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2017 (5) TMI 584 - HC - Income TaxEligibility to exemption under Section 11 although the Assessee was not registered under Section 12A(a) - Held that:- By an amendment with effect from 1st April, 1997 the words “whichever is later and such trust or institution is registered under Section 12 AA” were inserted at the end of Section 12A (a) of the Act. Therefore the said amendment did not apply to the Assessee during the relevant AY. It will be recalled that the Appellant’s application for registration under Section 12A of the Act was made on 23rd June, 1973 i.e. prior to 1st July 1973 and was pending as on the date of the above amendment. The first part of the condition in clause (a) as it read prior to the above amendment stood fulfilled. Section 12 AA was itself inserted by an amendment with effect from 1st April 1997. Therefore, the question of the Assessee having to get itself registered under Section 12 AA did not arise. By the time the ITAT answered the above question, the registration under Section 12 A (a) was granted. The registration related back to the date of the application i.e. 23rd June 1973.Therefore, question (i) framed by the Court is answered in the affirmative i.e. in favour of the Assessee and against the Revenue. Could the Assessee be granted exemption under Section 11 of the Act when there was a failure on its part to comply with the provisions of Section 12A (b) of the Act? - Held that:- The assessment order was passed on 29th February 1996 and the Assessee's audit report was ready on 12th March 1996. Had the AO granted the Assessee two weeks' time, the Assessee would have filed its audit report and the assessment order passed thereafter would still have been within the deadline of 31st March 1996. It would have caused no prejudice to the Revenue. CIT(A) noted that even if there was a non-compliance with Section 12 A (b) of the Act by the Assessee, thus disentitling it to exemption under Sections 11 and 12 thereof, the AO was still not justified in adding the entire corpus of the Assessee to its taxable income. The corpus fund had been present in the earlier years and was a capital receipt. Even as per the original return, the Assessee did not have any excess over expenditure which could have been taxed. The ITAT committed no error in concurring with the CIT (A). The question framed at (ii) above has to be answered in the negative, viz., in favour of the Assessee and against the Revenue. It is held that the Assessee could not have been denied exemption under Sections 11 and 12 of the Act as there was no failure to comply with Section 12A (b) of the Act.
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