9911796707
TMI Blog2023 (5) TMI 1367X X X X Extracts X X X X X X X X Extracts X X X X ..... proceedings are pending before the AO, unless the registration granted earlier is cancelled or refused for specific reasons. The statute also goes on to provide that no action u/s 147 could be taken by the AO merely for non-registration of trust for earlier years. In view of the above, we hold that the proviso to section 12A of the Act is applicable for the year under consideration. There remains no ambiguity that once the benefit of exemption under section 11(1)(a) of the Act is available to the assessee in pursuance to the proviso to section 12A(2) of the Act, the income of the assessee has to be computed after considering the benefit of exemption 11(1)(a) of the Act. In this case, the registration application under section 12AA of the Act was made dated 25-06-2010 which was accorded vide order dated 30-12-2010 effective from the AY 2011-12. However, the notice for the assessment under section 143(3) for the year under consideration was issued dated 29-11-2011 after the date of registration under section 12A of the Act. Thus, it transpired that the assessment under section 143(3) was not pending at the time of registration application under section 12A of the Act. Thus, there is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... u/s 143(3) by ITO 1(2) Rajkot. Ground No 2 The learned CIT 1 Rajkot has grievously erred in disallowing the expenses of Rs 155800/- without considering the proviso to section 12A(2)-(INSERTED BY THE FINANCE NO.2, 2014 W.e.f. 01/10/2014).Learned CIT(A) ought to have considered the fact that the at time of passing the order u/s 263 by learned CIT I, proviso to section 12A was not existed so he gave the direction to disallow the Expenses of Rs 155800/. So even if Rs 155800/ is added to the total income of the assessee, the same is allowable under section 12AA as per the new inserted provision. So addition made is totally in disregard with the proviso to section 12A(2) (INSERTED BY THE FINANCE NO.2, 2014 W.e.f. 01/10/2014) and requires to be quashed. So addition made on this ground may kindly be deleted. Your Honor s appellant craves leave to add, amend, alter or withdraw any or more grounds of appeal before hearing of appeal. 3. At the outset, it was noticed that there is a delay in filing the appeal by the assessee for 1640 days which was explained like this. Upon receiving the order on 25th March 2014 passed under section 263 of the Act by the ld. CIT dated 24th of March 2014, it wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his juncture, it was realized by the assessee that the order passed under section 263 of the Act was to be challenged before the ITAT which has not been done under the bona-fide believe of being availed alternate remedy i.e. presenting the case before the AO in consequence to the direction of the learned CIT under section 263 of the Act. As such, upon realization of the mistake as pointed out by the ITAT in its order, the appeal was immediately preferred against the order passed under section 263 of the Act within the period of 60 days of the order of the ITAT arising in the matter of assessment under section 143(3) r.w.s. 263 of the Act. However, in this process the delay has occurred for 1640 days since the date of the order was passed by the ld. CIT under section 263 of the Act under the bona fides belief. To this effect, the affidavit was furnished by the assessee which is available on record. Thus, it was prayed by the learned AR to condone the delay in filing the appeal by the assessee. 6. On the other hand, the learned DR submitted that the delay is inordinate and therefore the same should not be condoned. Likewise, the assessee adopted a negligent approach and therefore, it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case on hand is like this that the assessee in the present case is a trust and registered with the Charity Commissioner. It is engaged in organizing the cultural fair during the festive season of JANMASHAMI and Lokmela activity. It applied for registration under section 12AA of the Act dated 25 June 2010 which was granted by the ld. CIT (Exemption) vide order dated 30-12-2010 effective from 25th of June 2010. Thus, the assessee was eligible for exemption under section 11(1) of the Act effective from the previous year 2010-11 corresponding to the assessment year 2011-12. However, the assessee for the year under consideration i.e. financial year 2008-09 corresponding to assessment year 2009-10 claimed exemption under section 11(1)(a) of the Act for an amount of ₹ 14,67,850 which was disallowed by the AO in the assessment framed under section 143(3) of the Act by stating that the registration under section 12AA of the Act was not available with the assessee in the year under consideration. Even at the time of assessment stage, the assessee also accepted the legal position that it is not eligible for exemption under section 11(1) of the Act for the year under consideration. Thus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee was enhanced by the sum of ₹ 1,55,800.00 only. However, it was pleaded by the learned AR that there was the proviso to section 12A(2) of the Act effective from 1st October 2014 brought by the Finance (No.) Act 2014 which is retroactive in nature. As such, when the assessment order was passed under section 143(3) of the Act, the application for the registration under section 12A of the Act was pending and therefore the benefit of exemption under section 11 of the Act should be applied to the assessee. Thus, it was prayed that the matter can be set aside to the file of the AO for fresh adjudication to decide the issue fresh after granting the benefit of the exemption under section 11 of the Act to the assessee as per the provision of law. 16. Per contra, the learned DR was contended that the disallowance made by the AO in the original assessment order under section 143(3) of the Act vide order dated 2011 was accepted by the assessee wherein the disallowance of the exemption claimed by the assessee for ₹ 14,67,850 was denied upon the acceptance of the assessee which was also upheld by the ld. CIT(A). The finding of the ld. CIT(A) was also not challenged which t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he 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 date of such registration and the objects and activities of such trust or institution remain the same for such preceding assessment year: 20. It will be relevant to get into the Explanatory Notes to the Provisions of the Finance (No. 2), 2014 as given in CBDT Circular No. 01/2015 dated 21.1.2015 in reference to F.No. 142/13/2014-TPL which is reproduced hereinbelow for the sake of convenience: Para 8 - Applicability of the registration granted to a trust or institution to earlier years Para 8.2 Non-application of registration for the period prior to the year of registration caused genuine hardship to charitable organizations. Due to absence of registration, tax liability is fastened even though they may otherwise be eligible for exemption and fulfill other substantive conditions. However, the power of condonation of delay in seeking registration was not available. 21. This above cl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve. Thus, in such a situation, the proviso to section 12A of the Act comes into picture, which was inserted to cover the genuine hardship to the trusts for preceding years assessment after receiving the registration. The Proviso says when the registration is granted and any proceeding is pending before the AO relating to the previous/preceding year of the date of registration, the benefit of exemption will be applicable to the preceding year also. Thus, we hold that the proceedings pertaining to the A.Y. 2009-10 were pending at the time of registration under section 12A of the Act to the extent of the direction provided by the ld. CIT in his order passed under section 263 of the Act. Therefore, the benefit of exemption u/s 11 of the Act will be extended to the assessee. However, such benefits provided under section 11 of the Act shall be subject to the provisions contained therein. In other words, the AO while granting the benefit of exemption provided under section 11 of the Act shall adhere the relevant provisions of the Act. Hence, the ground of appeal of the assessee is partly allowed for the statistical purposes. Coming to ITA No. 425/Rjt/2018 (A.Y. 2010-11) 25. The identical ..... X X X X Extracts X X X X X X X X Extracts X X X X
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