Tribunal Orders Early Tax Benefits for Assessee

The Tribunal directed the CIT(E) to grant registration under Section 12AA and approval under Section 80G(5)(vi) effective from A.Y. 2020-21 instead of A.Y. 2021-22. Both appeals by the assessee were allowed.

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Issues Involved:
1. Granting registration under Section 12AA of the Income Tax Act.
2. Granting approval under Section 80G(5)(vi) of the Income Tax Act.

Detailed Analysis:

Issue 1: Granting Registration under Section 12AA

The assessee contested the decision of the CIT(Exemptions) to grant registration under Section 12AA effective from the Assessment Year (A.Y.) 2021-22 instead of A.Y. 2020-21. The application for registration was filed on 04.02.2020, making the assessee eligible for registration from A.Y. 2020-21 as per Section 12A(2). The assessee argued that the CIT(E) does not have the discretion to defer the effective date of registration once the application is filed within the stipulated time.

During the hearing, the assessee's representative highlighted that the CIT(E) issued a notice on 14.07.2020, requesting 26 documents/clarifications, which were promptly provided by 17.08.2020. A subsequent notice on 11.09.2020 led to the submission of an affidavit on 22.09.2020, after which the CIT(E) granted approval effective from A.Y. 2021-22. The assessee argued that the affidavit could have been made a condition for approval rather than a reason to defer it.

The Tribunal noted that Section 12AA requires the CIT(E) to satisfy himself about the objects and genuineness of the trust's activities. The provisions of Section 12A(1) and 12A(2) were examined, which stipulate that for applications made after 01.06.2007, the provisions of Sections 11 and 12 apply from the A.Y. immediately following the financial year in which the application is made. The Tribunal found that the CIT(E) had no discretion to delay the effective date of registration once satisfied with the trust's objects and activities.

The Tribunal concluded that the CIT(E) should have granted registration effective from A.Y. 2020-21, as the application was made on 04.02.2020. The Tribunal directed the CIT(E) to grant registration under Section 12AA effective from A.Y. 2020-21.

Issue 2: Granting Approval under Section 80G(5)(vi)

Similar to the issue of Section 12AA registration, the assessee contested the CIT(E)'s decision to grant approval under Section 80G(5)(vi) effective from A.Y. 2021-22 instead of A.Y. 2020-21. The application for approval was filed on 05.02.2020, making the assessee eligible for approval from A.Y. 2020-21.

The Tribunal's analysis and conclusions regarding the effective date of approval under Section 80G(5)(vi) mirrored those for Section 12AA. The Tribunal found that the CIT(E) should have granted approval effective from A.Y. 2020-21, as the application was made on 05.02.2020.

Conclusion:

The Tribunal directed the CIT(E) to grant both the registration under Section 12AA and the approval under Section 80G(5)(vi) effective from A.Y. 2020-21 instead of A.Y. 2021-22. Both appeals filed by the assessee were allowed.

Order Pronounced:

The order was pronounced in the open court on 01/03/2021.

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