TMI Blog2006 (5) TMI 123X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT(A) is defective both in law and facts of the case. 2. That the income of the club is exempt under s. 10(23) of the IT Act and the applications for exemption were duly submitted in time. 3. That the learned CIT(A) is not justified in upholding the findings of the AO simply on the ground that the exemption has not been granted and the income of the club would stand exempted with effect from the date exemption is granted. 4. That s. 10(23) of the IT Act is fully applicable in our case as the main object of the golf club is promotion of game, i.e. 'golf' and is fully covered by the language of s. 10(23) of the IT Act which reads as under: "Any income of the association of institution established in India which may be notified by the Central Government in the Office Gazette having regard to the fact that the association or institution has as its object the control, supervision, regulation or encouragement in India of the games of cricket, hockey, football tennis or such other games or sports as the Central Government may, by notification in the Official Gazette, specify in this behalf." 5. That the learned CIT(A) has not given any finding on the grounds of appeal that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the order of the Tribunal, passed in the case of assessee for the asst. yrs. 1990-91, 1993-94 and 1997-98. The AO shall re-work the income of the assessee by following the directions and the basis propounded by of the Tribunal in its order dt. 28th Feb., 2005. 6. As a result, the appeal for the asst. yr. 1989-90 is treated as partly allowed. 7. ITA Nos. 678 to 672/Chd/2003 (asst. yrs. 1991-92 to 1993-94 1994-95 to 1996-97) These five appeals pertain to the asst. yrs. 1991-92, 1992-93, 1994-95, 1995-96 and 1996-97. In all these appeals, apart from the grounds dealt with by us in relation to the asst. yr. 1989-90 above, the assessee has preferred the a new ground titled as Ground No. 5 in its memo of appeal which reads as under: "That the learned CIT(A) is not justified in holding that it is not possible for him to consider this income as income of the trust since the registration was allowed to the club under s. 12A of IT Act w.e.f. 1st April, 1997 whereas the assessee had duly applied for registration under the said section and the appellant had specifically requested the CIT for condonation of delay." This ground is common to all the aforesaid five appeals. We take up f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act vide its order dt. 19th Dec., 2000. The assessee contends that the registration has been granted by the CIT w.e.f. 1st April, 1989 in terms of its application made. The AO held otherwise. The stand of the AO was that the registration granted by the CIT on 19th Dec., 2000 would be applicable from 1st April, 1997 and, therefore, the plea of the assessee for grant of exemption under ss. 11 and 12 could not be considered in the impugned assessment years. This stand of the AO has been sustained by the CIT(A) and therefore the assessee is in appeal before us. 10. The learned counsel appearing on behalf of the appellant has however contended that the registration granted by the CIT is to operate from the date from which it has been applied for by the assessee. According to him the delay in filing of the application was considered favourably by the CIT and for the reasons stated in the application and the subsequent correspondence of the assessee, the CIT deemed it fit to condone the same. The registration has been allowed to the assessee after considering the explanations and information furnished by the assessee. The learned counsel referred to the paper book, especially pp. 4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting registration vide his order dt. 19th Dec., 2000 did not record any reasons for condoning the delay and therefore it was to be presumed that registration would be operative from 1st April, 1997. The order dt. 19th Dec., 2000, which reads as under: "Chandigarh Golf Club", Sector 6 Chandigarh, registered with the Registrar of Firms and Societies, Punjab on 25th Aug., 1966 has filed the registration application under s. 12A(a) of the IT Act, 1961, in the prescribed form on 31st March, 1998. The application is not in time. The delay in filing application for registration is condoned. Registration is allowed to the trust. The application has been entered at No. 73-C in the register of application under s. 12AA maintained in this office." 13. The learned Departmental Representative has also submitted a copy of the entries in the record of the CIT while processing the application seeking registration. We reproduce the SC1me as under: Ordersheet of the CIT-I, Chandigarh "Sir, The submissions made by the Chandigarh Golf Club and other documents furnished by the club have been examined Brief facts are that the Chandigarh Golf Club was registered with the Registrar of Firms and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on is deemed to have been granted to the trust or institution from the 1st day of the financial year in which the application is made. The CIT(A) has also the power to grant registration from the date of creation of the trust or institution. If he grants registration retrospectively, he has to record reasons in writing for the assessee. The relevant section being s. 12A is reproduced herewith. 