DARUL YATHAMA HYDERABAD DECCAN,HYDERABAD vs INCOME TAX OFFICER(EXEMPTION), WARD-2., HYDERABAD

Income Tax Appellate Tribunal, HYDERABAD BENCHES “A”, HYDERABAD

Before: SMT. P. MADHAVI DEVI & SHRI B. RAMAKOTAIAH

PER B. RAMAKOTAIAH, A.M. :

This is an appeal by assessee against the order of the Commissioner of Income Tax (Appeals)-9, Hyderabad, dated 03-03-2017 on the issue of extending the benefit of Section 12A of the Income Tax Act [Act] for the impugned AY. 2012-13.

Briefly stated, assessee filed its return of income for the AY. 2012-13 on 05-12-2012 declaring total income at NIL. Originally, assessee request for registration u/s. 12A was denied by the DIT(Exemptions) vide order dt. 27-02-2013 and

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as the assessee does not have registration, exemption u/s. 11 was denied and excess income over expenditure amounting to Rs. 9,17,395/- was assessed to tax. During the appellate proceedings, consequent to the order of ITAT dt. 20-01-2016, the DIT(Exemptions) has granted registration u/s. 12A of the Act, however, w.e.f. 08-08-2012. Since assessee is not having registration u/s. 12A for assessment year under consideration ie. AY. 2012-13, Ld.CIT(A) did not find any infirmity in the order of AO denying exemption u/s. 11 and dismissed the appeal of assessee. Assessee is aggrieved and raised the following grounds:

“1. The learned CIT(A) erred in facts and law while passing order u/s. 250 of the Income Tax Act, 1961.

The learned CIT(A) erred in confirming the order of Assessing Officer denying exemption u/s. 11 on the basis that Assessee is not having registration u/s. 12A for the relevant Assessment Year ignoring the fact that assessee has been granted registration by DIT(E) vide order dated 26/12/2012, which would apply to all the preceding assessment years for which assessment proceedings are pending 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.

The learned CIT(A) erred in not considering the retrospective nature of amendment in section 12A made by finance act 2014 by inserting first proviso to section 12A(2) based on which assessee is eligible for claiming exemption u/s. 11 of the Income Tax Act, 1961”.

It was submitted that assessee originally filed Form No. 10A and 10G on 14-12-2011, i.e., F.Y. 2011-12 with respect to A.Y. 2012-13. This confirms vide notice dated 27-03-2012 by ITO (Hqrs) O/o. Director of Income Tax

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(Exemption) where they have acknowledged the application filed in Form No. 10A/10G on 14-12-2011. There was one more notice dated 05-06-2012 in which they referred application filed in Form No. 10A/10G on 14-12-2011. Since they could not locate the file, subsequently assessee has once again filed the application on 08-08-2012. As the said application was rejected, assessee filed appeal before ITAT vide ITA No. 704/705/Hyd/2013. Hon'ble ITAT has set aside the order. Subsequently the DIT(E) granted the registration from 08-08-2012. Since the registration was given with effect from 08-08-2012, AO has not given the benefit of registration with effect from 14-12-2011 where the first application was made.

3.1. It was contended that the registration should be made applicable for AY 2012-13 also as applied during that year and also for the reason that assessment was pending as on the day of granting registration. Ld. Counsel relied on the Co-ordinate Bench decision in the case of Sahara Educational Society, Warangal in ITA No. 772/Hyd/2016 and Sri Bhanushali Mitra Mandal Trust in ITA No. 2515/Ahd/2015 in this regard.

Ld.DR relied on the orders of the Ld.CIT(A) to submit that there is no registration for AY. 2012-13.

We have considered the rival contentions and perused the documents placed on record. There is evidence that assessee has originally applied by filing Form-10A and

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10G on 14-12-2011. Office of the DIT(Exemptions) has issued notices dt. 27-03-2012 and also on 05-06-2012. The fate of those notices and proceedings could not be ascertained nor controverted by the Ld.DR. Since the DIT(Exemptions) granted registration on the revised application filed on 08-08-2012, we are of the opinion that the DIT(Exemptions) could have extended the benefit w.e.f. 14-12-2011 on the date on which assessee has originally filed. Not only that since the law is amended, the registration granted would be effective for all the pending assessment years.

5.1. In the case of Sahara Educational Society, it was held as under:

“As per the amended provision, any proceeding pending with AO on the date of registration, such pending proceeding/assessment, the assessee is eligible to get the benefit u/s 11 & 12 of the Act. In the given case, the assessment for AY 2011-12 was completed on 18/03/2014, i.e. on the date of registration, the assessment for AY 2011-12 was pending with the AO. Accordingly, we direct AO to extend the benefit of deduction u/s 11 to AY 2011-12 which is under dispute. Moreover, as per the ITA No. 772/H/16 Sahasra Educational Society amended provision, the object of the society should remain same in the pending year of proceedings and the year in which registration is granted. In the case before us also, the objects of the society remain same”.

5.2. In the case of Sri Bhanushali Mitra Mandal Trust, it was held as under:

"When Section 12A of the Act was amended by introducing new provisos to subsection (2) of Section 12A by Finance Act, 2014 with effect from 01.10.2014, the assessment orders Asst. Year 2011-12 passed by the assessing officer in respect of the present assessee

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were pending in appeal before the first appellate authority. During such pendency, the assessee was granted registration u/s. 12AA of the Act on 17.12.2013 w.e.f the assessment year 2013-14. The appeal is the continuation of the original proceedings and that the power of the Commissioner of Income-tax was co-terminus with that of the assessing officer were two well established principles of law. In view of the above and going by the principle of purposive interpretation of statues, an assessment proceeding which is pending in appeal before the appellate authority should be deemed to be 'assessment proceedings pending before the assessing officer' within the meaning of that term as envisaged under the proviso. It follows there-from that the assessee which obtained registration u/s 12AA of the Act during the pendency of appeal was entitled for exemption claimed u/s 11 of the Act."

Under the proviso to Section 12A(2) the assessee is eligible for the benefit of registration U/s 12A for A.Y. 2012-13”.

5.3. Respectfully following the Co-ordinate Bench decisions, we are of the opinion that the benefit of Section 11 can be extended to the impugned assessment year as assessee has originally applied during the assessment year as well as the registration granted is also effective. AO is directed to grant the benefit u/s. 11 for the impugned assessment year. Grounds are allowed.

In the result, the appeal of assessee is allowed.

Order pronounced in the open court on 8th June, 2018

Sd/- Sd/- (P. MADHAVI DEVI) (B. RAMAKOTAIAH) JUDICIAL MEMBER ACCOUNTANT MEMBER Hyderabad, Dated 8th June, 2018 TNMM

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Copy to : 1. Darul Yathamma Hyderabad Deccan, 22-2-780, Noor Khan Bazar, New Mallepally, Hyderabad.

Income Tax Officer(Exemptions), Ward-2, Hyderabad.

CIT(Appeals)-9, Hyderabad.

CIT(Exemptions)-Hyderabad.

D.R. ITAT, Hyderabad.

Guard File.

DARUL YATHAMA HYDERABAD DECCAN,HYDERABAD vs. INCOME TAX OFFICER(EXEMPTION), WARD-2., HYDERABAD