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Facts
The assessee, a charitable trust registered under Section 12A since 1974, failed to re-register under the amended provisions of Section 12A(1)(ac) for AY 2022-23, inadvertently applying for Section 80G approval instead. Consequently, the CPC disallowed its Section 11 exemption claim, leading to a substantial increase in its computed total income. The CIT(A) upheld the denial due to the lack of proper re-registration.
Held
The Tribunal found that the assessee had a bona fide case for its delay in filing the re-registration application. It remitted the matter back to the CIT(A) (Exemption) to condone the delay in seeking renewal of registration under Section 12A and 12AB and then consider the Section 11 exemption claim on merits for AY 2022-23 after providing an opportunity of being heard.
Key Issues
Whether the denial of Section 11 exemption due to inadvertent non-compliance with new re-registration requirements under Section 12A r.w. Section 12AB for a charitable trust can be condoned, allowing the exemption to be considered on merits.
Sections Cited
143(1), 12A, 12AB, 11, 80G
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “B” BENCH MUMBAI
Before: SHRI AMIT SHUKLA & SHRI GIRISH AGRAWAL
Present for: assessee : Shri Kulin V.Munim, CA Revenue : Shri Leyaqat Ali Aafaqui, Sr. DR Date of Hearing : 07.08.2025 Date of Pronouncement : 24.09.2025 O R D E R
PER GIRISH AGRAWAL, ACCOUNTANT MEMBER:
This appeal is filed by the assessee against the order of ld. Addl/JCIT(A)-2, Coimbatore, vide order no. ITBA/APL/S/250/2024- 25/1074611906(1), dated 18.03.2025 passed against the intimation issued by Centralised Processing Centre, Bengaluru (CPC), u/s. 143(1) of the Income-tax Act (hereinafter referred to as the “Act”), dated 01.06.2023 for Assessment Year 2022-23.
Grounds taken by assessee are reproduced as under:
1. 1. THE LEARNED CIT (A) ERRED IN CONFIRMING THE ADDITIONS MADE BY CPC IN INTIMATION U/S 143 (1) . THE SAME BE DELETED AS THE Bombay East Rotary Charitable Trust AY 2022-23 APPELLANT HAS OBTAINED PROVISIONAL REGISTRATION U/A 12A IN FORM NO 10AC.
2. THE LEARNED CIT (A) ERRED IN CONFIRMING THE ENTIRE AMMOUNT APPLIED FOR CHARITABLE PURPOSES IN INDIA AMOUNTING TO RS 10711992, CAPITAL EXPENDITURE OF RS 1459911 AND NOT ALLOWING STATUTORY ACCUMULATION AT 15% AMOUNTING TO RS 2352041 AND OPTION EXERCISED U/S 11 (1) AMOUNTING TO RS 1156327.
2.1. The sole issue involved in the present appeal is in respect of denial of exemption claimed u/s. 11 for want of valid registration u/s. 12A r.w.s. 12AB.
Brief facts of the case are that assessee was created on 10.10.1962 with the main object of providing medical services at concessional rate to the poor section of the society. Assessee had been running medical dispensary at Ghatkopar, Mumbai. It had obtained registration u/s. 12A vide registration number TR/5905 dated 26.06.1974. After obtaining registration in the year 1974, assessee did not obtain re- approval/re-registration by filing Form 10A r.w.r. 17A to claim exemption u/s. 11 as required u/s. 12A(1)(ac) for the year under consideration on account of amendment brought in the Act. Inadvertently, assessee had obtained order of approval u/s. 80G vide Form No.10AC under clause 11(i) of first proviso to subsection (5) of section 80G, dated 24.09.2021 for five years from Assessment Year 2022-23 to Assessment Year 2026-27. Assessee was under a bona fide belief that it had already obtained registration u/s. 12A and therefore, it was not necessary to secure re-registration. While submitting Form 10A, it had inadvertently clicked on section 80G and obtained the registration u/s. 80G.
