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TMI Blog2022 (10) TMI 945X X X X Extracts X X X X X X X X Extracts X X X X ..... f the case as well as law on the subject, the learned CIT(A) has erred in confirming the action of assessing officer in not granting deduction of expenses of Rs.20,07,776/- incurred towards the objects of the trust and thereby levying tax on gross total income of Rs.22,05,475/-. 3. Even otherwise, the assessing officer has erred in making the adjustment u/s. 143(1) by treating the claim of exemption u/s. 11 as incorrect although such incorrect claim was not apparent from any information in the return of income as envisage under clause (ii) of S. 143(1)(a). 4. Assessee craves leave to add, alter or delete any ground(s) either before or in the course of hearing of the appeal. 5. It is prayed that the assessment may please be quashed and/or addition made by the assessing officer and confirmed by CIT(A) may please be deleted." 3. Brief stated the relevant material facts are summarized as follows: (a) Assessee is a Trust registered under Bombay Public Trust Act. Assessee has not been registered under section 12A of the IT Act, 1961. (b) Assessee filed it return on 31.03.2017 (after the due date) declaring total income at NIL as under: Income from Other Sources Voluntary Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e) Application of Income is allowed as an exemption u/s 11 of the Act for purpose of determination of Total Income only in case of a charitable or religious Trust/Institution, for which law provides a special/defined procedure, beginning with the registration of such Trust with the Revenue u/s 12A r.w.s 12AA of the Act. This basic condition has not been observed by the Assessee in the instant case. Thus, Section 11 itself is not applicable in the present case, in view of nonregistration of the Assessee 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. f) Assessee is a Trust with religious and charitable purpose. It is in receipt of voluntary donations including anonymous donations to tune of Rs.22,03,747/- and sale of scrap of Rs.1,728/-, totaling Rs.22,05,475/-. These receipts are 'Income' as per definitions in the Act. Chapter III of the Act (Sec 10 to 13B) exempts Income arising to a charitable and religious Trust u/s 11 of the Act i.e. on application of its Income for its objects. This is subject to s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd 2015-16. In the assessment year 2016-17, the assessing officer denied the exemption and assessment was completed by issuing intimation under section 143(1) of the Act. For assessment years 2017-18, 2018-19, 2019-20, 2000-2021 and 2021-22, the assessments were not framed under scrutiny assessments. After this, the assesse-trust has filed fresh Form No.10A, and the fresh registration was granted to the assesse-trust recently on 05.04.2022, which is placed at paper book page no. 1 to 3, therefore ld Counsel contended that assessee-trust was in existence since from the beginning and therefore the deduction should be allowed to the assessee-trust. To support his plea, the ld Counsel relied on the judgment of Hon`ble Gujarat High Court in the case of Mayur Foundation, 274 ITR 562 (Gujarat). 7. The Ld. Counsel also contended that assessee's case is also squarely covered by the judgment of the Co-ordinate Bench of ITAT, Surat in the case of Shree Surti Modhvanik Hitvardhak vs ITO (in ITA No.149/SRT/2017), wherein it was held as follows: "10. We have considered the rival submission of both the parties and perused the record carefully. We find that the ld.AO disallowed the claim of exp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eard 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. The Hon'ble Court not accepted the contention of the revenue that the assessment proceedings came to an end when the assessment is framed. Thus, the objection of the Ld. Sr DR that the assessee cannot take the benefit of Proviso of section 12A(2) is not acceptable in view of the decision of Hon'ble High Court. 13.Further, the Co-ordinate Bench of Bangalore Tribunal in ITO Vs CCMP (supra) by referring the decision of Hon'ble Rajasthan High Court held that when registration under section 12AA of the Act and appeal in continuation of original assessment before the Appellate Authorities is also covered by the Proviso sub-section (2) of section 12A of Income Tax Act. 14.Further, we find that the assessee claim was not considered on merit in absence of production of registration under section 12AA of the Act and considering the fact that the assessee was granted registration dated 26.06.2018, though it is effective from 15.10.2017. Further, the contention of the assessee throughout the assessment proceedings and at the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... `s application. Therefore, assessee trust was not registered for the following assessment years Viz: assessment years 2013-14, 2014-15, 2015-16, 2016-17 , 2017-18, 2018-19, 2019-20, 2020-2021 and 2021-22. After this, assessee trust applied for fresh registration in Form No.10A, in the year 2022 and the fresh registration was granted to the assesse-trust on 05.04.2022 therefore, assessee-trust is not entitled to get exemption prior to 05.04.2022. Therefore, ld DR contended that assessing officer has rightly denied the exemption, under section 143(1) of the Act. 10. We have heard both the parties and carefully gone through the submissions put forth on behalf of the assessee along with the documents furnished and the case laws relied upon, and perused the facts of the case including the findings of the ld. CIT(A) and other material brought on record. We note that application of income is allowed as an exemption u/s 11 of the Act for purpose of determination of total income only in case of a charitable or religious Trust/Institution, for which law provides a special/defined procedure, beginning with the registration of such Trust with the Revenue