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TMI Blog2021 (11) TMI 403X X X X Extracts X X X X X X X X Extracts X X X X ..... in the field of Homeopathic Medical College and Hospital and running Graduate, under Graduate and post Graduate courses under the name of M/s Mahavira Homeopathic Medical College and Hospital. Though there is a lapses on the part of the assessee for not pursuing the registered application after the insertion of the amendment whereby the record of the registration was transferred from ITO to CIT(E) and thereafter - negligence on the part of the assessee cannot legalize the action on the part of the Assessing Officer/CIT(E) for not passing appropriate order on the application of registration dated 12.05.1998. Admittedly, until the assessment year under consideration, the assessee continued to be treated as a charitable entity without any formal registration order by the lower authorities. Even in the assessment years under review, the Assessing Officer has not denied that the assessee is charitable and imparting education within the four corners of section 2(15) of the Income Tax Act. In any case, the assessee s registration application should have been decided expeditiously and more particularly within the period of 6 months after the insertion of the amendment capping the tim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd which have been ignored summarily by the CIT(A). 4. That the Ld. CIT(A) has erred in not considering the fact that as per the judicial pronouncement that if the CIT does not pass an order on the application made u/s 12AA within the prescribed period of six months, then the said exemption shall be deemed to have been allowed as per the judgment of Apex Court in the case of CIT Vs Society for Promotion of Educational reported in 382 ITR 06 (SC) and in the case of the assessee, the exemption deemed to have been granted. 5. That the taxing of excess of income over expenditure as made by the CIT(A) and confirmation of status as AOP is against the facts and circumstances of the case. 6. That the Appellant craves leave to add or amend the grounds of appeal before the appeal is finally heard or disposed off. 3. The assessee has raised the following grounds of appeal in ITA Nos. 139 125/Asr/2020 1. That the Ld. Commissioner of Income Tax (Appeals)-4, Ludhiana has erred in confirming the order of Assessing Officer and bringing to tax excess of income over expenditure amounting to ₹ 47,44,901/- as per income and expenditure account. 2. That the Ld. CIT(A) has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Trust deed and rules and regulations have been enclosed in the Paper Book at pages 2 to 12. 2. The said society had moved an application for registration u/s 12A on the prescribed form 10A on 12.05.1998 as per copy placed at page 13 and enclosed all the documents therein and there have been certain correspondence, with the concerned Assessing Officer then the Commissioner of Income Tax , placed at pages 16 to 22 of the Paper Book, which proves beyond any iota of doubt that all such documents had been submitted for the purpose of registration u/s 12A and clarification was also made as desired. 3. During the course of assessment proceedings u/s 143(3), the assessee could not trace the necessary certificate of registration u/s 12A, which had been mentioned in para 3 of the order of Assessing Officer and, therefore, the Ld. Assessing Officer has taken the status as AOP and without doubting the aims and objects and genuineness of the society, the excess of income over expenditure on the basis of audited books of accounts as per page 24 of the paper Book, amounting to ₹ 14,99,088/- was subjected to tax, meaning thereby that no adverse view was taken with regard to the genu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .1998 was only a request for granting registration, which is patently wrong as stated above. Further, no doubt has been raised either by the CIT(A) and the Assessing Officer about the authenticity of such documents. FINDING OF THE CIT(A) 7. The CIT has also mentioned the same facts and wrongly interpreted that information has not been filed in para 5.3 of the order, which is proved from the reply at page 17, 18 19 of the paper book. 8. It is submitted that the Commissioner was duty bound to either registered the assessee u/s 2A or refuse the registration, but since no order u/s 12 appears to have been passed and there is mention of word SHALL and the registration should be deemed to have been granted automatically, on the expiry of six months. This view has been confirmed by the Apex Court, Hon ble Kerala High Court and the Jurisdictional, Amritsar Bench, copy of the judgments have been placed at following pages of the paper book: - Page 52 The Judgement of Apex Court in the case of CIT Vs. Society for Promotion of Edn, Allahabad, it has been held as under:- Section 12A, read with section 12AA of the Income-tax Act, 1961- Cha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e judgment of Amritsar Bench in the case of Tilla Baba Farid Religious and Charitable Society , copy of the judgment placed at pages 46 to 51 of the paper and the relevant finding is at page 49 of the Paper Book. 11. In view of the above said facts, the registration u/s 12A may, please, be granted and oblige. 