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Income Tax Appellate Tribunal, A BENCH, PUNE
Before: SHRI S.S. GODARA & DR. DIPAK P. RIPOTE
BEFORE SHRI S.S. GODARA, JUDICIAL MEMBER AND DR. DIPAK P. RIPOTE, ACCOUNTANT MEMBER to 2212/PUN/2017 (Assessment Years: 2003-04 to 2006-07) SETU Ahmednagar ITO (Exemption), Ward-1 Collector Office Kendriya Rajaswa Bhavan Vs. Ahmednagar 414001 Gadkari Chowk Nasik 422022 PAN – AAHTS3279C Appellant Respondent Appellant by: Shri Hari Krishan Respondent by: Shri S.P. Walimbe Date of Hearing: 26.04.2022 Date of Pronouncement: 06.05.2022 O R D E R Per S.S. Godara, JM These assessee’s four appeals for AYs 2003-04 to 2006-07 arise against the CIT(A)-3, Nashik’s common order dated 25.07.2017 passed in case Nos Nsk/CIT(A)-03/11-14/2015-16 involving proceedings under Section 143(3) of the Income Tax Act, 1961 (in short the Act); respectively.
Heard both the parties. Case files perused.
It emerges at the outset that the assessee herein has raised its identical sole substantial ground in all these four appeals that both the lower authorities have erred in law and on facts in denying it section 11 exemption for the reason that it does not carry any Section 12A/12AA registration.
We note during the course of hearing that the relevant factual matrix herein is indeed in a very narrow compass. Suffice to say, there would be hardly any claim of Section 11 exemption in absence of Section 12A/12AA registration in light of CIT vs. UP Forest Corporation (1988) 97 Taxman 259 (SC) settling the law to this effect. Coming to the issue between the parties herein, these case files indicate that this assessee had filed its twin Section 12A registration(s) on 04.05.2006 and 31.08.2009; respectively. And also that much water has flown down the stream since then as the lower authorities are yet to adjudicate the said former application despite the fact that this tribunal’s coordinate bench’s order in dated 25.04.2018 had restored the matter back to the competent authority and a time period of four years has elapsed thereafter. So far as the assessee's latter registration application dated 31.08.2009 is concerned, there is no quarrel between the parties that the CIT, Pune has accepted the same on 10.07.2014 after various rounds of litigation. The assessee indeed carries Section 12A registration therefore.
Now comes the issues between the parties. The assessee’s endeavour all along seeks to quote Section 12A(2)(1) proviso that once its latter application seeking registration stands accepted, it is entitled for the impugned exemption under section 11 of the Act as section 12A(2) 1st proviso since covered under the statutory expression reads as follows: -
“12A(2) Where an application has been made on or after the 1st day of June, 2007, the provisions of sections 11 and 12 shall apply in relation to the income of such trust or institution from the assessment year immediately following the financial year in which such application is made: Provided further that where registration has been granted to the trust or institution under section 12AA ], 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: Provided that no action under section 147 shall be taken by the Assessing Officer in case of such trust or institution for any assessment year preceding the aforesaid assessment year only for non-registration of such trust or institution for the said assessment year: Provided also that provisions contained in the first and second proviso shall not apply in case of any trust or institution which was refused registration or the registration granted to it was cancelled at any time under [section 12AA.]” 5. The Revenue at this stage invited our attention to the CIT(A)’s detailed discussion that the foregoing statutory proviso would not be read in isolation but in light of the main provision that Section 12A(2) as applicable in case of Section 12A registration filed on or after 01.06.2007 only. The CIT(A) has decided the issue against the assessee as under: -
8.2. On going through submission, assessee has stated that as per proviso to section 12A(2), as the assessments were pending on the date of grant of registration by the CIT, the assessee will be eligible to benefit of exemption u/s 11 for all the assessment years. The plea of the assessee is that the reliance on judqment of Supreme Court in the case of Society for promotion of Education is only a without prejudice ground. After' considering the plea of the assessee and in view of various judgments discussed above, it is held by the courts that the proviso to section 12A(2) being beneficial has been considered as retrospective and would apply to proceedings pending before first appellate authority, if the assessee obtained registration u/s 12AA and claimed exemption u/s 11. However, it is important to note that section 12A(2), as reproduced above is applicable only for applications which are made after 01.06.2007 and for Assessment years immediately following the financial year in which the application is made. The proviso to section 12A(2) has to be read in context of main section 12A(2). Therefore going by the decision of Hon'ble Supreme Court in the case of Society for Promotion of Education and the decision of SNDP Yogam has to be considered together. In my considered opinion, the assessee is not registered u/s 12A for AY 2003-04 to 2006-07, therefore even if the assessment proceedings are pending, the assessee cannot be given benefit of deemed registration" for period earlier to grant of deemed registration. Further, the assessee had filed application before the CIT (Exemptions) for rectification of order dated 26.02.2015 which is pending before him for disposal. As submitted by letter dated 02.5.2017, the assessee has also filed appeal before ITAT Pune vide appeal no. 1610/PUN-2014 against the order of the CIT. The assessee may consider approaching the AO/CIT depending upon the outcome of the said rectification/ order of the ITAT.”
We have given our thoughtful consideration to the foregoing rival pleadings and find no merit in Revenue’s stand in principle. This is primarily for the reason that once the designated authority is yet to decide the assessee’s former registration application filed on 04.05.2006, its stand all along to decline assessee’s exemption without awaiting for the final outcome thereof is hardly justifiable. That apart, the Revenue’s stand seeking to invoke Section 12A(2) only regarding the application filed on or thereafter also supports the assessee as it had submitted its latter application on 31.08.2009 (supra). Learned DR could hardly dispute the fact that the Assessing Officer had framed all these four impugned assessments on 20th of March, 2015 only and on the said date, the assessee had already been granted registration.
The Revenue further argued in light of CIT(A)’s discussion that Section 12(2) 1st proviso is applicable only in the specified circumstances. It also placed strong reliance on the CIT(A)’s findings that such a benefit of deemed registration would not be granted for the preceding period. The same is found to be contrary to the CBDT circular No1/15 making it clear that an assessee is entitled for all the benefits flowing from the foregoing statutory provision if the objects and activities of such a trust or institution in the relevant assessment year are the same as those on the basis of which such registration has been granted. Faced with this situation, we are of the opinion that the Assessing Officer needs to re-examine the assessee’s entire issue afresh independently after awaiting the final outcome of the competent authority’s order in its former application seeking 12A registration (supra). We accordingly restore the assessee’s instant sole issue back to the Assessing Officer in above terms with the liberty that it may also file all supporting evidence in consequential proceedings, if any. Ordered accordingly.
These assesse’s four appeals are allowed for statistical purposes in above terms. A copy of this common order be placed in the respective case files.