SHRI SHRIRAM PARMARTHIK TRUST,INDORE vs. INCOME TAX OFFICER WARD EXEMPTION INDORE, INDORE

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ITA 294/IND/2026Status: DisposedITAT Indore09 July 2026AY 2019-2019 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the proviso to section 12A(2) of the Income Tax Act, 1961, read in conjunction with CBDT Circular No. 1/2015, grants retrospective effect to registrations granted under section 12AA. This means that if the objects and activities of the trust were the same in the earlier assessment year for which proceedings were pending, the benefit of exemption under sections 11 and 12 can be applied. The Tribunal noted that the registration under section 12AA was granted on 26.02.2020. However, it also referred to a registration granted on 26.11.2018 (though this date seems to conflict with the facts stated earlier, the Tribunal's reasoning relies on it). The Tribunal concluded that the registration granted should be considered in favour of the assessee for AY 2019-20. Consequently, the impugned order was set aside, and the matter was remanded to the AO to recompute the income after allowing the admissible exemption under sections 11 and 12, providing the assessee an opportunity to furnish necessary information. The appeal was allowed for statistical purposes.

What were the facts?

The assessee, Shri Shriram Parmarthik Trust, is challenging an order passed by the CIT(A) for Assessment Year (AY) 2019-20. The trust, registered with the registrar of public trust since 2001 and engaged in charitable activities, filed its return on 31.08.2019 declaring an income of Rs. 52,920/-. However, the CPC processed the return under section 143(1) on 11.05.2020, determining a total income of Rs. 7,69,390/- and raising a demand of Rs. 2,81,688/-. The CPC did not consider the expenses or the fact that the trust was registered under section 12AA on 26.02.2020. An application for rectification under section 154 was rejected on 28.12.2022, stating that the registration was effective from AY 2020-21. The CIT(A) upheld this decision, dismissing the assessee's appeal.

What were the issues?

1. Whether the Ld. CIT(A) erred in not considering the proviso to section 12AA(2) and the application of sections 11 to 13 for AY 2019-20? The assessee argued that the proviso to section 12AA(2) should be considered, and the AO should be directed to consider it and cancel the demand. 2. Whether the Ld. CIT(A) erred in dismissing the appeal on the ground that registration under section 12AA was granted from AY 2020-21 and therefore could not be considered for AY 2019-20, leading the AO to rightly deny exemption under section 11? The assessee contended that the CIT(A) erred in this reasoning. 3. Whether the lower authorities erred in making adjustments under section 143(1)(a) and assessing income on the gross amount without considering expenditure? The assessee relied on the judgment in DCIT vs Vaishnav Polytechnic College and argued that the CPC's order taxing the gross amount without allowing expenditure was incorrect. 4. Without prejudice, whether the taxing of gross income without considering expenditure is bad in law and the AO should be directed to tax the net income? The assessee made this alternative submission.

Which sections of the Income-tax Act were involved?

Section 253,Section 250,Section 154,Section 246A,Section 12AA,Section 11,Section 12,Section 13,Section 143(1)(a),Section 12A(2),Section 42A,Section 147

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, INDORE BENCH, INDORE

Before: SHRI MANISH BORAD & SHRI PARESH M JOSHI

Hearing: 06.07.2026Pronounced: 09.07.2026

Per Paresh M Joshi, J.M.:

This is an Appeal filed by the Assessee under section 253 of

the income tax Act 1961,[ herein after referred to as the Act

for sake of brevity] before this tribunal as and by way of a

second appeal. The Assessee is aggrieved by the order

bearing no: - ITBA/APL/S/250/2025-26/1085126100(1)

dated 23.01.2026 passed by the Ld. CIT (A) u/s 250 of the

Act, which is herein after referred to as the “Impugned

order”. The Relevant Assessment year is 2019-20 and the corresponding previous year period is from 01.04.2018 to

31.03.2019.

2.

Factual Matrix

2.1 That the assessee is a charitable trust registered with

the registrar of public trust vide registration dated

03.12.2001.

2.2 That the trust is engaged in advancing the charitable

objects like medical relief and advancing other objects of

public utility.

2.3 That during the year under consideration, the assessee

trust was not registered u/s 12A of the Act but was

registered u/s 12AA on 26.02.2020. That the books were

audited and the ROI was filed on the basis of the audited

accounts.

2.4 That the ROI for the AY 2019-20 was filed on

31.08.2019 declaring the income of Rs. 52,920/- after

claiming the deductions for the expenses and the amount set

apart @15% of gross receipts. That the said return was

processed by the CPC on 11.05.2020 determining the total income of Rs. 7, 69,390/- and a demand of Rs. 2,

81,688/- was raised. That the CPC did not consider the

expenditure incurred for the object of the trust and also

did consider the registration granted u/s 12AA of the

Act. The application of section 11 and other provisions of the

Act were denied on the short ground that the assessee trust

was not registered u/s 12AA for the year under

consideration.

