ITO (E) I(1), MUMBAI vs. BREACH CANDY SWIMMING BATH TRUST, MUMBAI

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ITA 951/MUM/2015Status: DisposedITAT Mumbai18 July 2016AY 2011-123 pages

In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal upheld the CIT(A)'s order directing the Assessing Officer to grant exemption under Section 11. This was because the sole reason for denial of exemption, the cancellation of Section 12A registration, had been reversed by a prior ITAT order.

What were the facts?

The Assessing Officer denied exemption under Section 11 as the assessee's registration under Section 12A was cancelled. The assessee challenged this cancellation before the ITAT, which restored the registration.

What were the issues?

Whether exemption under Section 11 can be denied if the underlying Section 12A registration, which was cancelled, has been restored by a higher tribunal.

Which sections of the Income-tax Act were involved?

Section 11,Section 12A,Section 2(15)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “D” Bench, Mumbai

Before: Shri B.R. Baskaran (AM)& Shri Ramlal Negi (JM)

For Appellant: Shri Govardhan S. Gaunkar
For Respondent: Shri Nitin Waghmode
Hearing: 18.7.2016Pronounced: 18.7.2016

O R D E R Per B.R. Baskaran (AM) :

The appeal filed by the Revenue is directed against the order dated 14.11.2014 passed by learned CIT(A)-1, Mumbai and it relates to A.Y. 2011-12.

2.

Grounds of appeal read as under :-

1. That on the facts and circumstances of the case and in law, the Ld. CIT(A), erred in granting exemption u/s 11 of the I. T.Act". 2. "That Appellant prays that the order of the Commissioner of Income- tax(Appeals) —I, Mumbai, be set aside and that of the Assessing Officer be restored considering the fact that appellant had filed an appeal u/s 260A against the order of Hon'ble ITAT wherein the registration u/s 12 of the assessee was restored on which cit(a) had relied to give relief ". 3. "The Appellant craves leave to amend or any ground or ad a new ground which may be necessary".

2 Breach Candy Swimming Bath Trust

3.

We have heard the parties and perused the record. The Assessing Officer rejected the claim for exemption u/s. 11 on the ground that the registration granted to the assessee u/s. 12A of the Act earlier has since been cancelled by DIT(E), vide his order dated 26.12.2011. In the appellate proceedings, the assessee submitted before learned CIT(A) that it had challenged the order passed by DIT(E) by filing the appeal before the Tribunal and the ITAT has since reversed the order of DIT(E) and restored the registration to the assessee. Learned CIT(A) accordingly directed the Assessing Officer to allow exemption u/s. 11 of the Act. For the sake of convenience, we extract below the order of learned CIT(A) in this regard :-

5.2 I have considered the facts and circumstances of the case, the assessment order of the A.O. and the submissions of the assessee. It is noticed that the A.0 had denied the claim of exemption u/s. 11 of the LT.- Act for the reason of cancellation of Registration u/s. 12A of the I.T. Act, 1961 vide order of the DIT dated 26.12.2011. However, the said cancellation order has been set aside by the Hon. Jurisdictional ITAT 'F' Bench, Mumbai and Registration u/s. 12A is restored to the appellant vide said order. Under these circumstances, the reason for denial of exemption of the income of the appellant becomes erroneous and non-est in view of order of the Hon. Tribunal referred above. The relevant part of the order of the Hon. Tribunal is reproduced as follows –

"In view of the foregoing, for the reasons afore-stated, in our view, the assessee is not hit by the first proviso to section 2(15) of the Act. The further question of it leading to, or not so, withdrawal of its registration as a charitable institution under the Act would, therefore, not arise in the facts and circumstances of the case. We decide accordingly."

5.2.1 It is seen that the Registration u/s. 12A of the appellant is restored which was the only reason for denial of exemption u/s.

11.

While deciding the issue of Registration u/s. 12A, the issue of applicability of proviso to section 2(15) of the I.T. Act, 1961 has been decided in favour of the appellant. Therefore, prima facie Registration getting restored, makes the denial of exemption u/s. 11 to the appellant baseless particularly when same has been allowed from year to year under the similar facts and circumstances of the case. In view of above discussion, the A.0 is directed to compute the income of the appellant by granting exemption u/s. 11 of the I.T. Act which was denied for want of Registration u/s. 12A and now restored to the appellant vide order of the Hon. ITAT. Accordingly Ground No. 1 and 2 and 3 of appeal are allowed.

3 Breach Candy Swimming Bath Trust

4.

Since the very ground on which exemption u/s. 11 was denied by the Assessing Officer has since been reversed by the Tribunal, we do not find any infirmity in the order passed by learned CIT(A). Accordingly, we uphold his order.

5.

In the result, appeal filed by the Revenue is dismissed.

Order has been pronounced in the Court on 18.7.2016

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