Loading judgment…
Facts
The assessee, an Association of Persons (AOP) and charitable trust, filed its return for AY 2016-17 declaring Nil income. The gross receipts were Rs. 46,15,093, and it claimed application of Rs. 47,89,574 for charitable purposes. The return was processed under Section 143(1)(a), denying its claim as a charitable trust and adding back the gross receipts.
Held
The Tribunal observed that the assessee was granted registration under Section 12AA on 22.01.2018. Relying on the proviso to Section 12A, it held that the benefit of registration could apply to preceding assessment years for which proceedings were pending. Therefore, the matter was remitted back to the Assessing Officer to examine the activities and objects of the trust for the year in appeal.
Key Issues
Whether the benefit of registration under Section 12AA granted on 22.01.2018 can be extended to Assessment Year 2016-17, where assessment proceedings were pending at the time of registration.
Sections Cited
250, 143(1)(a), 139(4A), 12AA, 11, 12, 12A, 143(1)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, PUNE BENCHES “SMC”, PUNE
Before: DR.MANISH BORAD
आदेश / ORDER
PER DR. MANISH BORAD, ACCOUNTANT MEMBER :
This appeal filed by the assessee pertaining to the assessment year 2016-17 is directed against the order dated 17.03.2025 of Addl/JCIT(A)-5, Kolkata passed u/s.250 of the Income-tax Act, 1961 (hereinafter also called ‘the Act’) arising out of the Intimation Order dated 30.04.2018 passed u/s.143(1)(a) of the Act.
Assessee has raised following grounds of appeal :
(All grounds are on an alternate and without prejudice basis to each other) 1. The learned CIT(A), NFAC erred in law and on facts in confirming the total income of the appellant at Rs. 46,15,093 instead of retuned income of Rs.
2. Appellant contends that, registration of 12A, granted on 22-01-2018 has a bearing on the entire gamut of all pending assessment proceedings (in particular AY 2016-17) on the said date. As such, the issue of assessment proceedings for AY 2016-17 deserve to be revisited in it's entirety, since, key objects of the assessee are same since year 1995, till date.
The learned I-T authorities computed appellant's taxable "total income" at Rs. 46,15,093 without granting deduction for genuine and Bonafide expenses incurred for the object of the trust amounting to Rs. 47,89,574/-. Learned I-T authorities failed to appreciate that taxing of gross receipts (instead of taxing the net income) of the assessee is not the mandate of the Income-Tax Act.
4. Appellant contends that the appellant's innocent error in filing ROI in Form ITR-7 has been carried to an illogical extent; leading to taxation of the entire receipts of the assessee. Learned I-T authorities ought to have considered the 'genuine activity of appellant per se, instead of 'erroneously filed ITR-7'.
5. Appellant craves leave to add/alter/modify/amend/delete all or any of the grounds of appeal.
3. Brief facts of the case are that the assessee is an Association of persona (AOP) and filed its return of income for A.Y. 2016-17 on 28.06.2017 declaring Nil income. During the year, gross receipts of the assessee are Rs.46,15,093/- and the amount claimed to be applied for charitable purposes is Rs.47,89,574/-. Return processed u/s.143(1)(a) of the Act by Centralized Processing Centre (CPC) on 30.04.2018 denying the assessee’s claim being charitable trust and the claim of application of funds was denied and the gross receipts during the year at Rs.46,15,093/- were added back. Income assessed at Rs.46,15,090/-. Aggrieved assessee preferred appeal before ld.CIT(A) but failed to succeed as ld.CIT(A) observed that as the return of income is belated assessee failed to fulfil the conditions of section 139(4A). Further, ld.CIT(A) has observed that assessee has not filed Form 10B. Now the assessee is in appeal before this Tribunal.
Ld. Counsel for the assessee apart from contending that the expenditure incurred by the assessee trust are more than the gross receipts/voluntary contribution also stated that assessee has been granted registration u/s.12AA(1)(b)(i) of the Act vide order dated 22.01.2018 and at that point of time the assessment proceedings u/s.143(1)(a) were not completed. He further referred to proviso to Sarvoday Pratishthan section 12A prior to its omission by the Finance Act, 2023 effective from 01.04.2023 where it has been provided that where registration has been granted to the trust or institution u/s.12AA or section 12AB, then provisions of section 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 Authority 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. Referring to the said section, he submitted that the issue needs to be restored to the file of Jurisdictional Assessing Officer before whom assessee shall demonstrate that even for the impugned assessment year objects and activities of the assessee trust remain same. Therefore, the benefit of registration u/s.12AA of the Act shall be available to the assessee for A.Y. 2016-17 also.
On the other hand, ld. Departmental Representative supported the orders of the lower authorities and raised no objection if the matter is restored to the file of JAO for necessary verification about the objects and activities of the assessee trust.
I have heard the rival contentions and perused the record placed before me. I observe that the assessee is a charitable trust working under the Trust Deed made on 25.01.1993. Assessee has been granted registration u/s.12AA(1)(b)(i) of the Act vide order dated 22.01.2018 and applicable for F.Y. 2017-18 and onwards. In the return of income, assessee claimed application of income incurred towards genuine and bonafide charitable objects of the trust amounting to Rs.47,89,574/-. Major receipts of the assessee trust include rental income of Rs.14,46,157/- and income from Sports and Swimming activity at Rs.31,57,140/-. Application of income is mainly towards educational object at Rs.80,000/-, towards health and medical relief at Rs.46,69,896.50. Though the assessee has raised one of the ground that the expenditure incurred is higher than the gross receipts, therefore even if the assessee is not considered as registered trust u/s.12AA of the At even then also, no addition is called for in view of the settled judicial precedents. However, before me Ld. Counsel for the assessee asserted more for the applicability of proviso to section 12AA of the Act prior to its omission from 01.04.2023 onwards which reads as under :
"Provided further that where registration has been granted to the trust or institution under section 12AA or section 12AB, 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 the date of such registration and the objects and activities of such trust or institution remain the same for such preceding assessment year."
Quoting the above proviso, Ld. Counsel for the assessee is claiming that since A.Y. 2016-17 was pending before CPC at that point of time and even when the registration was available during the course of First Appellate proceedings, assessee deserves to get the benefit of exemption u/s.11 as it is registered u/s.12AA of the Act. At this juncture, it was asked that since registration u/s.12AA of the Act has been granted for F.Y. 2017-18 onwards, there has been no examination of the activities of the assessee trust for F.Y. 2015-16 relevant to A.Y. 2016-17 as to whether similar activities as per objects of the trust deed have been carried out and as have been examined by ld.CIT (Exemption) while granting registration to the assessee u/s.12AA of the Act on 22.01.2018. I find substantial merit in the contention of ld. Counsel for the assessee and therefore find it proper to remit back Sarvoday Pratishthan this issue to the file of Jurisdictional Assessing Officer. Ld. JAO shall examine all the issues raised on merits in the instant appeal along with settled judicial precedents and also examine the activities of the assessee trust for the year under appeal and also verify as to whether they are in consonance with the objects for which registration u/s.12AA of the Act is granted to the assessee trust on 22.01.2018. Needless to mention ld. JAO shall grant reasonable opportunity of hearing to the assessee. Impugned order is set aside and all the effective grounds of appeal raised by the assessee are allowed for statistical purposes.
In the result, appeal of the assessee is allowed for statistical purposes.
Order pronounced on this 17th day of June, 2025.