TMI Blog2022 (10) TMI 945X X X X Extracts X X X X X X X X Extracts X X X X ..... t of the assessee should be taxable, as if the assessee is doing business in the capacity of association of person (AOP). The said lis should be remitted back to the file of the assessing officer to examine income and expenditure of assessee. Hence, we set aside the order of ld CIT(A) and remit this issue back to the file of the assessing officer with the direction to examine the Profit and loss account/or income and expenditure account of the assessee and compute the net taxable profit by applying the commercial principles. The assessee is also directed to submit before the assessing officer the Profit and loss account/or income and expenditure account, with supporting evidences and documents. Appeal of the assessee is treated to be allowed for statistical purposes. - ITA No. 239/SRT/2021 - - - Dated:- 21-10-2022 - Shri Pawan Singh, JM And Dr. A. L. Saini, AM For the Assessee : Shri Rasesh Shah, CA For the Respondent : Shri H. P. Meena, CIT(DR) ORDER PER DR. A. L. SAINI, AM: Captioned appeal filed by the assessee, pertaining to assessment year (AY) 2016-17, is directed against the order passed by the Learned Commissioner of Income Tax (A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tal Rs.22,05,475/- (c) Total Income NIL (Rs.22,05,475 - Rs.22,05,475) (d) Return was processed under section 143(1) vide order dated 03.01.2018 by CPC, Bangalore. The exemption under section 11 of the Act was not allowed to the assessee by CPC Bangalore. Total income of assessee was assessed at Rs.22,05,475/-. 4. Then after the assessee trust filed appeal before ld CIT(A) against intimation/order under section 143(1) of the Income Tax Act, dated 03.01.2018, passed by DCIT, CPC, Bangalore (hereinafter referred to as the AO ) for AY.2016-17. The ld. CIT(A), has confirmed the action of the assessing officer, observing as follows: 7.2 Finding a) Assessee has filed its computation of Income for AY. 2016-17 (Page 1-2 of Paper book). Assessee has claimed Adjustment on account of Section 10 and 11 of the Act of Rs.22,05,475/-. As a result, Total Income is assessed at NIL. In Schedule 3 of the computation of Income, the Assessee has claimed as under: Schedule 3 Adjustments on account of Section 10 and 11 Return to be furnished u/s 139(4A) Whether ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 12A(1) stipulates the condition of registration of Trust/Institution in receipt of Income being registered u/s 12AA of the Act. The Assessee is not registered u/s 12A/12AA of the Act, so the benefit of exemption u/s 11 shall not apply there to the Assessee. There is no basis for allowing exemption to the Assessee on its income u/s 11 of the Act. g) Voluntary contributions to Assessee qualify as Income u/s 2(24)(iia) of the Act and the same is therefore, subject to the provisions of the Act, eligible to exemption u/s 11 on application subject to the condition that it is registered with Revenue u/s 12A/12AA of the Act. Assessee is not entitled to exemption u/s 11 of the Act as it is not registered u/s 12A/12AA of the Act. This issue stands settled by decision of Hon'ble Apex Court in UP Forest Corporation vs. DCIT(2008) reported in 297 ITR 1(SC). It is the correct legal position that is relevant and not the view that the parties may take of their rights in the matter [Refer to the judgments of Hon'ble Apex Court in Kedarnath Jute Manufacturing Co. Ltd. vs. CIT (1971) 82 ITR 363 (SC) and CIT vs C Parikh co (India) Ltd. (1956) 29 ITR 661 (SC)]. 7.3 In view of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e by taking view that the assessee failed to produce the registration certificate under section 12AA of the Act. The ld.CIT(A) also held that the assessee would have obtained the copy of registration from the office of Commissioner(Exemption) or to apply it again, which the assessee has not done. 11. Before us, the ld.AR of the assessee vehemently argued that appeal before the Appellate Authority are the continuation of assessment proceedings has been held by various Hon ble High Courts in Tribunals. The ld.AR further vehemently prayed that as per sub-section (2) of section 12A of the Act, when an application has been made on or after 01.01.2007, the provision of section 11 and 12 shall apply in relation to income of such trust or institution from assessment year immediately following the financial year in which such application is made. The Proviso attached to sub-section (2) of section 12Ashall apply to a trust or institution, where the application is made from the assessment year from such institution or trust was earlier granted registration. The ld. AR for the assessee also vehemently submitted that the assessee was having valid registration since 1974 and the same was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the first appeal as well as before this Tribunal is that assessee-trust is registered under section 12A and the revenue authorities have not examined their own record nor refuted the contention of the assessee that the registration number provided by the assessee in its references are not corrected. We further find that before moving fresh application, the assessee filed application under the provisions of Right to Information Act (RTI), for seeking the copy of registration certificate granted initially. The assessee has also placed on record the reply of CPIO and the order of First Appellate Authority under RTI. Moreover, on further filing fresh application for registration under section 12AA, the assessee was granted fresh registration. In our view, the grounds of appeal raised by the assessee required fresh consideration by the ld.AO in view of the decisions of Hon ble Jurisdictional High Court in Mayur Foundation (supra) and the Co-ordinate Benches of Tribunal as referred above. Therefore, the appeal is restored back to the file of ld.AO to consider the claim of assessee afresh by considering the various decisions as referred above and pass the order afresh in accordance with l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A of the Act. This basic condition has not been fulfilled by the Assessee-Trust, that is, it is not registered. Thus, section 11 itself is not applicable in the present case, in view of non-registration of the Assessee-Trust u/s 12A/12AA of the Act. Thus, there is denial of exemption u/s 11 for want of registration u/s 12A/12AA of the Act. The registration u/s 12A/12AA is a precondition for the application of sections 11 and 12 of the Act. Therefore, we note that Assessing Officer has rightly denied the exemption under section 143(1) of the Act, as the assessee has failed to fulfill the basic conditions, that is the assessee is not a registered trust under