TMI Blog2007 (2) TMI 252X X X X Extracts X X X X X X X X Extracts X X X X ..... also been challenged. It has thus been contended that the Ld. CIT erred in law and in fact in not registering the appellant society under section 12AA of the Act with effect from the previous year relevant to the assessment year 2002-03. During the course of hearing of the appeal the Ld. counsel invited attention to statement of facts enclosed along with the grounds of appeal. He contended that the society was registered with the Registrar of Societies, Assam, dated 19-6-1992 as per Societies Registration Act, 1860. The sole purpose of the Society was to run the educational institution and its income was exempt from the assessment years 1993-94 to 1998-99 under section 10(22) of the Act and the claim of the assessee was accepted by the Department. The section 10(22) of the Act was omitted by the Finance (No. 2) Act, 1998 with effect from 1-4-1999 and for the assessment years 1999-2000 and 2000-01 the exemption was claimed under section 10(23C)(iiiad) of the Act and the returns for the aforestated assessment years were duly filed in response to notices issued under section 142(1) of the Act. The relevant particulars for the assessment year 2001-02 were filed as per petition claiming ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4. The Ld. D.R. pointed out that the Ld. CIT was required to register the Society from first day of the financial year in which the application was filed and since the application was submitted on 30-3-2004 he rightly registered the Society with effect from 1-4-2003 and since no reason was given for delay in filing the application, the registration was not required to be given with effect from 1-4-2001. According to the Ld. D.R. the Ld. CIT was also correct in holding that there could not be two orders of registration under section 12AA of the Act. 5. The Ld. counsel relied on the decision in the case of Society of Divine Providence v. Union of India [1999] 235 ITR 339 (MP) and submitted that cogent reason was required to be assigned as to why the Ld. CIT refused registration as per application of the assessee. 6. We have carefully considered the issue. It could not be denied that the second application of the assessee filed for registration for financial year relevant to the assessment year 2002-03 was not considered while granting registration under section 12AA of the Act as per the order of the CIT dated 1/13-10-2004. The view of the Ld. CIT that there could not be two ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1993-94 for claiming exemption under section 10(22). There was no demand raised from the assessment years 1993-94 to 1998-99. It is presumed that the assessee was exempted under section 10(22) since no adverse intimation was given by the revenue. 5. From the assessment years 1999-2000 to 2001-02 as per amended provisions of the Act, the Institution comes under the purview of section 10(23C)(iiiad) for which details were also filed and no tax was paid. 6. Since the gross receipt for the assessment year 2001-02 exceeded Rs. 1,00,00,000 the Institution was covered under section 10(23C)(vi), therefore, approval of the learned CCIT was required. The assessee filed application with complete details on 30-3-2004 for needful approval for the assessment years 2002-03 and 2003-04 which is still pending before the learned CCIT. More so, the assessee simultaneously applied for registration under section 12A on the same date i.e., on 30-3-2004 in Form No. 10A along with forwarding letter, explaining the delay. The learned CIT has passed the order under section 12AA registering the society with effect from 1-4-2003 vide order dated 1-10-2004 and not allowed exemption for the intervening peri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... application dated 30-3-2004 was filed before the learned CCIT which is still pending. 12. The assessee has applied for registration in Form No. 10A under section 12A dated 30-3-2004 with effect from 1-4-2003 before the learned CIT. The learned CIT has passed order under section 12AA dated 1-10-2004 granting registration while issuing the order under section 12AA with effect from 1-4-2003. The intervening period i.e., assessment years 2002-03 and 2003-04 is left since no order has been passed giving registration or refusal on reasons. The assessee has submitted application dated 31-3-2004 along with forwarding letter where delay was explained submitted for exemption for intervening period. 13. It is expected from the CCIT that the authority should have passed the order after hearing of the assessee within the provisions of the Act and reasonable time since the delayed order cannot meet the justice. The claim of the assessee for registration of the institution as charitable purpose cannot be denied only for reasons of delay, which is already brought on record before the learned CCIT and CIT. It is not expected by the revenue authorities to pass two orders dated 1-4-2003 and 8-5-2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... against the order of Commissioner of Income-tax refusing to grant registration under section 12A of the Income-tax Act, 1961 ('the Act') to the assessee for assessment year 2002-03. 2. The facts of the case are that the assessee is a registered society and is running educational institutions, i.e., school and a college at Guwahati. It was created on 19-6-1992 and registered on the same day with Registrar of Societies, Assam. It was treated as a society existing solely for educational purposes and was granted exemption under section 10(22) of the Act right up to assessment year 1998-99 when above provision was omitted from the Statute. Thereafter assessee claimed and was allowed exemption under section 10(23C)(iiiad) of the Act right up to assessment year 2001-02. 