12. Alternatively, it is submitted that the status has been taken as AOP and the entire surplus along with corpus donations have been taxed. It is submitted herewith that if the income has been charged to tax as per the normal provisions of the Act, ignoring the exemption u/s 11 12, then the assessee is entitled to set off brought forward losses as per computation of income and the same needs to be allowed as per the judgment of Chandigarh Bench of the ITAT in the case of M/s Patiala Urban Planning Development Authority, in ITA No. 1408/Chd/2018 and in ITA No. 55/Chd/2018. Copy of the judgment is being filed herewith and relevant finding is in para 18:- Para 18: In view of the above, we hold, that the assessee not being eligible for exemption u/s 11 12 of the Act, the other provisions applicable to exempt entity will also not apply to it. In other words, we h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd has held as under:- In such circumstances, respectfully following the decision of the Hon ble Supreme Court, we answer the question in favour of the assessee and against the revenue and reject the appeal. The registration however is applicable only from the date of expiry of the six months from the date of application. There shall be no order as to costs. 5. While giving this judgment, the Hon ble Supreme Court has relied upon the circular of CBDT. 6. The same is the judgment of Bangalore Tribunal, which has also taken the same view. 7. The Jurisdictional Bench was also ceased with the same issue and had followed the judgment of Apex Court. 8. The same view has been taken in the case of Lakha Singh Charitable Trust by the Amritsar Tribunal. Reliance is also being placed earlier judgment of Amritsar Bench , it has been held that if the registration has been granted for any of the year, then it is deemed to be registered for any other year, for which, the proceedings are pending at any Appellate stage. This finding has been given in the judgment of Amritsar Bench in the case of Tilla Baba Farid Religious and Charitable Society , copy of the judgment pla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2. There is no other issue in the present case, because the receipts and expenses have been accepted by the department and regarding the genuineness of activity and aims and objects, there is no whisper in the order of Assessing Officer and meaning thereby, that if there would have been registration u/s 12A, then the surplus as per Profit and Loss Account would not be taxable at all. The remaining contention raised by the assessee are common as raised by the assessee for the assessment year 2013 14 13. The Ld.AR for the assessee had submitted that the assessee was entitled to the deemed registration under the act as the lower authority has failed to court the registration within a statutory. Six months from the date of application. It was also the contention of the Ld.AR that that assuming the first contention of the assessee is not accepted by the Tribunal, then it was submitted that the assessee had been granted registration on12.11.2020 on the application filled on 21.8.2017 however it was submitted that prior thereto the assessee had all along been granted the benefit of registration by from 1998, except for the years under considerations. On the basis of the fresh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to the ITO. 16. Our attention was drawn to the certificate of registration granted to the assessee vide order dated 20.07.1998 bearing no. 45 to 49 (page 1 of the paper book). On the basis of the above, it was submitted that the assessee has completed all the requisite applications and nothing was required to be done as at the end of the assessee. 17. Further, during the argument the assessee has submitted that by the amendment, w.e.f., 01.06.1999, clause 2 in section 12AA was inserted with the following effect page 21 is as under: 2. Every order granting or refusing registration under clause (b) of subsection (1) shall be passed before the expiry of six months from the end of the month in which the application was received under clause (a) [or clause (aa) [or clause (ab)] of sub-section (1)] of section 12A.] 18. Based on the above said amendment, it was submitted that it was incumbent upon the lower authorities to grant the registration within 6 months of applying for registration u/s 12A of the Income Tax Act. It was submitted that under the law as applicable, the assessee should have been deemed to have been granted the registration by the registration authority ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n under section 12A on 26-05-2012 but this application was rejected by the CIT vide its order dated 26-12-2012 on sole ground that the University had failed to incorporate certain clauses in the VTU Act. The appeal filed against the said order of the CIT was also dismissed for the same reason. The AO has also reopened the assessment under section 147 of the Act for the assessment years 2008-09 and 2009-10, 2004-05 to 2007-08 and 2010-11 to 2013-14. During the reassessment proceedings, the assessee has again filed the third application for registration under section 12A on 5-11-2014 along with the resolution passed by the Execute Council of the University approving certain amendments to the VTU Act, as desired by the CIT. However, the CIT insisted on production of the amendments enacted by the state legislature. According to the assessee, this constrained him to withdraw the application on 27-05-2015 with a liberty to file a fresh application. The amendment came to be eventually enacted by the state legislature on 13-08-2015 and shortly thereafter on 25-08-2015 the assessee filed its 4th application for registration under section 12A of the Act. After the amendments approved by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r accepting or rejecting the application of registration filed by the assessee on 12.05.1998; however it is undeniable that the assessee continues and imparts the education in the field of Homeopathic Medical College and Hospital and running Graduate, under Graduate and post Graduate courses under the name of M/s Mahavira Homeopathic Medical College and Hospital. In our considered opinion, though there is a lapses on the part of the assessee for not