TaxTMI 
TaxTMI 
2024 (9) TMI 279
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.... granted to the appellant on 28-09-2019 i.e. during the course of pendency of assessment proceedings for Assessment Year 2018-19 and the object & activities of the appellant remained same as compared to the year of registration and therefore, the appellant was eligible for benefit of section 11 and 12 as per section 12A of the Income- tax Act, 1961 for Assessment Year 2018-19 also. That on the facts and in the circumstances of the case and in law, the Ld CIT(A) erred confirming the action of the Ld Assessing Officer in denying the benefit of exemption under section 11 and 12 of the income-tax Act, 1961 and assessing the total income of the appellant at Rs. 7,56,19,050/- by stating that the appellant has not claimed exemption under section 11 and 12 of the Act by way of filing of revised income-tax return even when the appellant had duly longed additional claim to allow exemption under section 11 and 12 of the Act as eligible to the appellant during the course of assessment proceedings itself. 3. That on the facts and in the circumstances of the case and in law, the Ld CIT(A) erred confirming the action of the Ld Assessing Officer in denying the benefit of exemptio....
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....ranted registration u/s 12AA of the Act vide letter dated 28.09.2019 and consequently the assessee vide letter dated 29.01.2021 made a claim of exemption u/s 11 & 12 of the Act. Ld. AR has referred to the proviso to section 12A(2) of the Act and submitted that the provisions of section 11 & 12 shall apply in respect of the income derived from the property held under the trust of any assessment year preceding the assessment year for which the registration u/s 12A has been granted and the assessment proceeding of the preceding assessment year is pending before the AO as on the date of such registration subject to the conditions that objects and activities of such trust or institution remain the same. Thus, Ld. AR has submitted that when the registration u/s 12A was granted to the assessee during the pending of the assessment year under consideration then the claim of exemption u/s 11 & 12 cannot be denied by the AO on the ground of non-filing of revised return of income. Ld. AR has thus submitted that the assessee reiterated its claim of exemption u/s 11 & 12 before the CIT(A) but it was not accepted even by the CIT(A) which has no embargo for entertaining the claim not made in the r....
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....tion 10(23C) (iiiad) is claimed incorrectly when gross receipts of education society in A.Y. 2018-19 is more than 1 Cr. Society Apologies' for above mistake incurred in filing income tax return, Society members relied on professional assuming he will correctly file societies income tax return. Mistake in filing the return was unintentional and not on part of the society but consultant who on wrong assumption thought society being education institute income is exempt from tax under provisions of sections 10(23C) without appreciating that gross receipt of the society is more than 1 cr. Society is now filing before you revised computation of income, Audit Report in form 10B and proof of Tax and Interest paid with request to accept this revised computation in assessment proceedings. Society is engaged in education activities which are covered u/s 2(15) of Income Tax Act. It is registered under section 12AA and entitled to claim deduction/exemption under section 11. Society request that since they have paid tax along with interest no penalty be levied on them as society is running education institute which are already suffering from financial stress due to covid 19 pandemic....
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....g to the assessment year for which the registration was granted but such preceding year is pending assessment before the AO. Hence there is no legal impediment either for the AO or for the CIT(A) to allow the claim of exemption u/s 11 & 12 of the Act if the assessee satisfies the conditions provided u/s 12A(2) read with proviso to the said section. The twin conditions as provided in the proviso to section 12A(2) are that the assessment proceedings are pending at the time of granting registration u/s 12AA of the Act and second that the activities and objects of the assessee remains unchanged for the year under consideration as well as time of granting registration u/s 12A/12AA of the Act. The CIT(Exemption) while granting registration u/s 12AA has duly considered this fact of activities and objects of the assessee are not changed since its inception and a certificate to this effect was submitted by the assessee before the CIT(E) placed at page no.70 of the paper book as under: "Declaration I Jawed Akhtar, secretary of Akshay Academy, hereby declare that there is no change in the objects and activities of society as mentioned in the bye -laws of the society since it....
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....ate authorities is not barred. It is constantly held in several decisions that a legal claim can be made by the assessee before appellate authorities even if the same was not claimed during assessment-proceedings. We also observe that the provisions of section 11/12 grant exemption to the assessee and such exemption, if not allowed, would result in illegal collection of tax from the assessee, which is never an objective of the Income-tax Act, 1961. In view of this position of law, we do not find any difficulty in accepting the alternative claim of assessee to allow exemption u/s 11/12. However, the claim of exemption u/s 11/12 involves a different type of working based on application and accumulation of income. Therefore, we feel that it would be more appropriate to refer this matter back to Ld. AO who shall give an opportunity to the assessee to provide the necessary information for computation of exemption u/s 11/12. Based on such information, the Ld. AO shall allow the exemption as admissible u/s 11/12 to the assessee." 5.4 A similar view has been taken by this Tribunal in case of Madhya Pradesh Council for Vocational Eeducation & Training vs. CIT(E) (supra) in para 9 to 11 a....
