2023 (1) TMI 414 - AT - Income Tax

Exemption u/s 11 - Denial of exemption as assessee was not having registration u/s 12AA for the year under consideration - AO held that the assessee was granted registration u/s 12AA on 25/10/2018 effective from 24/04/2018 i.e. A.Y. 2019-20, hence, the assessee is not eligible for deduction u/s 11 and 12 for the year under consideration - HELD THAT - Assessee while making submission vehemently relied upon the decision of Navsari Malesar Behdin Anjuman, Agiary Street, Malesar, Navsar 2020 (4) TMI 576 - ITAT SURAT wherein the Coordinate Bench of Tribunal while relying upon the decision of Punjab Educational Society 2017 (12) TMI 989 - ITAT AMRITSAR held that benefit of first proviso to Section 12A(2) of the Act would be applicable to the facts of the said case. Benefit of Section 11 is to be given if the registration is obtained even during the pendency of appeal before the ld. CIT(A). Again coming to the fact of the case,we find that the assessment in the present case was completed on 23/02/2021, before that date, the registration was granted vide order dated 25/10/2018. As in SNDP Yogum case 2016 (3) TMI 1110 - ITAT COCHIN held that proviso to section 12A(2) inserted from .01.10.2014 has retrospective effect thus, and there should be no denial of relief under section 11 to a trust if it had obtained registration during the pendency of appeal. Similar view was also taken in Shree Bahnushali Mitra Mandal Trust 2016 (4) TMI 578 - ITAT AHMEDABAD Thus, respectfully following the decisions of coordinate benches, find that the assessee is also eligible for first proviso to Section 12A(2) of the Act. Grounds of appeal raised by the assessee is allowed.

Summary

Issues:
- Eligibility for exemption u/s 11 of the Income Tax Act
- Interpretation of proviso to Section 12A(2)
- Applicability of first proviso to Section 12A(2) for pending assessment years
- Granting of registration under Section 12AA during the pendency of appeal

Analysis:
1. The appeal concerns the eligibility of the assessee for exemption under Section 11 of the Income Tax Act for the Assessment Year 2018-19 due to the absence of registration under Section 12AA. The Assessing Officer disallowed the deduction claimed by the assessee, leading to an appeal before the ld. CIT(A) and subsequently to the Tribunal.

2. The primary contention of the assessee was based on the interpretation of the proviso to Section 12A(2), which allows for the extension of benefits under Sections 11 and 12 to the preceding assessment year if the registration is granted during the pendency of appeal. The assessee argued that the denial of exemption was based on a technicality and that the registration process delay should not affect their eligibility for the deduction.

3. The ld. CIT(A) upheld the decision of the Assessing Officer, stating that the registration was granted w.e.f. A.Y. 2019-20, and not for the year under consideration. The first proviso to Section 12A(2) was deemed inapplicable as no assessment was pending on the date of registration. The ld. CIT(A) concluded that the case laws cited by the assessee did not support their claim, leading to the filing of an appeal before the Tribunal.

4. During the Tribunal proceedings, the assessee relied on various judgments to support their claim, emphasizing that the registration was obtained during the pendency of appeal and should entitle them to the exemption under Section 11. The Tribunal considered the timelines of registration and assessment, along with precedents from other benches, to determine the applicability of the first proviso to Section 12A(2) in favor of the assessee.

5. Ultimately, the Tribunal allowed the appeal of the assessee, citing the retrospective effect of the proviso to Section 12A(2 and the eligibility for relief under Section 11 if registration is obtained during the pendency of appeal. The decision was influenced by similar judgments from other benches, leading to the allowance of the grounds of appeal raised by the assessee.

This comprehensive analysis highlights the key legal issues, arguments presented, decisions made by the authorities, and the final judgment delivered by the Tribunal in favor of the assessee.