AKSHAY ACADEMY,INDORE, M.P. vs. THE INCOME TAX OFFICER, NFAC, DELHI, THE INCOME TAX OFFICER, NFAC, DELHI

Per Vijay Pal Rao, JM :

This appeal by assessee is directed against the order dated 25.01.2024 of the Commissioner of Income Tax (Appeal) National Faceless Appeal Centre (NFAC) Delhi, for A.Y.2018-19. The assesse has raised following grounds of appeal:

“1.That on the facts and in the circumstances of the case and in law, the Ld CIT(A) erred confirming the action of the Ld Assessing Officer in denying the benefit of exemption under section 11 and 12 of the income-tax Act, 1961 and assessing the total income of the appellant at Rs. 7,56,19,050/- without properly appreciating the facts of the

ITANo.199/Ind/2024 Akshay Academy case and submissions filed before him/her even when registration order under section 12AA of the Income-tax Act, 1961 in the case of the appellant was duly granted to the appellant on 28-09-2019 i.e. during the course of pendency of assessment proceedings for Assessment Year 2018-19 and the object & activities of the appellant remained same as compared to the year of registration and therefore, the appellant was eligible for benefit of section 11 and 12 as per section 12A of the Income- tax Act, 1961 for Assessment Year 2018-19 also. That on the facts and in the circumstances of the case and in law, the Ld CIT(A) erred confirming the action of the Ld Assessing Officer in denying the benefit of exemption under section 11 and 12 of the income-tax Act, 1961 and assessing the total income of the appellant at Rs. 7,56,19,050/- by stating that the appellant has not claimed exemption under section 11 and 12 of the Act by way of filing of revised income-tax return even when the appellant had duly longed additional claim to allow exemption under section 11 and 12 of the Act as eligible to the appellant during the course of assessment proceedings itself. 3.That on the facts and in the circumstances of the case and in law, the Ld CIT(A) erred confirming the action of the Ld Assessing Officer in denying the benefit of exemption under section 11 and 12 of the income-tax Act, 1961 and assessing the total income of the appellant at Rs. 7,56,19,050/- by stating that the appellant has not filed audit report in Form No. 10B within time even when the appellant has duly filed Form No. 10B during the course of assessment proceedings itself. 4. That on the facts and in the circumstances of the case and in law, the Ld CIT(A) erred confirming the action of the Ld Assessing Officer in denying the benefit of exemption under section 11 and 12 of the income-tax Act, 1961 and assessing the total income of the appellant at Rs. 7,56,19,050/- even when, in any case, only net income i.e. of Rs. 5,10,38,529/- can be subject to tax. 5.The appellant reserves the right to add, alter and modify the grounds of appeal as taken by it.” 2. The assesse trust has filed its return of income for the year under consideration on 18.03.2019 declaring total income at nil

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ITANo.199/Ind/2024 Akshay Academy after claiming exemption u/s 10(23C)(iiiad) of the Act. In the scrutiny assessment the AO noted that the assesse has declared gross receipt at Rs.7,56,19,050/- which is more than the prescribed monetary limit for claiming exemption u/s 10(23C)(iiiad) of the Act and therefore, the said claim of the assessee cannot be allowed. During the assessment proceeding the assesse’s vide letter dated 30.01.2021 explained that the claim of exemption u/s 10(23C)(iiiad) of the Act was wrongly made however, assessee was registered u/s 12AA and is entitled to exemption u/s 11 & 12 of the Act and accordingly requested the AO to allow the claim of exemption u/s 11& 12 of the Act. The AO denied the claim of exemption u/s 11 & 12 of the Act on the ground that the assesse has not filed revised return of income for making a new claim which is not raised in the original return of income by placing the reliance on the judgment of Hon’ble Supreme Court in case of Goetze (India) Limited vs. CIT 284 ITR 323. The AO further observed that the assesse even not filed the audit report in form 10B within stipulated time. Aggrived by the order of the AO the assessee filed appeal before the CIT(A) but could not succeed.

