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Facts
The assessee, a religious institution, claimed exemption under Section 10(23BBA) of the Income Tax Act for AY 2015-16. The Assessing Officer disallowed this exemption, stating that Section 10(23BBA) applies only to bodies established under Central, State, or Provincial Acts. The CIT(A) upheld this decision. The assessee also obtained registration under Section 12AA of the Act for AY 2022-23 to 2026-27 during the pendency of its appeal.
Held
The Tribunal noted that the assessee is a notified religious institution under the Tamil Nadu HR&CE Act, not a body established by a specific statute for which Section 10(23BBA) exemption is intended. However, considering the assessee obtained registration under Section 12AA during the pendency of appeal and following judicial precedents, the Tribunal held that the assessee is eligible for exemption under Section 11.
Key Issues
Whether the assessee is eligible for exemption under Section 10(23BBA) or alternatively under Section 11 of the Income Tax Act, considering its registration under Section 12AA and the interpretation of the second proviso to Section 12A(2).
Sections Cited
10(23BBA), 143(3), 12A, 12AA, 12AB, 11
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Income Tax Appellate Tribunal, ‘B’ BENCH: CHENNAI
Before: SHRI MAHAVIR SINGH & SHRI S.R. RAGHUNATHA
per second proviso to Section 12A(2) of the Act, which reads as follows : “Provided further that where registration bas 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 rust or institution remain the same for such preceding assessment year”
We note that the assessee has relied on the following decisions of the various courts, which are in favour of the assessee’s claim of exemption u/s.11 in the present facts of the case.
a) CIT vs. Mayur Foundation (supra), b) SNDP Yogam vs ADIT (supra) c) Shree Bhanushali Mitra Mandal Trust vs. ITO (supra), 10 -: 14. In the present facts and circumstances of the cases, we note that the assessee is a notified religious institution as enumerated under the Tamil Nadu HR&CE Act, 1959 and obtained the registration U/s.12AA of the Act was granted by the CIT(E) vide its order No.AABTK6034B22CH01 dated 21/03/2023 w.e.f. assessment years 2022-23 to 2026-27 during the pendency of the appeal proceedings. As per the second proviso to Section 12A(2) of the Act, the assessee obtained registration before the disposal of the appeal by the Ld.CIT(A), and respectfully following the decisions of the Hon’ble courts (supra) relied by the assessee in support of the claim exemption U/s.11, we are inclined to allow the appeal of the assessee and direct the AO to re-compute the total income of the assessee by allowing exemption U/s.11 of the Act.
In the result, the appeal of the assessee is allowed. Order pronounced on 30th August, 2024.