TELANGANA SAILING ASSOCIATION,HYDERABAD vs. COMMISSIONER OF INCOME TAX (EXEMPTION), HYDERABAD

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ITA 1416/HYD/2026Status: DisposedITAT Hyderabad04 November 2026AY 2026-2713 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal held that the CIT(E)'s rejection of the assessee's application for registration under Section 12AB on the technical ground of not furnishing proof of registration prior to April 1, 2021, was improper and unjustified. The Tribunal noted that the assessee had filed an application for registration on December 15, 2015, and claimed deemed registration as no order was passed within six months as per the then-existing Section 12AA(2). The Tribunal found that the CIT(E) failed to consider this crucial fact and the fate of the earlier application. Therefore, the impugned order of the CIT(E) was set aside. The matter was remanded to the CIT(E) to consider the facts regarding the December 15, 2015 application and the claim of deemed registration, and then decide the application on merits after providing an opportunity of hearing. The same directions were applied to the rejection of the Section 80G approval application, which was also remanded for fresh adjudication. The appeals were allowed for statistical purposes.

What were the facts?

The assessee, Telangana Sailing Association, filed appeals against orders of the Commissioner of Income Tax (Exemptions), Hyderabad, for Assessment Year 2026-2027. The orders rejected the assessee's applications for regular registration under Section 12AB and approval under Section 80G of the Income Tax Act, 1961. The assessee had initially applied for registration under Section 12A on December 15, 2015. No order was passed within six months, leading the assessee to claim deemed registration. Subsequently, under the new regime, the assessee obtained provisional registration in Form-10AC and then applied for renewal in Form-10AB. The CIT(E) rejected the renewal application, stating the assessee failed to furnish proof of registration prior to April 1, 2021.

What were the issues?

1. Whether the rejection of the assessee's application for regular registration under Section 12AB of the Income Tax Act, 1961, by the CIT(E) is legally sustainable, considering the assessee's claim of deemed registration based on an earlier application filed on December 15, 2015, for which no order was passed within the statutory period. 2. Whether the rejection of the assessee's application for approval under Section 80G of the Income Tax Act, 1961, by the CIT(E) is legally sustainable. Assessee's Contention: The assessee argued that its application filed on December 15, 2015, for registration under Section 12A, if not rejected within six months, resulted in deemed registration. The subsequent provisional registration and application for renewal were made in accordance with the law. The assessee relied on the fact that its income tax returns for Assessment Years 2020-2021 and 2021-2022 were processed by CPC allowing claims under Sections 11 and 12, indicating acceptance of its exempt status. The rejection by the CIT(E) was arbitrary and unjustified. Revenue's Contention: The revenue, through the learned DR, submitted that the CIT(E) correctly rejected the application as the assessee failed to furnish proof of registration prior to April 1, 2021, despite opportunities, making the renewal application unsustainable.

Which sections of the Income-tax Act were involved?

Section 12AB,Section 80G,Section 12A,Section 12AA(2),Section 11,Section 12,Section 143(1)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, HYDERABAD

Before: SHRI VIJAY PAL RAO & SHRI MANJUNATHA G.

For Respondent: DR Waseem UR Rehman
Pronounced: 04.11.2026

आदेश / ORDER PER VIJAY PAL RAO, VICE PRESIDENT:

These two appeals by the Assessee are directed against two separate Orders of the learned CIT(E), Hyderabad, whereby the application of the assessee for grant of regular registration u/sec.12AB of the Income Tax Act [in short "the Act"], 1961 as well as approval u/sec.80G of the Act were rejected by the learned CIT(E) for the assessment year 2026-2027. ITA.No.1416/Hyd./2026:

2.

The assessee has raised the following grounds of appeal:

“On the facts and in the circumstances of the case and in 1) law, the order passed by the Commissioner of Income Tax (Exemp ons), Hyderabad, (‘CIT(E)’) is erroneous and bad in law. 2) The Ld. CIT(E) erred in not renewing registration under sec on 12A. 3) The appellant craves leave to add, alter, modify, OR withdraw any of the above grounds at OR before the me of hearing, and to urge such any other grounds as may be necessary in the interest of natural justice.”

ITA.No.1417/Hyd./2026:

3.