12A. The provisions of s. 11 and s. 12 shall not apply in relation to the income of any trust or institution unless the following conditions are fulfilled, namely: (a) the person in receipt of the income has made an application for registration of the trust or institution in the prescribed form and in the prescribed manner to the CIT before the 1st day of July, 1973, or before the expiry of a period of one year from the date of the creation of the trust or the establishment of the institution, (whichever is later and such trust or institution is registered under s. 12AA): Provided that where an application for registration of the trust or institution is made after the expiry of the period aforesaid, the provisions of ss. 11 and 12 shall apply in relation to the income of such trust or i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rder of the Tribunal, seemingly on the merits of the issue is to be understood only in that light. Our attention was invited to para 3 of the order of the Tribunal in the miscellaneous application preferred by the assessee in this regard as follows: "After hearing the parties, we are of the view that in para 10 of the order, we have only explained as to how the issue is dependent on findings of fact and our decision cannot be considered to be a decision on merits in the light of the decision of the Tribunal that the additional ground raised by the assessee is not entertainable as it involved investigation of facts not on record. We clarify that the assessee shall be at liberty to argue the matter on merits in the regular appeal if such a ground is taken in the main grounds of appeal and in any case our decision in para 10 should not be considered as a decision on merits in regard to the additional ground of appeal." 17. Therefore, it was contended that the plea of the learned Departmental Representative that the issue regarding the effective date of the grant of registration has been held by the Tribunal to be w.e.f. 1st April, 1997, cannot be considered as a precedent. 18. W ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of the trust or establishment of the institution only in case the CIT, for reasons to be recorded in writing, is satisfied that the person in receipt of the income was prevented from making the application before the expiry of period aforesaid for sufficient reasons. If the CIT is not satisfied about the sufficiency of reasons, the registration shall be granted from the first day of the financial year in which the application is made. It is in this background now we examine the fact situation in the instant case. The assessee has been incorporated as a society in the year 1966. It applied for registration vide its application dt. 18th March, 1998, submitted before the CIT on 31st March, 1998, a copy of the same placed at pp. 4 and 5 of the paper book. Subsequently, vide its communication dt. 3rd March, 2000, the assessee submitted further explanation and sought registration with effect from the financial year 1989-90. It also filed the following: (a) Balance sheets for financial years 1989-90 to 1998-99. (b) Audit report under s. 12(b) of the IT Act, 1961, in the Form 10B for the financial years. 1989-90 to 1998-99. (c) Three copies of accounts for the financial years 1989- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the condonation of delay will relate back the effect of registration to the very date of creation of the trust or institution. As a matter of fact, by the amendment of the proviso below cl. (a) of s. 12A by the Finance (No. 2) Act, 1991, w.e.f. 1st Oct., 1991, it is not made clear by the legislature itself that where condonation is granted and the trust is registered upon condonation, the registration shall have effect from the date of creation of the trust." 21. The relevant provisions which have been discussed by us in the earlier paragraphs clearly empower the CIT to condone the delay where the assessee makes a belated application for registration. Condonation itself implies acceptance of the explanation for the delay sought to be condoned. The resultant benefits of the registration, even for the period covered in delay, cannot be denied to the assessee. Therefore, we do not find any justification in the stand of the AO that the registration granted by the CIT vide his order dt. 19th Dec., 2000 was to be understood as being effective from 1st April, 1997. 23. Now, coming to the clarifications submitted by the learned Departmental Representative as obtained from the CIT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sheet of the CIT, a copy of which is placed by the learned Departmental Representative shows a noting that "though the application for registration under s. 12A is not preferred within the prescribed time.....". Similarly, the noting also contains an observation that the delay in submission of application may be condoned. All this clearly goes to show that the CIT while granting registration was well aware that the assessee had filed its application belatedly and that the assessee had also applied for condonation of delay in filing such application. On the face of such facts, the averments presently found made in the clarification dt. 19th/24th Jan., 2005 issued by CIT which have been noted by us in the earlier part, are inexplicable and are de hors the material on record. 25. We also notice that the clarification seek3 to make out that the registration has to be considered as having been allowed from the date of issuing of the order under s. 12A of the Act. Quite clearly, this is contrary to the understanding of the AO itself. The AO has taken the stand that the registration is effective from 1st April, 1997 being the first day of the financial year during which the assessee app ..... X X X X Extracts X X X X X X X X Extracts X X X X
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