2021 (3) TMI 969 - HC - Income Tax

High Court admits appeal on registration delay, rejects Revenue's genuineness plea, grants registration from 01.04.2005.

The Division Bench of the High Court admitted the appeal on the delay in filing the registration application but rejected the Revenue's plea on the ... Exemption u/s 11 - Charitable activity or not - Trust has dropped its demand for registration with retrospective effect - Tribunal set aside the order of the CIT u/s.12AA rejecting the application for registration u/s 12 AA on the ground that all the objects were of the charitable nature and at the time of registration, the Commissioner of Income Tax could only look into the genuineness of the Trust and did not examine the activities of the Trust, relying on the decisions rendered under the old provisions of Section 12A of the Income Tax Act and without considering the new provision of Section 12AA of the Act - HELD THAT:- As far as the question raised relating to the genuineness of the Trust claiming exemption and registration under Section 12AA of the Income Tax Act is concerned, the Hon'ble Division Bench earlier rejected the plea of the Revenue and agreed with the conclusion of the Tribunal stating that it is purely a question of fact. The Hon'ble Division Bench has rightly decided the said question of law against the Revenue. Hence, we are not inclined to give any finding with regard to the 1st question of law. Whether Tribunal was right in holding that there were sufficient reasons for the delay in filing the application for registration even though the assessee had not explained the delay from January 2003 to 2006 and the assessee Trust itself had by its letter dated 09.10.2009 foregone its claim for registration with retrospective effect? - Tribunal, while setting aside the order passed by the Commissioner of Income Tax with direction to grant registration to the Trust, further directed the Commissioner to decide the issue with regard to condonation of delay by taking a lenient view and in accordance with the observation made by the Tribunal. The application for registration was made by the assessee – Trust on 27.02.2006 for getting the registration done retrospectively from 01.04.2002. As per Section 12A (1) proviso (2) of the Income Tax Act, the registration of the Trust or Institution shall be made from the first day of the Financial Year in which the application is made. So far as the present application is concerned, admittedly, the Trust had submitted their application on 27.02.2006. Therefore, as per Section 12A(1) proviso (2) of the Act, registration can be done only from 01.04.2005. Therefore, as per the said provision, registration cannot be done retrospectively from 01.04.2002, which the respondent is seeking for. The respondent – Trust itself, by its letter dated 09.10.2009, had foregone its claim for registration with retrospective effect. Therefore, the question of condonation of delay in registering retrospectively, does not arise. Hence, we are of the considered view that the registration can be done from 01.04.2005 based on the assessee's application dated 27.02.2006. Issues involved: Appeal challenging order of Income Tax Appellate Tribunal regarding registration under Section 12AA of the Income Tax Act, delay in filing application for registration, retrospective registration request.Analysis:1. Substantial Questions of Law Raised by Appellant:The appellant raised two substantial questions of law challenging the Tribunal's decision. The first question pertained to the Tribunal setting aside the Commissioner of Income Tax's order rejecting the registration application under Section 12AA. The appellant argued that the Tribunal erred in not considering the new provision of Section 12AA and only focusing on the genuineness of the Trust during registration. The second question raised was regarding the delay in filing the registration application. The Tribunal held that there were valid reasons for the delay, even though the appellant had not explained the delay adequately. The Trust had also waived its claim for retrospective registration, which was a crucial point of contention.2. Division Bench's Decision:The Division Bench of the High Court admitted the appeal on the second question of law related to the delay in filing the registration application. However, concerning the genuineness of the Trust for claiming exemption and registration, the Division Bench rejected the Revenue's plea. The Division Bench agreed with the Tribunal that the genuineness issue was a question of fact and upheld the Tribunal's decision.3. Registration and Condonation of Delay:The Tribunal directed the Commissioner of Income Tax to grant registration to the Trust and decide on the condonation of delay leniently. The Trust had applied for registration on 27.02.2006, seeking retrospective registration from 01.04.2002. However, as per the Income Tax Act, registration could only be granted from the financial year in which the application was made. Therefore, the registration could only be done from 01.04.2005, not retrospectively from 01.04.2002. Additionally, the Trust had voluntarily abandoned its claim for retrospective registration, making the question of condonation of delay moot.4. Final Decision of the Court:The Court disposed of the Tax Case Appeal, emphasizing that registration could be granted from 01.04.2005 based on the Trust's application date of 27.02.2006. The Court made it clear that retrospective registration from 01.04.2002 was not permissible, especially since the Trust had withdrawn its request for such retrospective registration. No costs were awarded in the judgment.This detailed analysis covers the key issues raised in the appeal, the court's decision on each issue, and the rationale behind the judgment delivered by the High Court.