RKKR SHIKSHA FOUNDATION,GURGAON vs. ITO (EXEMPTIONS), FARIDABAD

ORDER PER H.S. SIDHU, JM Assessee has filed this Appeal against the impugned Order dated 17.11.2015 passed by the Ld. CIT(A), Gurgaon on the following grounds:-

passed by the Ld. CIT(A) confirming the addition of Rs.

1,58,27,052/- by the AO u/s. 143(3) is bad both in the eye of law and on facts.

2. On the facts and circumstances of the case, the ld.

CIT(A) has erred both on facts and in law in denying exemptions u/s. 11 / 12 of the Income Tax Act, 1961 on the ground that appellant had not been granted

Certificate of Registration u/s. 12A of the Act.

CIT(A) has erred in not appreciating that appellant is eligible for exemption u/s. 11/12 of the Act as Tribunal vide order dated 2.11.2010 directed the CIT to grant

Certificate of Registration u/s. 12A of the Act.

CIT(A) has erred in confirming income of Rs.

1,58,27,052 though the appellant had been given benefit of section 11/12 for AY 2010-11 and AY 2011-12 on the basis of ITAT order.

5. The appellant craves leave to add, amend or alter any of the grounds of appeal at or before the time of hearing.

2. The brief facts of the case are that the assessee filed its return declaring NIL income on 28.9.2012 and the same was processed. The case was selected for scrutiny and accordingly, statutory notices u/s. 143(2) of the I.T. Act, 1961 was issued on 23.9.2013. Later the case was transferred due to change in jurisdiction and again notices u/s. 142(1)/129 of the Act alongwith detailed questionnaire were issued on 5.12.2014. In response thereto, Asseessee’s AR attended and filed the information/details from time to time. The assessee Company is registered u/s. 25 of the Companies Act, 1956. No business activities had 2 been carried out by the assessee company during the previous year relevant to the assessment year under consideration. The only source of income is interest on FDR. The assesee in its return had claimed exemption u/s. 11 of the I. T. Act. Assessee was asked to furnish Certificate u/s. 12A for the relevant year. The assessee replied that registration u/s. 12A was not granted by the Ld. CIT, Faridabad. Against the order of the Ld. CIT, assessee appealed before the ITAT, Delhi which vide order dated 31.8.2010 (ITA NO. 758, 759/Del/2010) directed the CIT to grant registration u/s. 12A. As per the assessee, the CIT has not granted registration u/s. 12 till date. Therefore, the AO has observed that the assessee is not registered u/s. 12A and the assessee is not eligible for exemption u/s. 11. Thus, excess of income over expenditure amounting to Rs. 1,58,27,052/- (Rs. 16042305 – 215253) was treated as profits from business and professional and added back to the income of the assessee. Accordingly, the AO assessed the income of the assessee at RS. 1,58,27,050/- vide his order dated 16.3.2015 passed u/s. 143(3) of the I.T. Act, 1961.

3. Against the assessment order, the asseessee preferred an appeal before the Ld. CIT(A), who vide his impugned order dated 17.11.2015 has dismissed the appeal of the assessee by observing that the AO has denied the exemption claimed by the assessee u/s. 11/12 of the I.T. Act on the ground that the assessee society is not registered u/s. 12AA of the I.T.

Act for the relevant AY. The assessee contended that the ITAT vide its order dated 2.11.2010 had held that the assessee is eligible for 3 registration u/s. 12AA which should be granted. In this regard, the assessee has filed a copy of the order dated 20.5.2015 u/s. 12AA passed by the CIT(E), Chandigarh. Ld. CIT(A) observed that on perusal of the order of the Ld. CIT(E) it reveals that the assesse has been granted registration u/s. 12AA for the AY 2015-16 onwards. As such the assessee is not registered u/s. 12AA for the year under reference. Ld. CIT(A) has discussed this fact with the AR of the assessee who explained that the registration u/s. 12AA had been wrongly given by the CIT(E) w.e.f AY 2015-16 although the date of application u/s. 12A was 26.6.2009. The assessee contended that he was in fact eligible for registration u/s. 12AA w.e.f AY 2010-11 and as such the exemption claimed during the AY 2012-13 may be allowed to him. However, Ld. CIT(A) has observed that the fact remains that the assessee society is not registered u/s. 12AA for the AY under reference, therefore, the assessee is not eligible for the benefits of the deduction u/s. 11/12 of the I.T. Act and accordingly, dismissed the appeal of the Assessee vide his order dated 17.11.2015.

4. Against the order of the Ld. CIT(A), assessee is in appeal before the Tribunal.

“Order u/s. 154 of the I.T. Act, 1961

In continuation to Order u/s. 12AA dated 20.5.2015 passed by the Commissioner of Income Tax (Exemptions), Chandigarh, the year from which the benefit of registration u/s. 12AA needs to be given inadvertently written as “Assessment Year 2015-16” instead of “Assessment year 2009-10” in the case of M/s RKKR Shiksha Foundation, Plot No. 69, Sector-53, Village Waziarabad, Gurgaon, PAN No. AAECR3310B.

5.1 Ld. Counsel of the assessee during the hearing also filed the copy of the decision dated 1.9.2016 passed in CWP No. 17374 of 2015 (O&M) of the Hon’ble Punjab & Haryana High Court at Chandigarh wherein the Hon’ble High Court has held as under:-

Learned Counsel appearing on behalf of respondents No. 2 and 3 states that the orders under section 154 of the Income Tax Act, 1961 have been passed rectifying the order dated 20.5.2015 under Section 12AA of Act. This is communicated by a letter dated 19.8.2016 wherein it is stated that inadvertently the year from which the benefit of registration was written as “Assessment Year 2015-16 instead of “Assessment year 2009-10”. The same was accordingly rectified. A copy of the letter together with the enclosure is taken on record as marked ‘X’.

2. In view thereof the petitioner’s grievance so far as, this writ petition is concerned stands redressed. The consequential effect would have to be given in accordance with law. An appeal is pending before the CIT (Appeals) and before ITAT. The order of rectification shall be considered by the CIT(A) and the Tribunal while disposing of the appeals. We would request the expeditiously disposal of the appeals. The petitioner

shall be entitled to appear before the CIT(A) and the Tribunal to invite their attention to a copy of this order. 3. Disposed of.” 5.3 In view of the above, Ld. Counsel of the assessee has requested that keeping in view of the rectification order passed u/s., 154 dated 19.8.2016 passed by the Ld. CIT(E) and the decision dated 1.9.2016 of the Hon’ble High Court of Punjab and Haryana at Chandigarh, the Appeal of the assesee may be allowed and orders of the lower authorities may be set aside.

7.1 In the background of the aforesaid discussions and keeping in view of the orders of the Ld. CIT(E) and the decision of the Hon’ble High Court of Punjab and Haryana at Chandigarh, as aforesaid, the assessee is eligible for registration u/s. 12AA in the present assessment year i.e. AY 2012-13, as a result thereof, also eligible for exemption claimed during the AY 2012-13. Accordingly, the addition in dispute is not sustainable in the eyes of law. Hence, we set aside the orders of the lower authorities and delete the addition in dispute.