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2018 (12) TMI 36 - AT - Income TaxExemption u/s 11 - assessee did not have the required registration u/s 12AA - addition on account of corpus fund/donations, addition on account of creditors and addition on account of disallowance - Held that - It is an admitted fact that the registration was granted vide order dated 8.6.2015 which was to have effect from 1st April, 2014. Although the assessment order was passed on 27.2.2014, the assessee was already registered u/s 12AA on 29.01.2016 when the assessee s appeal was decided by the Ld. Commissioner of Income Tax (A). As the powers of the CIT(A) are coterminous with that of the Assessing Officer and further as the appellate proceedings are an extension of the assessment proceedings itself, we are of the considered opinion that the benefit of this proviso is to be extended to pending first appellate proceedings also. Accordingly, we hold that the assessee should be allowed the benefit of exemption u/s 11 - issue is restored to the file of the Assessing Officer to examine the assessee s claim u/s 11 of the Act after affording proper opportunity to the assessee - Appeal of the assessee stands allowed for statistical purposes.
Issues:
- Denial of exemption under section 10(23C)(iiiad) and section 11 of the Income Tax Act, 1961. - Interpretation of proviso to section 12A(2) regarding registration and exemption eligibility. Analysis: Issue 1: Denial of exemption under section 10(23C)(iiiad) and section 11 The appellant, a Trust providing education, filed an appeal against the Commissioner of Income Tax(A)'s order denying exemption under section 10(23C)(iiiad) and section 11 of the Income Tax Act for the assessment year 2011-12. The Assessing Officer had denied exemption due to lack of registration under section 12AA at the time of filing the return. The Commissioner upheld the denial but allowed deletion of depreciation addition. The appellant argued that registration was granted later and genuine educational activities were proven. The Tribunal noted that the appellant was granted registration under section 12AA with retrospective effect. As the registration was in place during the appellate proceedings, the benefit of exemption under section 11 should be extended. The Tribunal directed the Assessing Officer to re-examine the eligibility for exemption under section 11, allowing the appeal for statistical purposes. Issue 2: Interpretation of proviso to section 12A(2) The Tribunal interpreted the proviso to section 12A(2) which allows exemption under sections 11 and 12 for income derived from property held under trust for preceding assessment years if registration under section 12AA is granted. Despite the absence of registration at the time of filing the return, the Tribunal held that the appellant, having obtained registration with retrospective effect, should benefit from the proviso. The Tribunal emphasized that the benefit should extend to pending appellate proceedings as well, restoring the issue to the Assessing Officer for proper examination of the exemption claim under section 11. This interpretation aligns with the legislative intent to provide relief to genuine cases facing hardship due to lack of registration. In conclusion, the Tribunal allowed the appeal, emphasizing the importance of registration under section 12AA for exemption eligibility under sections 10(23C)(iiiad) and 11. The Tribunal's interpretation of the proviso to section 12A(2) ensured that genuine cases receive relief and proper assessment of exemption claims is conducted.
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