ITANo.199/Ind/2024 Akshay Academy 12A(2) of the Act and submitted that the provisions of section 11 & 12 shall apply in respect of the income derived from the property held under the trust of any assessment year preceding the assessment year for which the registration u/s 12A has been granted and the assessment proceeding of the preceding assessment year is pending before the AO as on the date of such registration subject to the conditions that objects and activities of such trust or institution remain the same. Thus, Ld. AR has submitted that when the registration u/s 12A was granted to the assessee during the pending of the assessment year under consideration then the claim of exemption u/s 11 & 12 cannot be denied by the AO on the ground of non-filing of revised return of income. Ld. AR has thus submitted that the assessee reiterated its claim of exemption u/s 11 & 12 before the CIT(A) but it was not accepted even by the CIT(A) which has no embargo for entertaining the claim not made in the return of income. Thus, Ld. AR has submitted that in view of second proviso of 12A(2) of the Act the assesse is entitled for exemption u/s 11 & 12 of the Act. In support of his contention he has relied upon following decisions:

(i) M/s Barkatullah Vishwavidyalaya vs. DCIT(E) in ITANo.924/Ind/2018

(ii) Madhya Pradesh Council for Vocational Education & Training vs. CIT(E) in ITANos. 176 & 177/Ind/2022

3.1 Ld. AR has further submitted that during the course of assessment proceedings the assessee filed form no.10B placed at Page 4 of 19

ITANo.199/Ind/2024 Akshay Academy page no.67 to 69 of the paper book. The assesse also filed declaration to the fact that there is no change in the objects and activities of the assessee trust since inception which is placed at page no.70 of the paper book. Ld. AR has submitted that the assessee statistics all the conditions prescribed in the proviso to section 12A(2) of the Act. He has also relied upon CBDT circular no.173 of 2019 dated 13th April 2019 as well as the decision of the Rajkot Bench of the Tribunal in case of Shri Rajkot Vishashrimali Jain Samaj v. ITO 200 ITD 662.

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ITANo.199/Ind/2024 Akshay Academy be allowed which was also realized by the assesse while making a fresh claim before the AO during the assessment proceedings which is referred by the AO in para 2.2 as under:

“2.2 Further, the assessee vide his letter uploaded on 30.1.2021 has stated that Deduction under section 10(23C) (iiiad) is claimed incorrectly when gross receipts of education society in A.Y. 2018-19 is more than 1 Cr. Society Apologies' for above mistake incurred in filing income tax return, Society members relied on professional assuming he will correctly file societies income tax return. Mistake in filing the return was unintentional and not on part of the society but consultant who on wrong assumption thought society being education institute income is exempt from tax under provisions of sections 10(23C) without appreciating that gross receipt of the society is more than 1 cr. Society is now filing before you revised computation of income, Audit Report in form 10B and proof of Tax and Interest paid with request to accept this revised computation in assessment proceedings. Society is engaged in education activities which are covered u/s 2(15) of Income Tax Act. It is registered under section 12AA and entitled to claim deduction/exemption under section 11. Society request that since they have paid tax along with interest no penalty be levied on them as society is running education institute which are already suffering from financial stress due to covid 19 pandemic/Society prays that lenient view be taken in the case having regard to the fact and circumstance of the case and voluntary tax payment made by the society." In this regard the reliance is placed on the landmark decision of the Hon'ble Supreme Court in the case of Goetze (India) Limited Vs CIT (284 ITR 323) wherein the Apex court has held that "it is necessary for an assessee to revise its return of income for raising any new claim which is not raised in the original return of income". In the instant case the assessee had not revised his Return of Income to claim new exemption for the A.Y. 2018-19. Not even Audit

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ITANo.199/Ind/2024 Akshay Academy Report in Form No. 10B not filed for the A.Y. 2018-19 within the stipulated time.” 5.1 The AO has not disputed the fact that during the pendency of the assessment proceedings the assessee was granted registration u/s 12AA vide order dated 28th September 2019 w.e.f assessment year 2019-20 which is recorded in para 3 of the assessment order as under:

“3. On Verification of the Registration Certificate issued u/s 12AA, in the registration certificate issued u/s 12AA dated 28.09.2019, it is specifically mentioned that "An application in Form No. 10A seeking Registration u/s 12AA of the Income Tax Act, 1961 was filed on 29.03.2019". The registration u/s 12AA was granted on 28.09.2019 only from the A.Y. 2019-20. Hence, it is clear that there is no registration u/s 12AA for the A.Y. 2018-19 and hence allowing exemption u/s 11 for the A.Y. 2018-19 does not arise.” 5.2 It is pertinent to note that when the registration u/s 12AA was yet to be granted at the time of filing return of income then the assesse was not supposed to make any claim in the original return of income filed u/s 139(1) of the Act. Further the limitation for filing the revised return of income also expired by the time the registration u/s 12AA was granted vide order dated 28.09.2019. Thus, it is not a case of non-filing of revised return of income by the assessee despite having an option but the registration was granted after the time limit of filing revised return of income and therefore, the question of filing the revised return does not arise for making claim of exemption u/s 11 & 12 in view of the proviso to section 12A(2) which mandates the applicability of section 11 & 12 of the Act on the income of the assesse for the assessment year preceding

