2010 (12) TMI 1164 - HC - Income Tax

High Court affirms Association's benefits under sec.11 & sec.12 despite past order. Registration key for exemption.

The High Court admitted appeals to determine if the Association is entitled to benefits under sec.11 and sec.12 despite a previous order. The Tribunal's ... - Issues involved: Interpretation of provisions of Income Tax Act, 1961 regarding entitlement to benefit under sec.11 and sec.12 despite previous order; Validity of rejection of exemption under sec.11 for assessment years 1989-90 to 1995-96; Impact of registration under sec.12A on eligibility for exemption under sec.11 and sec.12.Summary:1. The High Court admitted appeals u/s 260A of the Income Tax Act, 1961 to address the question of whether the assessee Association is entitled to benefits u/s 11 and 12 despite a previous order by the Central Board of Direct Taxes. The appeals were consolidated for a common judgment. 2. The Trust, recognized as a Stock Exchange, applied for registration under sec.12A in 1973 and was granted registration in 1977. Subsequently, for assessment years 1989-90 to 1995-96, the claim for exemption u/s 11 was rejected by the Assessing Officer but allowed by the Tribunal.3. The respondent argued that the rejection of exemption under sec.10(23C)(iv) does not affect eligibility for benefits under sec.11 and sec.12. The Assessing Officer's reasons for denial of sec.11 exemption were based on absence of profit distribution restriction in the trust deed, not the previous order.4. The Tribunal held that registration under sec.12A is crucial for claiming exemption u/s 11, emphasizing that the Assessing Officer cannot reject exemption based on the nature of the association's objects once registration is granted.5. Precedents were cited to support the importance of registration under sec.12A and the limitations on the Assessing Officer's discretion post-registration. The Tribunal's decision aligns with these principles, affirming the assessee's entitlement to benefits u/s 11 and 12.6. The Court upheld the Tribunal's decision, concluding that the assessee Association is indeed entitled to benefits u/s 11 and 12. The appeals were dismissed based on the consistent application of legal principles.