The assessee has raised the following grounds of appeal:

“On the facts and in the circumstances of the case and in 1) law, the order passed by learned (‘Ld.’) Commissioner of Income tax (Exemptions), Hyderabad, (‘CIT(E)’) is erroneous and bad in law. 2) The Ld. CIT(E) erred in not renewing registration under sec on 80G of the IT act. 3) The appellant craves leave to add, alter, modify, OR withdraw any of the above grounds at OR before the me of hearing, and to urge such any other grounds as may be necessary in the interest of natural justice.”

4.

The learned Authorised Representative of the Assessee has submitted that the assessee is a society and registered under Andhra Pradesh Societies Registration Act, 2001 on 17.01.2015. The assessee also applied for registration u/sec.12A of the Act vide application dated 08.12.2015 filed on 15.12.2015. However, no order was passed by the learned CIT(E) either to grant registration or reject the application within the time specified under the Act. Therefore, the assessee was granted a deemed registration when no order was passed within a period of six months as provided under the Act. The learned Authorised Representative of the Assessee has further submitted that after the introduction of new registration regime in the year 2021 the assessee sought renewal of registration by filing application u/sec.12A of the Act in Form-10A in August 2021 wherein the society mentioned the fact of seeking registration vide application filed on 15.12.2015. The provisional registration was granted vide order dated 29.09.2021 in Form-10AC for a period of 05 years however, subsequently, the assessee applied for renewal of registration by filing Form-10AB in the month of September, 2025 within the statutory time limit provided under the Act which was rejected by the learned CIT(E) on the ground that the assessee is not eligible for seeking renewal of registration as the assessee failed to furnish the registration copy showing the registration prior to 01.04.2021. The learned Authorised Representative of the Assessee has thus submitted that when considering the correct facts, the rejection of application by the learned CIT(E) for granting registration u/sec.12A as well as approval u/sec.80G is highly arbitrary and unjustified once the case of the assessee is falling under the deemed registration granted on the application dated 15.12.2015. The learned Authorised Representative of the Assessee has referred to the said application filed at Page nos.2 to 5 of the paper book and also referred to the return of income processed u/sec.143(1) for the assessment years 2020-2021 and 2021-2022 whereby the CPC has allowed the claim of the assessee u/secs.11 and 12 of the Act. Thus, the learned Authorised Representative of the Assessee has submitted that the denial of registration by the learned CIT(E) is not sustainable in law when the assessee has rightly applied for renewal of registration as per the provisions of sec.12A(1)(ac)(i) of the Act. Hence, the impugned order of the learned CIT(E) may be set aside, and assessee be granted the regular registration u/sec.12A of the Act as well as approval u/sec.80G of the Act.

5.

On the other hand, the learned DR has submitted that the learned CIT(E) has given the finding that despite several opportunities the assessee failed to furnish the registration copy establishing the registration prior to 01.04.2021 therefore, in the absence of any proof of registration, the application of the assessee for renewal of the registration cannot be allowed and consequently, the same was rejected by the learned CIT(E). He has relied upon the impugned Orders of the learned CIT(E).

6.

We have considered the rival submissions as well as relevant material on record. The learned CIT(E) has rejected the application of the assessee filed in Form-10AB seeking regular registration/renewal of registration u/sec.12AB of the Act. There is no dispute that earlier provisional registration was granted by the CPC vide order dated 24.09.2021 by issuing Form-10AC for a period of 5 years and thereafter when the assessee applied for regular registration/renewal of registration the same was rejected by the learned CIT(E) vide impugned order as under:

“The assessee has filed an e-application in Form No.10AB seeking registration u/s 12AB of the Income-Tax act, 1961.

2.

Notices were issued to the assessee in respect of proceedings u/s 12A(1)(ac)(ii) to produce the registration certificate granted prior to 01.04.2025/ order in Form 10AD, along with other relevant information for verification. In response to the same, the assessee has submitted information. The CPC has issued the regular registration in Form No.10AC as per the provisions of 12A(1)(ac)(i), only those assesses are eligible for extension of registration (i.e. for period AY 2022-23 to AY 2026-27), who were already registered u/s 12A/12AA prior to 01.04.2021.

3.

