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2023 (3) TMI 915 - AT - Income TaxExemption u/s 11 - denial of claim as assessee trust is not a registered trust u/s.12AA of the Act and treated the assessee as an AOP and taxed income at maximum marginal rate - assessee is a registered charitable trust running educational institution viz. Alpha Matriculation Higher Secondary School - whether the registration granted is to be read as prospective or retrospective in term of 2nd proviso to section 12A? - HELD THAT - The insertion of 2nd proviso to section 12A of the Act has been explained by Explanatory Notes to provisions of Finance (No.2) Act 2014 and it is provided that same is applicable to earlier assessment years which are pending before the AO as on date of such registration. As relying on case of SNDP Yogam 2016 (3) TMI 1110 - ITAT COCHIN claim of the assessee u/s.11 of the Act granting exemption holding that registration granted to the assessee trust is retrospective and not prospective.
Issues Involved:
1. Reassessment and Assumption of Jurisdiction under Section 147 of the Income Tax Act. 2. Denial of Exemption under Section 11 of the Income Tax Act due to lack of registration under Section 12AA. Summary: 1. Reassessment and Assumption of Jurisdiction under Section 147: The first jurisdictional issue raised by the assessee regarding reassessment and assumption of jurisdiction under Section 147 of the Act was not prosecuted by the assessee. Consequently, the issue was dismissed as not pressed. 2. Denial of Exemption under Section 11: The primary issue was whether the CIT(A) erred in confirming the action of the Assessing Officer in denying the claim of exemption under Section 11 of the Act. The assessee, a registered charitable trust running an educational institution, claimed exemption under Section 11 for the assessment year 2011-12, which was denied by the Assessing Officer on the grounds that the trust was not registered under Section 12AA. The CIT(A) upheld the Assessing Officer's decision, stating that the second proviso to Section 12A of the Act is prospective and not retrospective. The CIT(A) referenced the Supreme Court judgment in the case of UP Forest Corporation, which held that registration is a condition precedent for availing exemption. The assessee argued before the Tribunal that the application for registration under Section 12AA, filed in 1991, had not been disposed of, and relied on the Supreme Court judgment in CIT Vs Society for Promotion of Education, which approved deemed registration in cases where the application was not disposed of within the prescribed time limit. The assessee also argued that the second proviso to Section 12AA, introduced by Finance (No.2) Act, 2014, should be applied retrospectively. The Tribunal noted that the assessee had indeed applied for registration in 1991 and again in 2012, with registration eventually granted in 2015, effective from 01.04.2011. The Tribunal referred to explanatory notes and various Tribunal decisions, including ITAT Cochin Bench in SNDP Yogam Vs. ADIT, which supported the view that the second proviso to Section 12A should be applied retrospectively to provide relief to genuine trusts. The Tribunal concluded that the registration granted to the assessee trust should be considered retrospective and not prospective. Consequently, the Tribunal allowed the assessee's claim for exemption under Section 11, reversing the orders of the lower authorities. Conclusion: The appeal was partly allowed, granting the assessee exemption under Section 11 of the Income Tax Act, holding that the registration under Section 12AA is retrospective.
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