2025 (2) TMI 1190 - AT - Income Tax

Tax Exemption Granted: Delayed Section 12AA Registration Doesn't Invalidate Charitable Trust's Claim for Income Tax Benefits

ITAT Delhi allowed an appeal for AY 2017-18, granting tax exemption under Section 11 despite delayed Section 12AA registration. The Tribunal distinguished ... Denial of section 11 exemption - CIT(Exemption) granted Section 12AA registration on 30.09.2020 which could not be extended as carrying retrospective effect - HELD THAT:- We find no merit in the Revenue stand as it has come on record that at the time of framing assessment herein dated 10.09.2021, the assessee had very well succeeded in getting Section 12AA registration. We thus quote section 12A 2nd proviso to hold that benefit of such a registration could not be denied as the re-assessment had been granted as on the date of re-assessed. So far as the Revenue reliance on M/S Shiv Kumar Sumitra Devi Smarak Shikshan Sansthan[2019 (9) TMI 55 - ALLAHABAD HIGH COURT] the said assessee’s appeal was pending before the tribunal; and, therefore, the benefit of registration u/s 12A could not be held to have covered u/s 12A 2nd proviso as the facts involved herein. We accordingly accept the instant sole substantive grievance and direct the AO to frame his consequential assessment as per law. Assessee’s appeal is allowed. The ITAT Delhi, in the appeal for AY 2017-18, addressed the rejection of the assessee's exemption claim under section 11 due to delayed Section 12AA registration granted on 30.09.2020. The Revenue relied on CIT Vs. M/S Shiv Kumar Sumitra Devi Smarak Shikshan Sansthan (2000) 113 taxman.com 334 (All.), upheld by the Supreme Court in (2022) 138 taxman.com 192, to deny exemption benefits. However, the Tribunal held that since the Section 12AA registration was obtained before the reassessment order dated 10.09.2021, the assessee was entitled to exemption under the second proviso to Section 12A. The Tribunal distinguished the cited case on facts, noting the appeal there was pending, and directed the Assessing Officer to frame assessment accordingly. The appeal was allowed.