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ITANo.199/Ind/2024 Akshay Academy to the assessment year for which the registration was granted but such preceding year is pending assessment before the AO. Hence there is no legal impediment either for the AO or for the CIT(A) to allow the claim of exemption u/s 11 & 12 of the Act if the assessee satisfies the conditions provided u/s 12A(2) read with proviso to the said section. The twin conditions as provided in the proviso to section 12A(2) are that the assessment proceedings are pending at the time of granting registration u/s 12AA of the Act and second that the activities and objects of the assesse remains unchanged for the year under consideration as well as time of granting registration u/s 12A/12AA of the Act. The CIT(Exemption) while granting registration u/s 12AA has duly considered this fact of activities and objects of the assessee are not changed since its inception and a certificate to this effect was submitted by the assessee before the CIT(E) placed at page no.70 of the paper book as under:

“ Declaration I Jawed Akhtar, secretary of Akshay Academy, hereby declare that there is no change in the objects and activities of society as mentioned in the bye –laws of the society since its inception.” 5.3 Even the AO has not disputed or raised any doubt about the activities and objects of the assessee remained same without any change during this period. Hence, as contemplated by the first proviso to section 12A(2) that the benefit of section 11 & 12 cannot be denied to a genuine charitable trust or society in respect of the income derived from the property held under trust for the preceding assessment year for which assessment proceedings are pending

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ITANo.199/Ind/2024 Akshay Academy before the AO even if the registration u/s 12A/12AA is granted subsequently and for the subsequent assessment year. Thus, it is clear that provisions of section 12A(2) r.w. proviso provides that registration once granted in subsequent year, the benefit of section 11 & 12 of the Act has to be given in the preceding assessment year for which the assessment proceedings are pending before the AO subject to the conditions that there is no change in the objects and activities of the trust during this period. This tribunal in case of M/s Barkatullah vishwavidyalaya vs. DCIT(E) vide order dated 30.06.2022 has considered this issue in para 11 as under:

“11. Now we proceed to examine the alternative claim of exemption u/s 11 / 12 demanded by the assessee. On perusal of the Proviso to section 12A(2) and the decision of Hon’ble Co-ordinate Bench of ITAT, Ahmedabad in Shri Bhanushali Mitra Mandal Trust (supra), we agree to the proposition that the assessee is entitled to the benefit of exemption u/s 11 / 12 for the assessment-year 2014-15 under consideration as the requirements prescribed in the Proviso stand satisfied, viz. (i) the revenue had already granted registration u/s 12AA from assessment-year 2019-20, (ii) the assessment-year under consideration is 2014-15 which falls within “any preceding assessment year”, and (iii) the objects and activities of the assessee remain same. We also find that the Ld. DR did not make any objection to this claim argued by Ld. AR. But however we have to ascertain one important aspect i.e. can we entertain this new claim made by assessee for the first time before us? In this respect we find that the Hon’ble Supreme Court has held in Goetze India Ltd. Vs. CIT (2006) 284 ITR 323 (SC) that a fresh claim can be made only by filing a revised return. But various courts have already analysed the impact of this decision and vehemently held that a fresh claim before appellate authorities is not barred. It is constantly held in several decisions that a legal claim can be made by the assessee before appellate authorities even if the same was not claimed during assessment- proceedings. We also observe that the provisions of section 11 / 12 grant exemption to the assessee and such exemption, if not allowed, would result in illegal collection of tax from the assessee, which is never an objective of the Income-tax Act, 1961. In view of this position of law, we do not find any difficulty in accepting the alternative claim of assessee to allow exemption u/s 11 / 12. However, the claim of exemption u/s 11 / 12 Page 9 of 19