the Act. 11. We note that assessee-trust applied for registration under section 12A/12AA of the Act on 06.08.2012. After this the Assessing Officer issued a defect-memo within six months stating that assessee-trust has not submitted required documents and evidences for registration. Since, the assessee-trust has failed to submit the required documents and details for registration therefore ld CIT(Exemption) denied registration, hence assessee-trust could not get registered in assessment year 2013-14. We also note that f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as required under section 11(2) of the Act, was only in Form No. 10, it was not permissible for the rule-making authority to fix such a period of limitation because the Legislature did not impose a limitation for giving a written notice to the assessing authority. The Revenue having carried the matter before the apex court, after referring to the provisions of section 11 of the Act, the apex court has enunciated the law in the following words (page 204) : It is abundantly clear from the wording of sub-section (2) of section 11 that it is mandatory for the person claiming the benefit of section 11 to intimate to the assessing authority the particulars required, under rule 17 in Form No. 10 of the Rules. If during the assessment proceedings, the Assessing Officer does not have the necessary information, the question of excluding such income from assessment does not arise at all. As a matter of fact, this benefit of excluding this particular part of the income from the net of taxation arises from section 11 and is subjected to the conditions specified therein. Therefore, it is necessary that the assessing authority must have this information at the time he completes the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mbay, AIR 1957 SC 503, to hold that it can safely be said that a matter can be said to be pending in a court of justice when any proceedings can be taken in it and that is the test to be applied. In Stroud's Judicial Dictionary, Fourth Edition, Volume 4, at page 1975, it is stated : A legal proceeding is 'pending' as soon as commenced and until it is concluded, i.e. , so long as the court having original cognisance of it can make an order on the matters in issue, or to be dealt with, therein. Applying the aforesaid principle, can it be stated that when the matter is pending before the Tribunal by way of an appeal, the assessment proceeding is pending? The answer has to be in the affirmative. The assessing authority is empowered and is duty bound, to pass an order giving effect to the order of the Tribunal for the purposes of assessing the tax liability of the assessee for the assessment year which was under consideration before the Tribunal. In these circumstances, it cannot be contended on behalf of the Revenue that the assessment proceedings come to an end when the assessment order is framed. The contention on behalf of the Revenue to equate the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stion should not be allowed to be raised when it is necessary to consider that question in order to correctly assess the tax liability of an assessee. Thus, the proceedings before the Tribunal are meant to correctly assess the tax liability of an assessee: If this be so, it follows that the assessment proceeding cannot be said to be complete and is pending till the appeal is heard and disposed of by the Tribunal and the order of the Tribunal is given effect to by the assessing authority by computing the correct tax liability of an assessee. In other words, whether an assessee is required to pay tax or becomes entitled to a refund, would be ascertained by the assessing authority after giving effect to the order of the Tribunal. In these circumstances, in the present case, the Tribunal was well within its jurisdiction to entertain the new ground by which the assessee claimed the benefit under section 11(2) of the Act and adjudicate the tax liability of the assessee. As already noticed hereinbefore, the Tribunal has categorically found that the additional ground involves the question relating to interpretation of section 11(2) and the facts on the basis of which such a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cts. 15. We note that Hon`ble Gujarat High Court in the case of Addor Foundation 117 taxmann.com 359(Guj.); held that non-disposed of an application filed for seeking registration under section 12AA within six months, as fixed by section 12AA(2) would not result in a deemed grant of registration. Hence, assessee cannot be treated as registered Trust for assessment years 2013-14, 2014-15, 2015- 16, 2016-17 , 2017-18, 2018-19, 2019-20, 2020-2021 and 2021-22. 16. The ld Counsel also argued that as per proviso to sub-section (2) of section 12A of the Act where registration has been granted to the trust or institution under section 12A/12AA, then, the provisions of sections 11 and 12 shall apply in respect of any income derived from property held under trust of any assessment year preceding the aforesaid assessment year, for which assessment proceedings are pending before the Assessing Officer as on the date of such registration and the objects and activities of such trust or institution remain the same for such preceding assessment year. However, we do not agree with the plea taken by ld Counsel, as the assessee`s trust under consideration applied for registration under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment year: [Provided also] that no action under section 147 shall be taken by the Assessing Officer in case of such trust or institution for any assessment year preceding the aforesaid assessment year only for non-registration of such trust or institution for the said assessment year: Provided also that provisions contained in the first and second proviso shall not apply in case of any trust or institution which was refused registration or the registration granted to it was cancelled at any time under [section 12AA or section 12AB]. 18. From the third proviso of sub-section (2) of section 12A, it is vivid that when trust is refused for registration then in that situation the trust cannot claim benefit of first proviso to sub-section (2) of section 12A of the Act. In the assessee`s case under consideration, the assessee was refused for registration in the year 2012-13 hence assessee is not entitled to claim benefit of first proviso to subsection (2) of section 12A of the Act, therefore the plea taken by the ld Counsel is not acceptable. 19. The ld Counsel also argued before us that if exemption is not granted under section 11 of the Act, then in that event t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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