Tax Tribunal affirms assessee's 12A registration for exemption under section 10(23C)(iiiab)

The Tribunal upheld the CIT(A)'s decision that the assessee possessed a valid 12A registration certificate and qualified for exemption under section 10(23C)(iiiab). The Revenue's appeals were dismissed, and the Cross Objections by the assessee were deemed infructuous. The judgment was delivered on 31st July 2019.

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Issues Involved:

1. Whether the inference drawn by the CIT(A) that the assessee has 12A registration certificate is an incorrect conclusion required to be upsetRs.
2. Whether the assessee can be said to be entitled for relief under section 10(23C)(iiiab)Rs.

Issue-wise Detailed Analysis:

1. Inference of 12A Registration Certificate:

The assessee failed to produce the 12A registration certificate before the Assessing Officer (AO) and the CIT(A), instead relying on an 80G certificate. The CIT(A) inferred that registration under section 12AA was available based on the 80G certificate. The Revenue challenged this conclusion, arguing that the 12A certificate was never produced.

The Tribunal noted that the assessee claimed the 12A certificate had been lost/misplaced and provided the 80G certificate and an affidavit to support their claim. The CIT(A) considered these arguments and the provisions of law, granting relief to the assessee. The Tribunal upheld the CIT(A)'s conclusion, noting that the 80G certificate necessitates the fulfillment of conditions set out in Rule 11AA of the Income Tax Rules, 1962, which includes the requirement of a 12A certificate. The Tribunal found no evidence to suggest that the 80G certificate was fraudulently obtained and noted that the 12A registration had not been revoked.

2. Entitlement for Relief under Section 10(23C)(iiiab):

The assessee argued that it was entitled to exemption under section 10(23C)(iiiab) as it was substantially financed by the government. The AO rejected this claim, stating that the assessee could not change its stance due to non-furnishing of the 12A certificate and noting that the definition of "substantially financed by the Government" was defined prospectively from 01.04.2015.

The Tribunal found that the assessee had made an alternate claim before the AO and provided details of government aid received. The AO had examined these facts but rejected the claim. The Tribunal noted that the percentage of government grants received by the assessee was 60% of the total receipts, which was sufficient to meet the threshold for being considered "substantially financed by the Government" even before the statutory definition was introduced.

The Tribunal referred to judicial precedents where institutions receiving less than 50% government funding were considered substantially financed. It concluded that the assessee met the criteria for exemption under section 10(23C)(iiiab) based on the facts and judicial standards set by courts.

Conclusion:

The Tribunal dismissed the Revenue's appeals, upholding the CIT(A)'s conclusions that the assessee had a valid 12A registration and was entitled to exemption under section 10(23C)(iiiab). The Cross Objections filed by the assessee were also dismissed as infructuous. The order was pronounced on 31st July 2019.

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