pursuing the registered application after the insertion of the amendment whereby the record of the registration was transferred from ITO to CIT(E) and thereafter. However the negligence on the part of the assessee cannot legalize the action on the part of the Assessing Officer/CIT(E) for not passing appropriate order on the application of registration dated 12.05.1998. Admittedly, until the assessment year under consideration, the assessee continued to be treated as a charitable entity without any formal registration order by the lower authorities. Even in the assessment years under review, the Assessing Officer has not denied that the assessee is charitable and imparting education within the four corners of section 2(15) of the Income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... purpose of insertion of the new proviso in the act was to mitigate the hardship of the society/trust like assessee who were into charitable activities, and on account of some technical reasons, the registration has not been accorded or sought in time. Admittedly the assessee was running the educational institution and was having the requisite approval under section 10(23) for the year prior to the year under consideration and the assessee was granted the registration under section 12 A of the Act with effect from 25.9.2009. In the year under consideration, the assessee was neither having registration under section 12 A of the Act nor was having approval under section 10 (23) of the Act. However, the activities of the assessee continued to be charitable and there was no change in activities of the assessee. In our view the assessee, though was registered on 25.9.2009, however the assessee, was entitled to the benefit of section 11, 12 and 13 of the income tax Act for the assessment year 2007-08 under consideration in terms of the proviso to section 12 A of The Income Tax Act. For the above said purposes we may rely upon the decision of the coordinate bench in the matter of SHYAM MAN ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ub-section (2) of section 288 and the person in receipt of the income furnishes along with the return of income for the relevant assessment year the report of such audit in the prescribed form duly signed and verified by such accountant and setting forth such particulars as may be prescribed. (2) Where an application has been made on or after the 1st day of June, 2007, the provisions of sections 11 and 12 shall apply in relation to the income of such trust or institution from the assessment year immediately following the financial year in which such application is made. The Finance Act No. 2 of 2014 has inserted the proviso to sub-section (2) of section 12A with effect from 1.10.2014. We are reproducing herein below sub-section (2) of section 12A first proviso, second proviso and third proviso for the sake of clarity. [Provided that where registration has been granted to the trust or institution under section 12AA, then, the provisions of sections 11 and 12 shall apply in respect of any income derived from property held under trust of any assessment year preceding the aforesaid assessment year, for which assessment proceedings are pending before the Assessing Officer as on th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 12A(2) of the Act and its proviso. For ready reference the same is reproduced below: (Section 12A(2) its proviso. [(2) Where an application has been made on or after the 1st day of June, 2007, the provisions of sections 11 and 12 shall apply in relation to the income of such trust or institution from the assessment year ITA No. 651/JP/2013 Shree Shyam Mandir Committee vs. ACIT immediately following the financial year in which such application is made:] [Provided that where registration has been granted to the trust or institution under section 12AA, then, the provisions of sections 11 and 12 shall apply in respect of any income derived from property held under trust of any assessment year preceding the aforesaid assessment year, for which assessment proceedings are pending before the Assessing Officer as on the date of such registration and the objects and activities of such trust or institution remain the same for such preceding assessment year. Provided further that no action under section 147 shall be taken by the Assessing Officer in case of such trust or institution for any assessment year preceding the aforesaid assessment year only for non registration of such tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able and should be applied to the pending appeals. In the present case the appeal is pending before the Tribunal for the year 2007-08 and there is a change in law with effect from 1.10.2014. Therefore, the benefit which are available to the assessee on account of insertion are required to be extended or passed on to the assessee. We, therefore, hold that the assessee is entitled to benefit under section 11 12 for the A.Y. 2007-08 on account of the fact that the assessment proceedings are pending. In view thereof, now we will deal with the reopening under section 147/148 of the IT Act. 29. In the light of the above said discussion we are of the opinion that, the benefit of section 11 and 13 of the income tax Act considering the assessee as charitable institution should be accorded. In the result the 2nd ground raised by the assessee is liable to be allowed. 27. In light of the above, we held that the assessee is entitled to the registration u/s 12AA on the basis of deeming provision and also on account of Explanation to section 12A. 28. In the result, the assessee s grounds of appeal are required to be allow edgor all the three appeals , however, for computation for ..... X X X X Extracts X X X X X X X X Extracts X X X X
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