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Facts
The assessee, a charitable trust registered under Section 12A since 1975, filed its return for AY 2021-22 declaring NIL income. The return was processed by CPC, which disallowed exemption under Section 11 due to the absence of a new registration under Section 12AB, raising a demand. The assessee had applied for re-registration under Section 12AB, which was granted later but effective from AY 2022-23.
Held
The Tribunal held that the assessee was eligible for exemption under Section 11 for AY 2021-22. The application for re-registration filed by the assessee was within the extended time allowed by CBDT circulars, making it valid and compliant with statutory requirements. Therefore, the adjustment made by CPC was liable to be deleted.
Key Issues
Whether the assessee charitable trust was eligible for exemption under Section 11 for AY 2021-22, despite a delay in obtaining fresh registration under Section 12AB, when the application was filed within the extended period allowed by CBDT?
Sections Cited
143(1), 250, 11, 12, 12A, 12AB
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “SMC” BENCH, AHMEDABAD
PER DR. B.R.R. KUMAR, VICE-PRESIDENT:-
This appeal has been filed by the Assessee against the order dated 03.03.2025 passed by the Ld. ADDL/JCIT(A), Panchkula (‘Ld. CIT(A)’ in short), under Section 250 of the Income-tax Act, 1961 (‘the Act’ in short), relating to the Assessment Year 2021-22.
The assessee has raised following grounds of appeal :-
“1. The learned ADDL.JCIT(APPEAL] grievously erred in law and on facts in dismissing the appeal of the appellant Trust against illegal intimation u/s 143(1) passed by ld CPC when the appellant Charitable Trust was registered since 1975 and activity of running charitable dispensary was not in dispute. The ld ADDL./JCIT (A) erred in not appreciating that due to frequent amendment's in provisions of section 11/12, the appellant did file application for fresh registration which was granted only from A.Υ. 2022-23. The exemption u/s 11/1 of the Act ought not to be disallowed due to technicality of procedure when genuineness ss of activity is not in doubt. It be so held now.
2. Without prejudice to the above ground, the Id ADDL./JCIT(A) also erred in law and on facts in confirming illegal intimation passed by Id CPC whereby
deduction of expenses / application for the purposes of the Trust running dispensary as per audited accounts was not given, it be so held now and deduction of Rs. 22,58,857/-as per accounts be directed to be given now.
3. Without prejudice to the above grounds, the Id ADDL/ICIT(A) also erred in law and on facts in not appreciating that the huge adjustment made by Id CPC by not allowing deduction of expenses incurred for the purposes of the Trust of Rs. 22,58,557/- without prior intimation/notice as per first proviso to section 143(1) made such intimation illegal and bad in law which deserved to be quashed. It be quashed now.
The Id ADDL./JCIY(A) also graciously erred both in law and on facts in not appreciating that the Id CPC patently went wrong in computing Gross receipts of Rs. 20,00,808/- as against net deficit is per audited accounts and as gross receipts could not be taxed and therefore as per settled legal position, the deduction of expenses/amount applied for purposes of the Trust also ought to be deducted from gross receipts as claimed. It be so held row.
5. On the facts and circumstances of the case, and on correct principles of accounting and law, there being no income after deducting the amount of expenses, the adjustment making total income at Rs. 20,00,880/- is patently wrong and against sanction of law. It be so held now and return of income be directed to be accepted in toto now.
6. Both the lower authorities failed adhere to principles of natural justice while making / confirming huge addition/disallowance by not properly considering the appellants explanations, grounds and submissions. The orders are thus illegal and invalid which needs to be quashed. It be so held now.”
Briefly stated facts are that the assessee is a charitable trust registered under section 12A of the Act, and engaged in the activity of running a charitable dispensary. The assessee filed its return of income for the year under consideration on 02.03.2022 declaring NIL income and claiming refund of Rs.53,330/-. The return was processed by the Centralized Processing Centre (CPC), Bangalore under Section 143(1) of the Act and intimation dated 25.10.2022 was issued determining total income at Rs.20,00,808/-, thereby raising a demand of Rs.5,32,480/- on the ground that the deduction u/s 11 of the Act was not allowable due to the absence of new registration details u/s 12AB in the return of income. The assessee had applied for re-registration u/s12AB by filing Form 10A on 29.03.2022 and was granted registration on 05.04.2022. However, the Ld. CIT(A) held that since the re-registration was applicable only from A.Y. 2022-23 onwards, exemption u/s 11 could not be allowed for the year under appeal i.e., A.Y. 2021-22.
3.1 The CPC disallowed the exemption claimed under section 11 of the Act on the ground that the assessee had not furnished a valid registration under section 12AB in the return. The assessee had applied for re-registration under section 12AB by filing Form 10A on 29.03.2022 and was granted registration on 05.04.2022. However, the Ld. CIT(A) held that since the re-registration was applicable only from A.Y. 2022-23 onwards, exemption under section 11 could not be allowed for the year under appeal i.e., A.Y. 2021-22.
4. Aggrieved by the order of the Ld. CIT(A), the assessee is now in appeal before the Tribunal.
Before us, the Ld. AR submitted that the Trust has been registered under section 12A since 1975, and its activities, particularly the running of a charitable dispensary, have never been doubted by the Department. The Ld. AR submitted that the assessee had filed application for fresh registration on 29.03.2022 and was granted registration on 05.04.2022 but it was from Asst. Year: 2022-23 to 2026-27 and not for A.Y. 2021-22. The Ld. AR contended that the application for registration as above was filed on 29.03.022, which was well within the extended time allowed by CBDT from time to time vide Circular No: 16/2021 dated 29.08.2011 whereby time for filing application for registration u/s 12A from 30th June 2021 to 31st March 2022 and the CBDT Circular again extended time vide Circular No: 7/2024 dated 23rd April 2024 tο 30.06.2024. The Ld. AR, therefore, argued that the assessee was eligible for registration w.e.f. A.Y. 2021-22 and exemption u/s 11/12 as claimed.
The Ld. DR, on the other hand, supported the orders of the authorities below.
We have heard both the parties and perused the material available on record. The main issue for adjudication in the present appeal relates to denial of exemption u/s 11 of the Act to the assessee Trust for A.Y. 2021-22 on the ground that valid registration u/s 12AB was not furnished. It is not in dispute that the assessee Trust had valid registration under section 12A since 1975. The assessee had filed its return for A.Y. 2021-22 on 02.03.2022, and subsequently, applied for registration under section 12AB by filing Form 10A on 29.03.2022. The said application was within the extended time allowed by CBDT Circular No. 16/2021, which extended the time for filing Form 10A up to 31.03.2022 and then again to 30.06.2024 vide Circular No: 7/2024 dated 23rd April 2024. Therefore, the application, in our considered opinion, was valid and in compliance with the statutory requirement.
7.1 In view of the above, we hold that the assessee was eligible for exemption under section 11 for the year under appeal and the adjustment made by CPC in intimation u/s 143(1) is liable to be deleted. The demand raised is accordingly directed to be deleted.
In the result, the appeal of the assessee is allowed.
The order is pronounced in the open Court on 25.09.2025.