ITANo.199/Ind/2024 Akshay Academy involves a different type of working based on application and accumulation of income. Therefore, we feel that it would be more appropriate to refer this matter back to Ld. AO who shall give an opportunity to the assessee to provide the necessary information for computation of exemption u/s 11 / 12. Based on such information, the Ld. AO shall allow the exemption as admissible u/s 11 / 12 to the assessee.” 5.4 A similar view has been taken by this Tribunal in case of Madhya Pradesh Council for Vocational Eeducation & Training vs. CIT(E) (supra) in para 9 to 11 as under:

“9. The assessee claims that it is entitled to benefit of exemption on the basis of 1stProviso to section 12A(2). For ready reference, the provision of section 12A(2) as existing at the relevant time, is re-produced below: “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 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 object and activities of the trust or institution remain the same for such preceding assessment year:

Provided further 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.”

[ Emphasis supplied ]

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ITANo.199/Ind/2024 Akshay Academy 10. Thus, to get the benefit of first proviso for preceding AY 2016-17 and 2017-18 in these appeals, three conditions have to be satisfied viz. (i) the registration must have been granted to assessee, (ii) the preceding year must be such whose assessment-proceedings were pending before the Assessing Officer as on the date of such registration, and (iii) the object and activities of the trust or institution remain the same for such preceding assessment year. Admittedly, the assessee has been granted registration by department w.e.f. 01.04.2017, thus condition (i) is satisfied. With regard to condition (ii), the factual matrix is such the registration was granted vide order dated 15.07.2022 and on that date, the assessee’s cases of AY 2016-17 and 2017-18 were concluded by AO but pending before ITAT, Indore in these appeals. Hence, a question would arise as to whether it can be said that the assessment-proceeding were pending before AO in such a situation? In this regard, there is a direct decision of Co-ordinate Bench of ITAT, Indore settling identical controversy in M/s. Barkatullah Vishwavidyalaya, Bhopal Vs. PCIT, ITA No.924/Ind/2018, order dated 30.06.2022, relevant paras are re- produced below: “8. Ld. AR, thereafter, made an alternative claim that the assessee has also received registration u/s 12A(1)(aa) read with section 12AA from AY 2019-20 onwards vide Order No. ITBA/EXM/S/12AA/2019-20/ 1016373495(1) dated 17.06.2019 issued by CIT(Exemption), Bhopal. Ld. AR invited our attention to the copy of registration-order. Ld. AR then referred to the section 12A(2) which reads as under: “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 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 object and activities of the trust or institution remain the same for such preceding assessment year:” Analyzing the above Proviso, the Ld. AR submitted that once the registration has been granted u/s 12AA, the exemption u/s 11 and 12 shall apply in respect of any preceding assessment-year for Page 11 of 19

ITANo.199/Ind/2024 Akshay Academy which the assessment-proceeding is pending before the AO on the date of registration. Ld. AR submitted that in the present case, the assessee has been granted registration u/s 12AA on 17.06.2019 for assessment-year 2019-20 onwards. Ld. AR submitted that the present appeal of assessee pertaining to assessment-year 2014-15 was pending on 17.06.2019 before this Bench. Hence the benefit of the Proviso is available to the assessee. Ld. AR gainfully referred the decision of ITAT, Ahmedabad in Shri Bhanushali Mitra Mandal Trust Vs. ITO, ITA No. 2515/Ahd/2015 dated 22.02.2016 where it was held thus: “7.1 To examine the first issue, necessarily I have to analyze the relevant provision, namely, the amendment to Section 12A by Finance Act, 2014 w.e.f. 01.10.2014 by way of insertion of provisos to Section 12A(2) of the Act which is reproduced below for ready reference: "[(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 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 further 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.]" 7.2 It is also relevant to reproduce the explanatory notes to the provisions of Finance (No.2) Act, 2014 as given in CBDT

