TMI Blog2021 (10) TMI 415X X X X Extracts X X X X X X X X Extracts X X X X ..... essee : Sri E. Phalguna Kumar, AR For the Revenue : Sri Y.V.S.T. Sai, DR ORDER PER SMT. P. MADHAVI DEVI, J.M. This is assessee s appeal against the order of the CIT (Exemption), Hyderabad, denying the registration to the assessee u/s 12A of the Act vide order u/s 12AA(1)(b)(ii) of the Income Tax Act, 1961 dated 27.09.2019. 2. Brief facts of the case are that the assessee is a university imparting education within its territorial jurisdiction and it is totally funded by the Government. It filed its application in form 10A on 31.03.2019 seeking registration u/s 12A of the Act. The CIT(E) called for various details observing that the assessee has not filed the return of income for the relevant year and has also got its accounts for the F.Y. 2016-17 and 2015-16 audited only on 16.09.2019, i.e. beyond the statutory time limit. He observed that assessee has deliberately not filed its return of income and thus violated the provisions of the Act. He observed that as per the amended Act, w.e.f. 01.04.2019, the compliance of law by a trust is mandatory. Therefore he observed the assessee has violated the law and therefore was not eligible for registration u/s 12A of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rated in the three provisos to subsection 2 of Sec 12A to the facts of the present case arid has erred in rejecting registration under Sec 12AA on the premise that the returns of Income arc not filed by the University. 3. The learned counsel for the assessee, Sri E. Phalguna Kumar, submitted that the assessee, being a university, was constituted under the state Statute i.e., the Kakatiya University Act 1976, formed to serve the educational needs of areas comprising of Warangal, Adilabad, Karimnagar and Khammam with headquarters at Warangal. He submitted that the assessee is existing wholly for educational purposes and was exempt from tax all along. However, there has been an amendment to the Finance Act requiring the assessee to file its return of income along with its audit reports. He submitted that since the assessee has been wholly and substantially funded by the Government, it was not assessable to tax prior to the amendment and therefore it was under the impression that it is not required to file return of income and also not to seek registration u/s 12AA of the Act. As soon as the assessee became aware of the requirements of law, the assessee has complied with the same. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ernment is only for salary and that the grant is less than 50% of its total receipts. 3. The CIT (E), on perusal of the acknowledgement of the return of income for the A.Y 2017-18 dated 23.9.2019, observed that the assessee has shown self-assessment tax payment of ₹ 50,00,000/- but has shown total income at Rs. Nil . He also observed from the computation of income filed for the A.Ys 2016-17 to 2018-19, that the assessee has claimed benefit of section 11, even though it has not obtained the registration u/s 12A of the Act. When asked to explain, the learned AR of the assessee explained before the CIT (E) that since they have already made an application for registration, they have claimed exemption u/s 11 of the Act. When the assessee was enquired as to whether they have already submitted Form 10 before the Assessing Officer for accumulation of its income, the assessee submitted that they have not filed any Form. 4. Taking the above facts into consideration, CIT (E) observed that: (i) the assessee has failed to file its audited accounts and failed to file the return of income for the earlier A.Ys and thus, the assessee has violated the provisions of the I.T. Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as earlier exempt from tax as the assessee is engaged only in imparting education which is a charitable activity and was also exempt from filing returns of income. It is submitted that it is headed by the Governor of the State as Chancellor and Vice-Chancellor and all other Officers engaged in the services are IAS Officers appointed by the State Govt and the Institution is controlled and run under the directions of the State Govt. sponsoring number of colleges and imparting education to several lakhs of engineering students. It was submitted that the assessee has made the application for registration u/s 12A of the Act pursuant to notice from the IT Department in the financial year ending 31.3.2019. It is submitted that along with Form 10A, the assessee has filed all the relevant documents and the CIT (E) ought to have considered as to whether the objects of the assessee were charitable activity or not for grant of registration u/s 12A of the Act. He submitted that the assessee is carrying on its activities strictly in accordance with the objectives. As regards the observation of the CIT (E) that the assessee has violated the provisions of section 11, he submitted that there is no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isputedly a charitable act. The assessee was earlier known as Jawaharlal Nehru Technological University which has subsequently been divided into four Universities and the assessee is one of them which was formed in 2008. Section 10(23C) (iiiab) provided that the income of any University or other Educational Institution existing solely for educational purposes and not for purposes of profit, and which is wholly and substantially funded by the Govt., its income is not to be included in the total income. However, sub-section (4C) and sub-clause (e) thereof to section 139 of the Act have been inserted by the Finance Act of 2002, to make the income of such university or other educational institution referred to in sub clause (iiiab) of section 10(23) as assessable to tax only if the total income in respect of such institution, without giving the effect to the provisions of section 10, exceeds the maximum amount which is not chargeable to income tax Sub-section (4E) to section 139 was inserted by the Finance Act of 2014 requiring every business trust, which is not required to furnish its return of income or loss under any other provisions of this section, to furnish return of such income ..... 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