 11 of the Act treating the assessee as AOP instead of charitable trust in the facts and circumstances of the case.

Analysis:
The appeal was filed by the assessee against the order passed by the Commissioner of Income Tax (Appeals)-10, Pune for assessment year 2008-09. The main issue revolved around the denial of exemption u/s. 11 of the Act by treating the assessee as an Association of Persons (AOP) instead of a charitable trust. The trust was formed for educational purposes for the benefit of all sections of society. The AO rejected the application for registration u/s. 12A of the Act, leading to the denial of exemption u/s. 11. The CIT(A) upheld the AO's decision, stating that the registration granted later was not applicable to the year under consideration. The Tribunal found no infirmity in the CIT(A)'s decision and dismissed the appeal.

An alternative argument regarding the applicability of the proviso to sub-section (2) of section 12A of the Act was raised before the CIT(A). The proviso stated that registration granted in subsequent years could apply to preceding years where assessment proceedings were pending. However, the CIT(A) held that the proviso introduced in Finance Act 2014 was not applicable to the assessment year 2008-09. The Tribunal agreed with this finding, emphasizing that no assessment proceedings were pending for the year under consideration when the registration was granted.

The assessee also sought to extend the benefit of exemption u/s. 11 to prior assessment years pending before the AO. Citing a Kolkata Tribunal case, the assessee argued for the extension of benefits. However, the CIT(A) noted that no assessment for the year under consideration was pending before the AO when the registration was granted. As there was no registration u/s. 12A for the relevant year, the assessee was not entitled to claim the exemption u/s. 11. The Tribunal concurred with the CIT(A)'s decision, dismissing the grounds raised by the assessee and upholding the denial of exemption.

In conclusion, the Tribunal dismissed the appeal, affirming the decision of the CIT(A) in denying the exemption u/s. 11 of the Act due to the absence of registration u/s. 12A for the year under consideration. The judgment was pronounced on 30th September, 2022.