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ITANo.199/Ind/2024 Akshay Academy Circular No.01/2015 dated 21.01.2015 in reference F.No.142/13/2014-TPL, which read as follows: "Para 8.2 Non-application of registration for the period prior to the year of registration caused genuine hardship to charitable organizations. Due to absence of registration, tax liability is fastened even though they may otherwise be eligible for exemption and fulfill other substantive conditions. However, the power of condonation of delay in seeking registration was not available." This clearly goes to prove that the first proviso to section 12A(2) was brought in the statute only as a retrospective effect with a view not to affect genuine charitable trusts and societies carrying on genuine charitable objects in the earlier years and substantive conditions stipulated in section 11 to 13 have been duly fulfilled by the said trust. The benefit of retrospective application alone could be the intention of the legislature and this point is further strengthened by the Explanatory Notes to Finance (No.2) Act, 2014 issued by the Central Board of Direct Taxes vide its Circular No. 01/2015 dated 21.1.2015. Apparently, the statute provides that registration once granted in subsequent year, the benefit of the same has to be applied in the earlier assessment years for which assessment proceedings are pending before the ld. A.O., unless the registration granted earlier is cancelled or refused for specific reasons. The statute also goes on to provide that no action u/s147 could be taken by the AO merely for non-registration of trust for earlier years. 7.3 In the instant case, it is not in dispute that registration was granted w.e.f. 17.12.2013 by the order of CIT(A) dated 08.05.2014. It is also not in dispute that objects and activities of the assessee trust are charitable in nature during the relevant financial year. When Section 12A of the Act was amended by introducing new provisos to sub-section (2) of Section 12A by Finance Act, 2014 with effect from 01.10.2014, the assessment orders Asst. Year 2011-12 passed by the assessing officer in respect of the present assessee were pending in appeal before the first appellate authority. During such pendency, the assessee was granted registration u/s. 12AA of the Act on 17.12.2013 w.e.f. the assessment year 2013-14. The appeal is the continuation of the original proceedings and that the power of the Commissioner of Income-tax was co-terminus with that of the assessing officer were two well established principles of law. In view of the above and going by the principle of purposive interpretation of statues, an assessment proceeding which is Page 13 of 19

ITANo.199/Ind/2024 Akshay Academy pending in appeal before the appellate authority should be deemed to be 'assessment proceedings pending before the assessing officer' within the meaning of that term as envisaged under the proviso. It follows there-from that the assessee which obtained registration u/s 12AA of the Act during the pendency of appeal was entitled for exemption claimed u/s 11 of the Act. 7.4 The explanatory Memorandum to Finance (No.2) Bill, 2014, which sought to amend section 12A explains the objects and reasons for making such amendments. The explanation makes it clear that it was in order to provide relief to such trusts in respect of which, due to absence of registration u/s 12AA tax liability got attached though otherwise they were eligible for exemption by fulfilling other substantive conditions that the amendment was brought in. That being so, denying such benefit to a trust like the assessee who had obtained registration u/s 12AA during the pendency of the appeals filed against the orders of the assessing authority, by narrowly interpreting the term, 'pending before the assessing officer' so as to exclude its pendency before the appellate authority, will be doing violence to the provisions of the Statute and, as such, liable to be interfered with. Moreover, under the Scheme of the Act, sections 11 and 12 are substantive provisions which provide for exemptions to a religious or charitable trust. Sections 12A and 12AA detail the procedural requirements for making an application to claim exemptions under sections 11 and 12 by the assessee and the grant or rejection of such application by the commissioner. Thus, in my view, sections 12A and 12AA are only procedural in nature. Hence, it is not the registration u/s 12AA by itself that offers immunity from taxation. A receipt whether it is revenue or capital in nature is to be decided at the assessment stage. Being procedural in nature, in my view, liberal interpretation will give effect to the intention of the amendment, thereby removing the hardship in genuine cases like the present assessee under consideration. 7.5 I am also supported by the order of Kolkata Bench of ITAT in case of Sree Sree Ramkrishna Samity vs. DCIT (ITA No. 1680/2012, order dated 09.10.2015) where it was held that amendment to Section 12A w.e.f. 01.10.2014 is retrospective. The relevant funding of the Hon'ble Kolkata Bench in case of Sree Sree Ramkrishna Samity vs. DCIT (supra) read as follows: "6.10. We hold that it is an established position in law that a proviso which is inserted to remedy unintended consequences and to make the provision workable, a proviso which supplies an obvious Page 14 of 19