3.1. Assessee filed its return of income within the extended due date on 07.11.2022 claiming exemption u/s. 11, reporting total income at nil. Assessee had furnished Form 10B on 10.09.2022 and Form 9A on Bombay East Rotary Charitable Trust AY 2022-23 08.09.2022. Return of the assessee was processed by CPC, u/s. 143(1), computing total income at Rs.1,56,80,271/- by making disallowance of the entire amount applied for charitable purposes in India amounting to Rs.1,07,11,992/- and capital expenditure of Rs. 14,59,911/-. Statutory accumulation at the rate of 15% amounting to Rs. 23,52,041/- was also disallowed while processing the return. Further disallowance was made of Rs.11,56,327/- for the option exercised by the assessee u/s. 11(1).
3.2. In the first appeal, ld. CIT(A) noted that assessee did not file any application in Form 10A for re-registration within three months from 01.04.2021 u/s. 12A(1)(ac) to obtain registration u/s. 12AB, to avail exemption u/s. 11. Since there was no fresh registration available on record as required under the amended provisions, the claim of the assessee was denied.
3.3. Assessee had moved a fresh registration application in Form 10A on 26.03.2025 for which the registration was received with effect from 02.04.2025. Assessee moved an application for condonation of delay in filing the application for fresh registration u/s.12A vide its letter dated 10.04.2025, submitted on 11.04.2025 in the Office of ld. CIT(Exemption), Mumbai. In the said application, assessee requested to grant registration from the expiry of last registration, from Assessment Year 2022-23 and onward. Assessee placed on record copy of Form 10AC u/r. 17A by which the provisional registration u/s. 12A(1)(ac) was granted with effect from 02.04.2025 for Assessment Year 2025-26 to Assessment Year 2027-28.
Assessee thus, pleads that it was on account of an inadvertent mistake while uploading the form for fresh registration which was Bombay East Rotary Charitable Trust AY 2022-23 required under the amended procedure, resulting into denial of exemption claimed u/s.11 though the trust has been registered since 1974 and has been always granted the claim of exemption u/s. 11.
4.1. On becoming aware of the inadvertent mistake, assessee had taken the action to rectify the same by filing the form for fresh registration, for which the provisional registration has been granted. However, the registration so granted is with effect from Assessment Year 2025-26 to Assessment Year 2027-28 which does not cover the year under consideration. For this, assessee has placed on record a petition for condonation of delay, treating its submission for renewal of the registration under the amended laws to be taken from Assessment Year 2022-23.
Before us, assessee has made out a bona fide case of not making an application for renewal of the registration which was originally granted in the year 1974 u/s. 12A seeking condonation of delay and granting the registration in continuity from Assessment Year 2022-23. We have considered the facts and circumstances of the case for which corroborative documentary evidences are placed on record. From the perusal of the submissions made by the assessee and the material on record, we find that assessee has a bona fide case whereby its delay in furnishing the application for re-registration to be in continuity is to be condoned.
5.1. In the interest of justice and fair play, we remit the matter back to the file of ld. CIT(A) to consider the same by condoning the delay which occurred for making a fresh application for availing registration u/s. 12A, which in fact was made and has been granted in Form 10AC though from Assessment Year 2025-26 to Assessment Year 2027-2028 Bombay East Rotary Charitable Trust AY 2022-23 effective from 02.04.2025. Ld. CIT(Exemption) is also directed to consider the condonation of delay, seeking renewal of the registration so as to grant the registration in continuity, covering the Assessment Year 2022-23. Once the delay in obtaining the renewed registration under the amended provisions of section 12A r.w.s.12AB is condoned, the claim of exemption u/s. 11 which has been denied by CPC may be considered on the merits by the ld. CIT(A) for their allowance. For this, the assessee be given reasonable opportunity of being heard to make its submission to justify and substantiate the claim so made. Accordingly, grounds raised by the assessee are allowed for statistical purposes.
In the result, appeal of the assessee is allowed for statistical purposes.