2.5 That the assessee trust moved an application for

rectification for “rectifying the mistake” which was rejected

by an order u/s 154 dated 28.12.2022 on the ground that

the application has been granted from the AY 2020-21 and

as such there is no mistake in processing the same. That

the aforesaid order u/s 154 bears no:-

ITBA/COM/F/17/2022-23/1048294793(1) and that same is

dated 28.12.2022 which is hereinafter referred to as the

“Impugned Rectification Order u/s 154” of the Act.

2.6 That the assessee being aggrieved by the aforesaid

Impugned Rectification Order” prefers the first appeal

u/s 246A of the Act before the Ld. CIT (A) who by the “Impugned Order” has dismissed the first appeal of the

assessee on the grounds and the reasons stated therein. The

core grounds and the reasons for the dismissal of the first

appeal were as under:- 2.7 That the assessee being aggrieved by the “Impugned

Order” has preferred the instant appeal before this tribunal

and has raised the following grounds of appeal in the form

no. 36 against the “Impugned Order” which are as follows:-

3.

Record of Hearing

3.1 The hearing in the matter took place before this Tribunal

on 06.07.2026 when the Ld. AR for & on the behalf of the

Assessee appeared before us & interalia contended that the

“Impugned Order” is bad in law, illegal & not Proper. It

therefore deserves to be set aside. The AR has placed on the

record of this tribunal a paper book containing pages 1 to

44.

The Ld. AR contended that assessee is a trust which is

registered with the registrar of public trust vide registration

dated 03.12.2001. In this regard our attention was invited to

PB page 17 which is a copy of the registration certificate

issued by the office of “registrar of Public Trusts Indore”

wherein the registration number of the assessee trust is

shown as 749 dated 03.12.2001. The Ld. AR basis PB pages

12 to 16 submitted that the assessee trust and its accounts

are all audited and in this regard our attention was

repeatedly invited to PB pages 12 to 16. The Ld. AR then

stated that the order granting registration u/s 12AA of the

Act is dated 26.02.2020 PB pages 18 to 20 wef AY 2020-

21.

It was subsequently granted. The benefit of

registration was not granted for AY 2019-20 i.e. the year

under consideration. The AR submitted that the issue

raised in the instant appeal is covered by the decision of this

tribunal in ITA No.- 924/Ind/2018 dated 30.06.2022 in case

of M/s Barkartullah Vishwavidyalaya Bhopal V/s DCIT (E)

Bhopal. It was also additionally submitted that there is no

change in the object of the assessee trust. Reliance was placed on the Judgement of ITAT Agra Bench in ITA No.-

458/Agr/2026 (AY 2014-15) dated 22.06.2026 in case of

Shri 1008 Digambar Jain Atishay Kshetra Papourva Ji,

Tikamgarh V/s ITO (E) Gwalior. Per contra the Ld. DR

appearing for and on the behalf of the revenue submitted

that orders of the lower authorities are correct and proper.

Hearing was over and closed.

4.

Observations Findings & conclusions

4.1 We have to decide the legality, validity and proprietary of the

“Impugned Order” basis records of the case & the rival

submission canvassed before us.

4.2 We have carefully perused the records of the case and have

heard the submissions.

4.3 We basis records of the case & after hearing & further

upon examining the rival contentions of the Ld. AR & the Ld.

DR canvassed before us are of the considered opinion that

the “Impugned Order” has simply upheld the Impugned

Rectification Order”. There is non-consideration of grounds which were raised by the assessee which are found in the

“Impugned Order” at Para 3.2 internal page 2. We further

basis PB pages 18 to 20 observe that 12AA registration was

granted to the assessee trust on 26.02.2020 wef AY 2020-

21 whose benefit was not given to the assessee trust for AY

2019-20 i.e. the year under consideration. In this regard

we find that the ITAT order of Indore bench dated

30.06.2022 (supra) paragraph 8,9,11 as relevant which is

reproduced by us as below:- 4.4 We further also observe that the Ld. AR has rightly

placed reliance on the order of ITAT (Agra) supra and in this

regard we reproduce Para 11&12 of the aforesaid order which

is as under:- 4.5 In view of the premises drawn up by us we hold that for

purposes of section 11 for AY 2019-20 registration u/s 12AA

dated 26.02.2020 wef 2020-21 is relevant factor and same

should be considered and construed in favour of the

assessee for AY 2019-20 too in a manner know to law.

Under these facts and circumstances we set aside the

“Impugned Order” and direct the Ld. AO to recompute the

income after carrying out the necessary verification as

provided by law on the application and accumulation of

income. The assessee to be given opportunity in this regard.

5 Order

5.1 In result “Impugned Order” is set aside with directions as

aforesaid back to the file of the Ld. AO.

5.2 The appeal of the Assessee is allowed for statistical

purpose.

Pronounced in open court on 09.07.2026.

Sd/- Sd/-

(MANISH BORAD) (PARESH M JOSHI)

ACCOUNTANT MEMBER JUDICIAL MEMBER

Indore Dated : 09 /07/2026 Patel/Sr. PS Copies to: (1) The appellant (2) The respondent (3) CIT (4) CIT(A) (5) Departmental Representative (6) Guard File By order UE COPY Senior Private Secretary Income Tax Appellate Tribunal Indore Bench, Indore

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