ITANo.199/Ind/2024 Akshay Academy omission in the section and is required to be read into the section to give the section a reasonable interpretation, requires to be treated as retrospective in operation, so that a reasonable interpretation can be given to the section as a whole and accordingly the said insertion of first proviso to section 12A(2) of the Act with effect from 1.10.2014 should be read as retrospective in operation with effect from the date when the condition of eligibility for exemption under section 11 & 12 as mentioned in section 12A provided for registration u/s.12AA as a pre-condition for applicability of section 12A." Ld. AR argued that the assessee is entitled to the benefit of this decision and therefore the assessment-year 2014-15 pending before this Bench in appeal must be construed as an assessment-year for which proceeding is pending before assessing officer. For the sake of completeness, Ld. AR also submitted that the assessee is a university established under the legislation of Madhya Pradesh Govt. and since beginning it is engaged in the very same objects and activities, therefore the objects and activities remained same. With these submissions, the Ld. AR argued that the assessee fully satisfies the requirement of aforesaid Proviso to section 12A(2) and therefore perfectly eligible for exemption u/s 11 / 12. Hence the Ld. AR requested to direct the Ld. AO to allow exemption u/s 11 / 12 to the assessee, if for any reason the exemption u/s 10(23C)(iiiab) is not allowed. 9. Per contra, the Ld. DR strongly supported the orders of lower authorities qua the disallowance of exemption u/s 10(23C)(iiiab). Ld. DR submitted that the receipts from government grant is just 3.50% and therefore the assessee is very far from the entitlement of section 10(23C)(iiiab). Accordingly, Ld. DR requested to uphold the disallowance made by lower authorities. However, the Ld. DR did not make any opposition to the alternative claim of exemption u/s 11 / 12 made by Ld. AR. 10. We have considered rival submissions of both sides, perused the records, considered the provisions of law and judicial precedents. We would first deal with the claim of exemption u/s 10(23C)(iiiab). XXX (not reproduced being ir-relevant in present appeal).

ITANo.199/Ind/2024 Akshay Academy under consideration as the requirements prescribed in the Proviso stand satisfied, viz. (i) the revenue had already granted registration u/s 12AA from assessment-year 2019-20, (ii) the assessment-year under consideration is 2014-15 which falls within “any preceding assessment year”, and (iii) the objects and activities of the assessee remain same. We also find that the Ld. DR did not make any objection to this claim argued by Ld. AR. But, however, we have to ascertain one important aspect i.e. can we entertain this new claim made by assessee for the first time before us? In this respect we find that the Hon’ble Supreme Court has held in Goetze India Ltd. Vs. CIT (2006) 284 ITR 323 (SC) that a fresh claim can be made only by filing a revised return. But various courts have already analysed the impact of this decision and vehemently held that a fresh claim before appellate authorities is not barred. It is constantly held in several decisions that a legal claim can be made by the assessee before appellate authorities even if the same was not claimed during assessment-proceedings. We also observe that the provisions of section 11 / 12 grant exemption to the assessee and such exemption, if not allowed, would result in illegal collection of tax from the assessee, which is never an objective of the Income-tax Act, 1961. In view of this position of law, we do not find any difficulty in accepting the alternative claim of assessee to allow exemption u/s 11 / 12. However, the claim of exemption u/s 11 / 12 involves a different type of working based on application and accumulation of income. Therefore, we feel that it would be more appropriate to refer this matter back to Ld. AO who shall give an opportunity to the assessee to provide the necessary information for computation of exemption u/s 11 / 12. Based on such information, the Ld. AO shall allow the exemption as admissible u/s 11 / 12 to the assessee. 12. In the result, this appeal of assessee is allowed for statistical purpose.” 11. Thus, the Co-ordinate Bench of ITAT Indore, following the decision of ITAT, Ahmedabad in Shri Bhanushali Mitra Mandal Trust Vs. ITO (Supra), has accepted in principle that going by the purposive interpretation of statues, an assessment proceeding which is pending in appeal before the appellate- authority should be deemed to be 'assessment proceedings pending before the assessing officer' within the meaning of that term as envisaged under the proviso to section 12A(2). Therefore, the condition (ii) is also satisfied. Now what remains is the last condition (iii) according to which the object and activities of the assessee should remain same for preceding assessment year i.e. AY 2016-17 and 2017-18 in these cases. Ld. AR submitted that the assessee is a Govt. owned society and its object and activities remained same year after year. We prima facie find merit in the submission of Ld. AR but still the AO should get an opportunity Page 16 of 19