3. The assessee applied under section 12A of the Act to the Commissioner of Income-tax for grant of registration of the society for assessment year 2002-03 to claim benefit of registration as a charitable institution vide application dated 23-3-2004 filed on 30-3-2004. Although in the title it was application only for the assessment year 2002-03, but in para-4 approval (registration) was sought for assessment years 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g the application under section 12A of the Act only on 30-3-2004. It was also stated in the application that as a society running solely for educational purposes, "the assessee shall face a perilous situation in the form of immense tax burden and its entire purpose of existence shall be jeopardized" if approval under section 12A would not be granted to the assessee. The assessee also rendered detailed explanation with reference to various functions carried on by the assessee leading to the delay in the submission of application for registration. 4. The Ld. Commissioner thereafter passed the order under section 12AA on 1-10-2004 as under:- "ORDER UNDER SECTION 12AA OF THE INCOME-TAX ACT, 1961 Shrimanta Shankar Academy, Panbazar, Guwahati as constituted by the Memorandum of Association registered with the Registrar of Societies, Assam, Guwahati on 19-6-1992 had filed an application for registration under clause (a) of section 12A of the Income-tax Act, 1961 in the prescribed form on 30-3-2004. The above noted Society has been registered under section 12AA of the Income-tax Act with effect from 1-4-2003. The application has been entered at File No. 42/12A(a)/CIT/GHY-1/TECH/2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... parties, the Ld. Accountant Member was of the view that nothing prevented the CIT to modify his order and grant registration to the assessee with effect from 1-4-2001. The Ld. Commissioner was not right in rejecting application on the ground that he could not pass two orders under section 12AA. He further observed that there was no application of mind by the Ld. Commissioner to the facts stated by the assessee in its application. In the light of decision of Hon'ble Madhya Pradesh High Court in the case of Society of Divine Providence v. Union of India [1999] 235 ITR 339, the Ld. Accountant Member directed as under:- "...We restore the issue back to the file of the Ld. CIT with the direction that he should apply his mind to the reasons given in the second application of the assessee and also take up the matter with the Chief Commissioner of Income-tax for disposal of pending application of the assessee. The order should be made after duly considering the request of the assessee for granting registration with effect from 1-4-2001 and giving proper opportunity of hearing to the assessee as per law." 6. The Ld. Judicial Member did not agree with the above view. He observed that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ding benefit under section 12A of the Act for assessment year 2002-03 when delay in the submission of the application was duly explained and there was no dispute that the assessee-society was a charitable institution existing solely for educational purposes. Remand of matter would lead to multiplicity of proceeding which could have been avoided in this case. Remand is also unjust and unfair to the assessee. The learned counsel of the assessee, accordingly, supported the proposed order of the Ld. Judicial Member. 9. The Ld. Departmental Representative, on the other hand, relied upon the proposed order of Ld. Accountant Member which, according to the learned representative, was fair as he merely directed re-examination of entire issue afresh. 10. On careful consideration of rival submissions, I am inclined to agree with order proposed by Ld. Judicial Member. It is true that remand of a matter is discretionary. But such discretion is required to be shown to be exercised in a judicial manner. In the case of Saurashtra Packaging (P.) Ltd. v. CIT [1993] 204 ITR 443, Their Lordships of Gujarat High Court have observed that where matter can be disposed of by the Tribunal on the basis o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 11 and section 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 Commissioner before 1-7-1973, 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 section 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 sections 11 and 12 shall apply in relation to the income of such trust or institution,- (i) from the date of the creation of the trust or the establishment of the institution if the Commissioner is, for reasons to be recorded in writing, satisfied that the person in receipt of the income was prevented from making the application before the expiry of the period aforesaid for sufficient reasons; (ii) from the 1st day of the financial year in which the application is made, if the Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... satisfaction in terms of proviso (i) to section 12A(a) and granting registration with effect from 1-4-2001 as requested by the assessee and as the Ld. CIT was obliged to grant, no order was passed nor any reasons were given in order dated 1-10-2004 for not extending benefit for assessment year 2002-03. When Ld. CIT's attention was drawn to above mistake in the second application, the Ld. CIT took the stand that two orders cannot be passed under section 12AA of the Act. It was also wrongly stated that the assessee-society now wants order of registration for assessment year 2002-03. This way an admittedly charitable institution was denied exemption on technical and flimsy grounds. If for some good reasons exemption was denied; it would have been a different matter. But after thorough examination of accounts, the Assessing Officer in assessment order dated 31-3-2005 has asked the assessee to pay tax of several lakhs for its inability to show requisite approval under section 12AA or 10(23C) of the Act. This totally disregards that a public authority is obliged to carry mandate of the Legislature in a just and fair manner. Remand here also appears to be unjust. Objects of the assessee-i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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