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Income Tax Appellate Tribunal, JAIPUR BENCH ‘SMC` JAIPUR
Before: SHRI SANDEEP GOSAIN, JM & SHRI RATHOD KAMLESH JAYANTBHAI, AM vk;dj vihy la-@ITA No. 142/JP/2022
This is an appeal filed by the assessee against the order of ld. Commissioner of Income-tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi, dated 22.03.2022 for the assessment year 2015-16 passed u/s 250 of the Income Tax Act, 1961. The assessee has raised the following grounds of appeal :-
“ In facts and circumstances of the case as well as in law the lower authorities have grossly erred and passed an impugned order and rejected the application which moved u/s 154 for rectification having purely of prejudice mind without going on the genuine facts of the case as the assessee appellant is entitled to get the benefit of expenditure claimed u/s 11 according to the provisions of the Act. So the order passed u/s 154 to rejecting the claim of exemption is absolutely illegal and beyond the facts. Therefore requesting with submit kindly allow the appeal to giving the relief in whole in favour of the assessee treating to the trust registered u/s 12AA.
The brief facts of the case are that the assessee appellant filed its return of income for the A.Y. 2015-16 on 28.09.2015 showing NIL income and claiming exemption u/s 11 & 12 of the IT Act. The CPC processed the return of income under section 143(1) by adding Rs. 8,64,984/- under the income from house property and raised a demand of Rs. 5,79,337/-. Subsequently, the appellant filed a rectification petition before the ITO Exemption Ward, Ajmer and the ITO exemption Ward, Ajmer rejected the application made by the appellant under section 154 of the Act vide order dated 10.02.2020 stating that “the order of Registration under section 12A(1)(b) of the Income Tax Act, 1961 has been passed by the Competent Authority on 06.05.2016 and the same is effective from 01.05.2016 i.e. from A.Y. 2016-17.
Therefore, the benefit of section 11 is applicable from AY 2016-17 and not from AY 2015-16. In view of this, the application made by the assessee trust under section 154 of the IT Act is hereby rejected.” Being aggrieved, the assessee preferred appeal before ld. CIT (A). The ld. CIT (A) upheld the order of the AO by observing that section 12A(1) stipulates the condition for registration of the trust under section 12AA for income to be exempt u/s 11 & 12. The appellant is admittedly not registered u/s 12AA during the assessment year under consideration, so the benefit of exemption u/s 11 & 12 shall not apply thereto. Therefore, the appellant is not entitled to an exemption of its income on its application under section 11 and 12 of the Act for the assessment year under consideration.
Now the assessee is in appeal before us.
Before us, the ld. A/R for the assessee submitted that the assessee trust is regularly filing its return of income from the very beginning in the status of a Trust and claiming expenditure/expenses under section 11 of the Act from the application of income. The detailed chart wherein the assessee had already claimed expenses incurred under section 11 is reproduced below :-
Asstt. Year Application of income Expenses incurred Surplus (Gross Receipts) u/s 11 income/Loss 2012-13 517520/- 409825/- 107695/- 2013-14 6375445/- 4505783/- 1869662/- 2014-15 2118299/- 4798271/- -2679972/- It was also submitted that the assessee trust had already been accorded Registration under section 12AA vide order dated 11.07.1966. However, because of change in the system of the Department, the case of the asseessee trust was transferred to New Ward (Exemption). Thus the assessee had to again sought fresh Registration under section 12AA which was accordingly granted on 06.05.2016 and in this way the assessee trust is Registered as General Public Utility Trust, constituted by Trust Deed originally indicating its object. It is important to mention here that during the previous assessment years i.e. 2012-13, 13-14 and 14-15 on the basis of Registration under section 12AA dated 06/05/2016 the assessee was allowed the expenditure/expenses under section 11 of the Act.
On the other hand, the ld. D/R supported the order of the ld. CIT (A).
We have heard rival contentions and perused the material available on record and also gone through the orders of the authorities below. During the course of appeal proceedings, the appellant submitted that it had filed its return of income declaring the gross total income at Rs. NIL on 28.09.2015 in which the income has been shown at Rs. 20,31,256/- and application of income at Rs. 25,96,210/-. It claimed that it is a trust and is basically a public utility charitable trust and since long span of time regularly filing its return of Income tax and claiming the deductions of expenses u/s 11 against the income so earned. It had also filed revised return on 07.03.2017 under section 139(5) which was treated as defective by the CPC due to non-auditing of books of account. The CPC has processed the return vide Order dated 02.01.2018 and raised the demand of Rs. 5,79,340/- by assessing the income from house property at Rs. 28,83,279/- and denying the claim of exemption. The appellant also contended that in respect of rectification application filed under section 154 against intimation under section 143(1) is based on the actual genuine facts of the case. The trust has filed an application for registration u/s 12AA of Income Tax Act, 1961 and ld. Commissioner of Income Tax (Exemption), Jaipur granted registration certificate under section 12AA vide Unique Registration Number AABTM 1605N/08/15-16/T-0384/12AA dated 06.05.2016. Thus the appellant requested to allow the deduction of expenses so claimed fully entitled to get which made for public charitable purpose according to the provisions of the Act.
5.1 Therefore, looking into the entirety of facts and circumstances that the assessee trust is registered under section 12AA w.e.f. 11.07.1966 and continuously getting benefit of section 11 of the IT Act, however, because of change in the system of the Department all the cases were transferred to New Ward (Exemption), therefore, technically the assessee trust again applied registration which was 5 Maheshwari Samaz Sampati Trust, Bhilwara. granted vide order dated 06.05.2016. Even the department while considering the entire facts of the case had already allowed expenses under section 11 of the Act for the assessment years 2012-13, 13-14 and 14-15. Therefore, keeping in view the principles of natural justice and consistency, we direct the AO to give benefit of section 11 to the assessee for the year under consideration. The order of ld. CIT (A) is set aside.
In the result, appeal of the assessee is allowed.
Order pronounced in the open Court on 10/08/2022.