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2024 (6) TMI 1292 - AT - Income TaxIssues Involved: 1. Denial of exemption under Section 11 of the Income Tax Act. 2. Consideration of genuine expenses of the Trust. 3. Applicability of Section 12AA registration to the assessment year in question. 4. General grounds and procedural aspects. Issue-wise Detailed Analysis: 1. Denial of Exemption under Section 11: The assessee filed an appeal against the order of the Additional/JCIT(A)-1, Visakhapatnam, which confirmed the total income at Rs. 33,84,440/- against the returned income of Rs. 31,040/-. The primary contention was the denial of exemption under Section 11 despite the assessee being registered under Section 12A as of 18/10/2016. The assessee argued that the amendment in the Finance Bill 2014 allowed for retrospective exemption under Sections 11 and 12. The Tribunal noted that the assessee, a registered charitable trust, had applied for registration under Section 12AA on 15/07/2016 and received it on 20/10/2016. The Tribunal referred to Section 12A(2) and relevant CBDT Circular No. 1/2015, which provides that the benefits of Sections 11 and 12 apply retrospectively to pending assessment proceedings if the trust's objects and activities remain the same. The Tribunal found that the assessee's activities were charitable and upheld the applicability of Section 12A(2) for the assessment year 2016-17, citing support from various judicial precedents. 2. Consideration of Genuine Expenses of the Trust: The assessee contended that the Assessing Officer (AO) erred in considering the gross receipts as taxable income instead of the net income of the Trust. The Tribunal, while allowing the benefit of exemption under Section 11, noted that this ground became academic. However, it agreed in principle that only the profit could be taxed if the benefit of Section 11 was denied, not the entire receipt. This recognition was merely academic as the exemption under Section 11 was granted. 3. Applicability of Section 12AA Registration: The Tribunal discussed the proviso to Section 12A(2), which was introduced to alleviate hardships for genuine trusts. It was noted that the registration granted under Section 12AA should apply to pending assessment proceedings if the trust's objects and activities remain unchanged. The Tribunal cited decisions from various courts, including the Hon’ble Rajasthan High Court and ITAT Kolkata, which supported the retrospective application of Section 12AA registration to pending assessments. The Tribunal concluded that the assessee was eligible for deduction under Section 11 for the assessment year 2016-17, as the registration under Section 12AA was obtained before the order under Section 143(1) was passed. 4. General Grounds and Procedural Aspects: - Ground Number 5: The Tribunal dismissed this ground as it pertained to 12AA proceedings, which were not related to the present appeal. - Ground Number 6: This ground was deemed academic since the Tribunal allowed the exemption under Section 11. However, it was noted that only the profit should be taxed if Section 11 benefits were denied. - Ground Number 7: This ground was general in nature, and no additional or altered grounds were raised. Therefore, it was dismissed. Conclusion: The appeal of the assessee was partly allowed, granting the exemption under Section 11 for the assessment year 2016-17 and addressing the procedural aspects accordingly. The order was pronounced in the open Court on 26th June, 2024.
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