However, the assessee has failed to furnish the registration copy evidencing registration prior to 01.04.2021, despite opportunity being provided. In the absence of proof of registration prior to 01.04.2021, the assesse's application for renewal of the said registration cannot be considered since the assessee registration from AY 2022-23 to AY 2026-27 itself is not valid registration.

4.

In view of the above facts, the present application filed in Form 10AB seeking renewal of registration u/s 12AB is treated as infructuous and herewith rejected.

BALA KRISHNA BATTULA CIT EXEMPTION), HYD” 6.1. Thus, in para-3 of the impugned order the learned CIT(E) has rejected the application of the assessee on technical grounds that the assessee is seeking renewal of registration without establishing that the assessee was granted registration prior to 01.04.2021. The assessee has filed copy of the application dated 09.12.2015 filed on 15.12.2015 placed at Page nos.3 and 5 of the paper book as under:

6.2. The assessee has now claimed that since no order was passed by the learned CIT(E) on the said application filed on 15.12.2015 within a period of six months from the end of the month in which application was filed as provided under sub-sec.(2) of sec.12AA of the Act as exist at the relevant point of time therefore, it will be a deemed registration granted to the assessee u/sec.12A of the Act. In respect of the claim, the assessee has filed copies of the orders passed by the CPC u/sec.143(1) of the Act for the assessment years 2020-2021 and 2021-2022 whereby the claim of the assessee u/secs.11 and 12 of the Act has been accepted. Thus, prima facie it appears that the application filed by the assessee for registration u/sec.12A of the Act on 15.12.2015 was not rejected by the learned CIT(E) within a period of six months and hence, it was necessary to consider all these relevant facts before rejecting the application on technical grounds by the learned CIT(E). Thus, the rejection of the application by the learned CIT(E) on this technical ground that assessee failed to show registration prior to 01.04.2021 without considering the relevant facts about the application of the assessee filed on 15.12.2015 and the fate of the said application for registration by any order passed within a period of six months as provided u/sec.12AA(2) of the Act is improper and unjustified. Accordingly, in the facts and circumstances of the case, the impugned order of the learned CIT(E) rejecting application on technical ground is set aside and matter is remanded to the record of the learned CIT(E) for considering this fact of filing application on 15.12.2015 for registration u/sec.12A of the Act and claim of the assessee as deemed registration in the absence of any order within the period of six months and accordingly, decide the application of the assessee on merits, after giving an appropriate opportunity of hearing to the assessee.

7.

In the result, appeal ITA.No.1416/Hyd./2026 of the Assessee is allowed for statistical purposes.

8.

The order passed by the learned CIT(E) rejecting approval u/sec.80G of the Act is identical and consequently rejection of application u/sec.12AB of the Act. Accordingly, in view of the matter in respect of registration u/sec.12AB remanded to the record of the learned CIT(E), this matter regarding grant of approval u/sec.80G of the Act is also remanded to the record of the learned CIT(E) for fresh adjudication on the same terms and directions.

9.

In the result, appeal ITA.No.1417/Hyd./2026 of the Assessee is allowed for statistical purposes.

To sum up, both the appeals of the Assessee are allowed for statistical purposes. A copy of this common order is placed in the respective case files

Order pronounced in the open court on 04.11.2026.

Sd/- Sd/- MANJUNATHA G VIJAY PAL RAO ACCOUNTANT MEMBER VICE PRESIDENT Hyderabad, Dated 04th November, 2026

VBP Copy to: TELANGANA SAILING ASSOCIATION, C-23 FF, STRELING VILLA, 1 VIKRAMPURI, SECUNDERABAD-500009, TELANGANA COMMISSIONER OF INCOME TAX (EXEMPTION), 2ND FLOOR, AAYKAR 2 BHAWAN, BASHEERBAGH, HYDERABAD-500004, TELANGANA 3 THE PR. CIT, HYDERABAD 4 THE D.R., ITAT, HYDERABAD B-BENCH, HYDERABAD. 5 GUARD FILE TRUE COPY Digitally signed VADREVU by VADREVU PRASADA RAO PRASADA Date: ASSISTANT REGISTRAR / RAO 2026.11.04 I.T.A.T., HYDERABAD 14:28:02 +05'30'

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