ITANo.199/Ind/2024 Akshay Academy to verify this condition (iii). Moreover, the claim of exemption u/s 11/12 involves a different type of working based on application and accumulation of income which the AO has not verified till now because he did not grant exemption for want of registration u/s 12A. For these reasons, we feel it most appropriate to remand these matters back to the file of AO for carrying out verification of fulfillment of condition (iii) discussed above and if that is held to be satisfied, to verify and allow exemption u/s 11/12. Needless to mention that the AO shall give necessary opportunities to assessee and pass order in accordance with law without being influenced by his previous order. Ordered accordingly. 5.5 Accordingly in the facts and circumstances of the case as discussed above and following the earlier decisions of this Tribunal we hold that the assessee is entitled for exemption u/s 11 & 12 for the year under consideration. We find that when there is no change in the objects and activities of the assessee since inception as a certificate to this effect was filed by the assessee before CIT(E) which was duly considered while granting registration u/s 12A therefore, the question of verifying the claim does not arise. Further when the claim u/s 11 & 12 was made only after the registration was granted by the CIT(E) then filing the audit report in 10B at the time of filing the return of income would amount to asking the assessee to make a compliance for non-existing fact at that point of time. Even otherwise filing of tax audit in form 10B is a directory requirement. Therefore, the delay in filing the tax audit report is not deliberate but due to the reason of subsequent registration u/s 12A cannot be a ground for denying the claim of exemption u/s 11 & 12 of the Act as this issue is now settled by the Hon’ble High Courts. An identical issue has been considered by this tribunal in case of Welfare Association for the Disabled vs. ADIT, CPC,

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ITANo.199/Ind/2024 Akshay Academy Bengaluru, in ITANo.138/Ind/2022 dated 21.12.2023. The relevant part of this order is held as under:

“6. Per contra, Ld. DR vehemently defended the orders of lower- authorities and submitted that furnishing of audit-report alongwith return of income is a pre-condition for allowability of exemption u/s 11. Since the assessee has not fulfilled such condition, the lower-authorities have rightly denied assessee’s claim of exemption u/s 11 and there is no infirmity in the action of lower-authorities. Ld. DR also pointed out an additional fact that the assessee has filed an application to higher authorities in terms of CBDT Circular issued u/s 119 of the act for condoning the delay in filing of audit report and such application is still pending with authorities. 7. In rejoinder, Ld. AR submitted that though the assessee has filed application to authorities in terms of CBDT Circular u/s 119 for condonation of delay, pursued the same and made all sincere efforts but the same is pending with authorities. Ld. AR submitted that the assessee has taken several adjournments in this appeal from ITAT itself on the ground of pendency of application before authorities. But, no outcome is forthcoming from authorities. Ld. AR submitted that in any case, the application u/s 119 is only an additional remedy which cannot take away appellate remedy. To fortify this submission, Ld. AR relied upon Para 5.6 of the judgement of Hon’ble Gujrat High Court in Indian Panel Board Manufacturer Vs. DCIT Tax Appeal No. 655 of 2022 dated 21.03.2023 where it has been held thus: “5.6 The tribunal further committed an error in appreciating the import of Section 119 2(b) of the Act inasmuch as the application contemplated thereunder is only additional remedy for the assessee which could not be said to be compulsorily resorted to, by the assessee. The circular No. 7/18 dated 20.12.2018 issued u/s 119 of the Act could not be, therefore, said to have taken away the appellate remedy.” 8. We have heard rival contentions of both sides and examined the present controversy in the light of judicial decisions. In view of settled judicial rulings noted in foregoing paragraphs, we find that the assessee can’t be denied the benefit of exemption u/s 11/12 as claimed in return of income for mere delay in filing of audit-report (Form No. 10B), when the assessee has in fact filed such report though after filing of return. We, therefore, deem it fit to remand this matter back to the file of AO for a fresh assessment after considering audit-report (Form No. 10B) filed by assessee. The assessee succeeds in this appeal.”

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ITANo.199/Ind/2024 Akshay Academy Accordingly, the claim of the assessee u/s 11 & 12 of the Act is allowed.

Order pronounced in the open court on 20.08.2024.

Sd/- Sd/- (B.M. BIYANI) (VIJAY PAL RAO) Accountant Member Judicial Member

Indore,_ 20.08.2024 Patel/Sr. PS

Copies to: (1) The appellant (2) The respondent (3) CIT (4) CIT(A) (5) Departmental Representative (6) Guard File By order UE COPY Sr. Private Secretary Income Tax Appellate Tribunal Indore Bench, Indore

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