TaxTMI 
TaxTMI 
TaxTMI 
2026 (4) TMI 234
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....s registered u/s. 12AA of the Act vide 12AA Registration Certificate dated 29.07.2019. Thus, the action of the Ld. AO, CPC of not allowing exemption u/s. 11 of the Act is liable to be quashed. 1.2. On the facts and in the circumstances of the case and in law, the Ld. AO, CPC has erred in disallowance of exemption u/s. 11 of the Act without appreciating that as per the First Proviso to Section 12A(2) of the Act, the benefit of exemption u/s. 11 of the Act shall apply on all the pending proceedings and thus, the Intimation u/s. 143(1) of the Act dated 26.02.2020, without considering the 12AA Registration Certificate dated 29.07.2019, is liable to be set aside and exemption u/s. 11 of the Act may kindly be allowed to the assessee society. 1.3. On the facts and in the circumstances of the case and in law and without prejudice to the above, the Ld. AO, CPC has erred in not allowing deduction of revenue expenditure incurred by the assessee society in the regular course of activities of the assessee society, which is wrong and contrary to the provisions of the Act. 2. The disallowance of exemption u/s. 11 of the Act by the Ld. AO, CPC u/s. 143(1) of the Act is w....
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....f sections 11 and 12 shall apply in respect of any income derived from property held under trust of any assessment year preceding the aforesaid assessment year, for which assessment proceedings are pending before the Assessing Officer as on the date of such registration and the object and activities of the trust or institution remain the same for such preceding assessment year:" On the basis of above Proviso to section 12A(2), the assessee submitted to CIT(A) that since registration has been granted to it from subsequent AY 2019-20, the provisions of section 11/12 shall apply in respect of preceding AY 2018-19 which was pending before AO as on the date of grant of registration. It is an undisputed fact that the registration u/s 12A/12AA from AY 2019-20 was granted to assessee on 29.07.2019 and the intimation u/s 143(1) for AY 2018-19 was passed by AO on 26.02.2020, therefore the assessment of AY 2018-19 was pending before AO. The assessee also relied upon ITAT Indore's order dated 27.12.2024 in ITA No. 319/Ind/2024 in assessee's case for AY 2017-18 wherein the ITAT has directed the AO to give similar benefit of Proviso to section 12A(2). However, the CIT(A) rejected assess....
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....r consideration on 10.06.2019 alongwith Computation of Total Income, Audit Report and Audited Financial Statements. Ultimately, based on documents of assessee, the AO assessed total income at Rs. 69,37,663/- but without giving exemption u/s 11/12. The AO denied exemption u/s 11/12 for two-fold reasons, viz. (i) the assessee had not filed return within the time permitted in the notice u/s 142(1), and (ii) the assessee got registration u/s 12A from AY 2019-20 which is not for AY 2017-18 under consideration. Aggrieved by order of AO, the assessee carried matter in first-appeal before CIT(A). The CIT(A), however, agreed with AO's conclusions and upheld assessment-order. Now, the assessee has come in next appeal before us assailing the orders of lower-authorities. 6. Ld. AR for assessee initially submitted that the assessee has, although after expiry of time allowed in notice u/s 142(1) but still before passing of assessment-order dated 28.12.2019, filed Return of Income, Audit Report and Audited Financial Statements for AY 2017-18 under consideration to the AO. Further, the department has granted registration u/s 12A to assessee vide order dated 29.07.2019 from AY 2019-20, but....
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....d by AO is only the fact that the object and activities of assessee remained same for AY 2018-19 as were there at the time when registration u/s 12A was granted. That apart, the claim of exemption u/s 11/12 involves a different type of working based on application and accumulation of income which needs to be verified by AO. Therefore, we feel that it would be more appropriate to refer this matter back to the AO who shall give an opportunity to the assessee to provide necessary information for the aforesaid verifications by AO and based on such information allow exemption as admissible u/s 11/12 to assessee. 9. Since the assessee has not filed return of income within the time allowed by AO in statutory notice u/s 142(1) and also not filed present appeal in time, we apprised the Ld. AR of assessee during hearing that the assessee shall be directed to pay a cost of Rs. 10,000/- to Prime Minister National Relief Fund and submit receipt of same to the AO during proceeding before AO. The assessee is accordingly directed. 10. Resultantly, this appeal is allowed for statistical purpose." 5. Therefore, in view of pre-existing order of ITAT in assessee's own case, we too....
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....stration and there was no reason of rejection by CIT, Exemption. Therefore, the assessee claimed exemption in return of income. Be that as it may, we are at present concerned with the eligibility of exemption u/s 11/12 in the light of Proviso to section 12A(2) and once the situation and condition prescribed therein are satisfied, the objection cited by Ld. DR cannot operate as a bar to the grant of exemption. 7. Lastly, we may also add one more point that during hearing, we raised a specific query to Ld. AR as to whether the assessee filed any response in terms of second Proviso to section 143(1)(a) to the intimation given by AO under first Proviso to section 143(1)(a) before making impugned disallowance? In reply, Ld. AR admitted that the assessee did not file any such response. Had the assessee filed a response to AO narrating the factual position and claiming the benefit of Proviso to section 12A(2), the AO would have considered assessee's response in terms of second Proviso to section 143(1)(a). However, in absence of response from assessee, the AO has proceeded to make the impugned disallowance, which has culminated into the present litigation. The entire exercise has resul....