2017 (1) TMI 452 - AT - Income Tax

Appeal allowed after Tribunal grants exemption under section 11 following High Court decision

Rkkr Shiksha Foundation Versus Income Tax Officer (Exemptions)

The appeal was dismissed by the CIT(A) due to lack of registration under section 12AA for the relevant assessment year. However, a rectification order ... Exemption claimed u/s. 11/12 - denial of claim on the ground that the assessee society is not registered u/s. 12AA for the relevant AY - Held that:- We find that the addition of ₹ 1,58,27,052/- is confirmed by the Ld. CIT(A) solely on the ground that the assessee had not been granted Certificate of Registration u/s. 12A of the I.T. Act, 1961. We find that Ld. CIT(E) vide his order dated 19.8.2016 passed u/s. 154 of the Act has rectified the mistake by stating that the benefit of registration u/s. 12AA now may be read as from “Assessment year 2009-10”. Hence, the assessee is eligible exemption u/s. 11 of the Act from the assessment year 2009-10. The assessee is eligible for registration u/s. 12AA in the present assessment year i.e. AY 2012-13, as a result thereof, also eligible for exemption claimed during the AY 2012-13. Accordingly, the addition in dispute is not sustainable in the eyes of law. Hence, we set aside the orders of the lower authorities and delete the addition in dispute. - Decided in favour of assessee Issues:1. Denial of exemption u/s. 11/12 by CIT(A) due to lack of registration u/s. 12A.2. Dismissal of appeal by CIT(A) based on non-registration u/s. 12AA for the relevant assessment year.3. Rectification order u/s. 154 by CIT(E) and decision by Punjab & Haryana High Court impacting the appeal.Issue 1: Denial of exemption u/s. 11/12 by CIT(A) due to lack of registration u/s. 12A:The assessee appealed against the order confirming an addition of Rs. 1,58,27,052 by the AO u/s. 143(3). The AO treated the excess income over expenditure as profits due to lack of registration u/s. 12A, denying exemption u/s. 11. The assessee contended eligibility for exemption u/s. 11/12 based on an ITAT order directing CIT to grant registration u/s. 12A. However, the Ld. CIT(A) dismissed the appeal, stating the society was not registered u/s. 12AA for the relevant year. The Ld. CIT(A) observed that despite a later registration order, the assessee was not registered for the year under consideration. The assessee argued for eligibility based on the registration date, but the Ld. CIT(A) upheld the denial of benefits u/s. 11/12.Issue 2: Dismissal of appeal by CIT(A) based on non-registration u/s. 12AA for the relevant assessment year:The assessee, in appeal before the Tribunal, presented a rectification order u/s. 154 by the CIT(E) correcting the registration year to 'Assessment Year 2009-10.' Additionally, a decision by the Punjab & Haryana High Court stated that the rectification should be considered by the CIT(A) and Tribunal. The Tribunal found that the assessee was eligible for registration u/s. 12AA from AY 2009-10, making them entitled to exemption u/s. 11 from that year onwards. Consequently, the Tribunal set aside the lower authorities' orders and deleted the disputed addition, allowing the assessee's appeal.Issue 3: Impact of rectification order u/s. 154 and High Court decision on the appeal:The rectification order u/s. 154 and the High Court decision influenced the Tribunal's decision in favor of the assessee. The rectification established the assessee's eligibility for registration u/s. 12AA from AY 2009-10, leading to exemption u/s. 11. The Tribunal considered these developments, overturning the lower authorities' decisions and ruling in favor of the assessee. As a result, the disputed addition was deemed unsustainable, and the appeal was allowed.This detailed analysis of the judgment highlights the issues of denial of exemption due to lack of registration, dismissal of appeal based on non-registration, and the impact of rectification orders and court decisions on the appeal outcome.