u/s 12A r.w.s 12AA of the Act. This ba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... only question which the court is required to decide is, as to whether, in the absence of any specific timelimit prescribed under section 11(2) of the Act, whether the time-limit prescribed in rule 17 for submission of Form No. 10 by the rule-making authority is valid. In the case of Nagpur Hotel Owners' Association [2001] 247 ITR 201 (SC), the following two questions came up for consideration before the Bombay High Court (page 203): "(1)Whether, on the facts and circumstances of the case, the Income-tax Appellate Tribunal is correct in holding that the application in Form No. 10 under rule 17 of the Income-tax Rules, 1962, could be filed even after the assessment is completed? (2)Whether, on the facts and circumstances of the case, the Income-tax Appellate Tribunal is correct in holding that the Income-tax Rules could not fix any timelimit for submitting an application in Form No. 10 under rule 17 of the Incometax Rules, 1962?" The High Court of Bombay held that, once rule 17 of the Rules did not prescribe any time-limit and the limitation of six months commencing from the end of the previous year for issuing the notice as required under section 11(2) of the Act, was onl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nouncement gives an impression that the stand of the Revenue is correct, inasmuch as a notice in writing furnishing the prescribed particulars should be submitted before the assessing authority and a completed assessment cannot be reopened, if such particulars are furnished subsequent to the completion of the assessment. However, it is apparent that the apex court has stated that the details have to be furnished before completion of the assessment proceedings and any information supplied subsequent to the completion of assessment cannot be taken into consideration. The question, therefore, that arises is when can an assessment be said to be complete or till what point of time the assessment proceedings can be said to be alive. In the case of Rambhai Jethabhai Patel v. CIT [1977] 108 ITR 771 , this court was called upon to decide the question as to till what point of time an assessment can be said to be pending. This court referred to various interpretations of the word "pending" at page 784 of the reported decision, and ultimately, relied upon the decision of the apex court in the case of Asgarali Nazarali v. State of Bombay, AIR 1957 SC 503, to hold that it can safely be said that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taxed or a permissible deduction is denied, there is no reason why the assessee should be prevented from raising that question before the Tribunal for the first time, so long as the relevant facts are on record in respect of the item. There is no reason to restrict the power of the Tribunal under section 254 only to decide the grounds which arise from the order of the Commissioner of Income-tax (Appeals). Both the assessee as well as the Department have a right to file an appeal/cross-objections before the Tribunal. The Tribunal should not be prevented from considering questions of law arising in assessment proceedings, although not raised earlier. The view that the Tribunal is confined only to issues arising out of the appeal before the Commissioner of Income-tax (Appeals) is too narrow a view to take of the powers of the Tribunal. Undoubtedly, the Tribunal has the discretion to allow or not to allow a new ground to be raised. But where the Tribunal is only required to consider the question of law arising from facts which are on record in the assessment proceedings, there is no reason why such a question should not be allowed to be raised when it is necessary to consider that que ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rejected, and in subsequent assessment years 2014-15 to 2021-22 the trust remains unregistered. Therefore, the judgment of Hon`ble High Court of Gujarat in the case of Mayur Foundation(supra) is not applicable, to the assessee under consideration. 14. Before us, assessment year under consideration is AY.2016-17 and the assessee-trust applied for registration in A.Y. 2013-14 that is on 06.08.2012, the assessee cannot claim the exemption for assessment year 2016-17, as the application for registration of the Trust was rejected in assessment year 2013-14 itself. The Ld Counsel also relied on the judgment of Co-ordinate Bench of ITAT Surat in the case of Shree Surti M. Hitvardhak Mandal - ITA No.149/SRT/2017. In our view, the said judgment of the Co-ordinate Bench does not assist the assessee under consideration, as in this case the registration granted was still in existence, and it was neither cancelled nor revoked by Revenue Authorities whereas in assessee`s case under consideration, no registration was granted at all. Hence, the judgment cited by ld Counsel is distinguishable on facts. 15. We note that Hon`ble Gujarat High Court in the case of Addor Foundation 117 taxmann.com 359 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... institution from the assessment year immediately following the financial year in which such application is made:] [Provided that the provisions of sections 11 and 12 shall apply to a trust or institution, where the application is made under- (a) sub-clause (i) of clause (ac) of sub-section (1), from the assessment year from which such trust or institution was earlier granted registration; (b) sub-clause (iii) of clause (ac) of sub-section (1), from the first of the assessment year for which it was provisionally registered: Provided further that where registration has been granted to the trust or institution under section 12AA or section 12AB], 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: [Provided also] that no action under section 147 shall be taken by the Assessing Officer in case of such trust or institution for an ..... 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