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.... but pending before ITAT, Indore in these appeals. Hence, a question would arise as to whether it can be said that the assessment-proceeding were pending before AO in such a situation? In this regard, there is a direct decision of Co-ordinate Bench of ITAT, Indore settling identical controversy in M/s. Barkatullah Vishwavidyalaya, Bhopal Vs. PCIT, ITA No.924/Ind/2018, order dated 30.06.2022, relevant paras are reproduced below: "8. Ld. AR, thereafter, made an alternative claim that the assessee has also received registration u/s 12A(1)(aa) read with section 12AA from AY 2019-20 onwards vide Order No. ITBA/EXM/S/12AA/2019-20/ 1016373495(1) dated 17.06.2019 issued by CIT(Exemption), Bhopal. Ld. AR invited our attention to the copy of registration-order. Ld. AR then referred to the section 12A(2) which reads as under: "12A(2) Where an application has been made on or after the 1st day of June, 2007, the provisions of sections 11 and 12 shall apply in relation to the income of such trust or institution from the assessment-year immediately following the financial year in which such application is made. Provided that where registration has been granted to the tr....
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....en by the Assessing Officer in case of such trust or institution for any assessment year preceding the aforesaid assessment year only for non-registration of such trust or institution for the said assessment year: Provided also that provisions contained in the first and second proviso shall not apply in case of any trust or institution which was refused registration or the registration granted to it was cancelled at any time under section 12AA.]" 7.2 It is also relevant to reproduce the explanatory notes to the provisions of Finance (No.2) Act, 2014 as given in CBDT Circular No.01/2015 dated 21.01.2015 in reference F.No.142/13/2014-TPL, which read as follows: "Para 8.2 Non-application of registration for the period prior to the year of registration caused genuine hardship to charitable organizations. Due to absence of registration, tax liability is fastened even though they may otherwise be eligible for exemption and fulfill other substantive conditions. However, the power of condonation of delay in seeking registration was not available." This clearly goes to prove that the first proviso to section 12A(2) was brought in the statute only....
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....s 11 of the Act. 7.4 The explanatory Memorandum to Finance (No.2) Bill, 2014, which sought to amend section 12A explains the objects and reasons for making such amendments. The explanation makes it clear that it was in order to provide relief to such trusts in respect of which, due to absence of registration u/s 12AA tax liability got attached though otherwise they were eligible for exemption by fulfilling other substantive conditions that the amendment was brought in. That being so, denying such benefit to a trust like the assessee who had obtained registration u/s 12AA during the pendency of the appeals filed against the orders of the assessing authority, by narrowly interpreting the term, 'pending before the assessing officer' so as to exclude its pendency before the appellate authority, will be doing violence to the provisions of the Statute and, as such, liable to be interfered with. Moreover, under the Scheme of the Act, sections 11 and 12 are substantive provisions which provide for exemptions to a religious or charitable trust. Sections 12A and 12AA detail the procedural requirements for making an application to claim exemptions under sections 11 a....
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....n 12A(2) and therefore perfectly eligible for exemption u/s 11/12. Hence the Ld. AR requested to direct the Ld. AO to allow exemption u/s 11/12 to the assessee, if for any reason the exemption u/s 10(23C)(iiiab) is not allowed. 9. Per contra, the Ld. DR strongly supported the orders of lower authorities qua the disallowance of exemption u/s 10(23C)(iiiab). Ld. DR submitted that the receipts from government grant is just 3.50% and therefore the assessee is very far from the entitlement of section 10(23C)(iiiab). Accordingly, Ld. DR requested to uphold the disallowance made by lower authorities. However, the Ld. DR did not make any opposition to the alternative claim of exemption u/s 11/12 made by Ld. AR. 10. We have considered rival submissions of both sides, perused the records, considered the provisions of law and judicial precedents. We would first deal with the claim of exemption u/s 10(23C)(iiiab). XXX (not reproduced being ir-relevant in present appeal). 11. Now we proceed to examine the alternative claim of exemption u/s 11/12 demanded by the assessee. On perusal of the Proviso to section 12A(2) and the decision of Hon'ble Co-ordinate Bench....
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....purposive interpretation of statues, an assessment proceeding which is pending in appeal before the appellate- authority should be deemed to be 'assessment proceedings pending before the assessing officer' within the meaning of that term as envisaged under the proviso to section 12A(2). Therefore, the condition (ii) is also satisfied. Now what remains is the last condition (iii) according to which the object and activities of the assessee should remain same for preceding assessment year i.e. AY 2016-17 and 2017-18 in these cases. Ld. AR submitted that the assessee is a Govt. owned society and its object and activities remained same year after year. We prima facie find merit in the submission of Ld. AR but still the AO should get an opportunity to verify this condition (iii). Moreover, the claim of exemption u/s 11/12 involves a different type of working based on application and accumulation of income which the AO has not verified till now because he did not grant exemption for want of registration u/s 12A. For these reasons, we feel it most appropriate to remand these matters back to the file of AO for carrying out verification of fulfillment of condition (iii) discussed ab....