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TMI Blog2023 (9) TMI 434X X X X Extracts X X X X X X X X Extracts X X X X ..... d in not addressing the appellant alternate submission that, in view of CBDT's Circular No.14/XL/35 dted 11/04/1955, ld. Assessing Officer should have advised the appellant to seek exemption u/s. 10(23C)(vi) of the Income-tax Act, 1961 and allowed the same in the interest of justice. 3. The impugned order is bad in law and on facts. 4. The Appellant reserves the right to add, amend, alter, omit or withdraw all or any of the grounds of appeal." Also, the assessee has raised an additional ground of appeal, which reads as follows: "Without prejudice to other grounds of appeal, in the facts and circumstances of the case and in law, the ld. Assessing Officer may be directed to give effect to provisions of sub-section 2 of section 12A of the Income-tax Act, 1961 and allow exemption u/ s. 11 and 12 of the Act and exclude the appellant's income from the total income for Assessment Year 2016-17." 2. Succinctly stated, the assessee society, which was established with the Direction of Education Department of Chhattisgarh Government vide letter No.7/Raipur dated 27.08.2007 & F-55/2006/20 dated 10.01.2008 had filed its return of income for A.Y.2016-17 on 31.03.2018 in the status ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e reply of following show cause on or before 11/12/2018 positively :- "On verification, it is found that the assessee has claimed exemption u/s 10(23c)(iiiab) of I. T Act, 1961. However, the assessee has not fulfilled all the conditions for claiming exemption u/s 10(23c)(iiiab) of I. T. Act, 1961. Therefore, a show cause is being issued as to why the exemption claimed u/s 10(23c)(iiiab) should not be disallowed?" In response to the show cause notice, the assessee society has submitted as under:- The assessee society was received grants from State Govt. of Rs. 1 crore vide letter no.35/2008-09 dated 20/08/2008. As per the CBDT circular no.4/2002 dated 16/07/2007 in which clearly exempted the education institution covered u/s 10(23c)(iiiab) of the Income Tax Act, 1961 and assessee society is a State Govt. Society which is governed by the State Govt. officials and funded by the State Govt. as and when required. Therefore, covered u/s 10(23c)(iiiab) of the Income Tax Act, 1961. The submission of the assessee has been considered but not acceptable. It is necessary to mention here that the entitlement for exemption under section 10(23c)(iiiab) is subject to two fold conditions:- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r consideration, i.e., A.Y.2016-17, where registration had been granted to the trust or institution u/s. 12AA of the Act the provisions of sections 11 and 12 shall apply in respect of any income derived from property held under the trust of any assessment year preceding the aforesaid assessment year, for which assessment proceedings were pending before the A.O as on the date of such registration, though subject to the condition that the objects and activities of such trust or institution remain the same for the said preceding assessment year. Elaborating further on his contention, it was submitted by the Ld. AR that though the registration u/s. 12AA of the Act was earlier rejected/refused to the assessee society by the CIT(Exemption), Bhopal vide his order dated 29.04.2019 for the reason that it had failed to file within the stipulated time period the requisite replies to the queries raised by the latter, but the said order had thereafter been set aside by the Tribunal vide its order dated 02.01.2023 in ITA No.124/RPR/2019 and the matter was restored to the file of the CIT(Exemption) with a direction to re-adjudicate the same. The Ld. A.R submitted that the CIT(Exemption) had there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fficer 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." (emphasis supplied by us) Further, the CBDT Circular No.01/2015 dated 21.05.2015 (applicable w.e.f. 01.10.2014) in order to remove hardships to charitable organizations due to non-application for registration for the period prior to the year of registration had come to the rescue of such assessee's for the years preceding the year of registration. As per the aforesaid CBDT Circular No.01/2015 (supra), the benefit of Sections 11/12 of the Act would be available to an assessee for a period prior to the year of registration despite the fact that no application for registration for the said period had been filed. The only rider/pre-condition that is required to be satisfied for bringing a case within the realm of the CBDT Circular No.01/2015 (supra) is that the assessment proceedings for the said preceding assessment year is pending before the A.O on the date of registration u/s. 12AA of the Act. For the sake of clarity, the aforesaid CBDT Circular No.01/2015 (supra) is culled out as under: "8. Applicability of the registration ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 12A(2) of the Act, where registration had been granted to the trust or institution u/s. 12AA of the Act, 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 A.O as on the date of such registration, subject to the condition that the objects and activities of such trust or institution remain the same for such preceding assessment year. However, the claim of the Ld. AR that the A.O be directed as per the provisions of sub section (2) to Section 12A of the Act to allow exemption u/s. 11 & 12 of the Act and exclude the income of the assessee society from the scope of its total taxable income for the year under consideration does not merit acceptance. In our considered view, the Ld. AR has on the basis of premature observations misconceived and wrongly construed the concession contemplated in the "1st proviso" to Section 12A(2) of the Act, and sought a direction to the said effect in the present appeal which challenges the declining of its claim of exemption u/s. 10(23C)(iiiab) of the Act. 11. Although t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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