No valid Registration to claim exemption u/s 11 of Income Tax Act: Telangana HC directs to deposit 3 crores [Read Order]

In a recent ruling the bench composed of Chief Justice Ujjal Bhuyan and Justice N. Tukaramji meets the ends of justice, while entertaining a writ petition, directed to pay an amount of Rs. 3 crores within a period of fifteen days from the date of the order.

The petitioner, M/s. Zoos and Parks Authority of Telangana filed a writ petition under the Article 226 of the Constitution of India seeking the validity of the impugned order issued by the respondent-department  under Section 220(6) of the Income Tax Act, 1961.

The impugned order of respondent no.1 (Assessing Authority) to pay Rs.5 crores to the respondents in an exchange for the Income Tax Department's demand of Rs.41,38,07,520 (Rupees Forty one crores thirty eight lakhs seven thousand five hundred and twenty only) being stayed.

The fact is that the petitioner underwent the assessment conducted by the Income Tax Department for the 6 assessment years from 2016-17 to 2021-22. Further, the demand notices have been issued by the Income Tax Department to the petitioner for payment of outstanding tax dues under Section 156 of the Income Tax Act.

However, the petitioner preferred appeal against each assessment order before the first appellate authority under Section 246(A) of the income Tax Act. 

In the meanwhile, petitioner had filed separate applications before respondent No.1 under Section 220(6) of the Income Tax Act for stay of outstanding demand for the assessment years 2016-17 and 2021-22.

The respondent No. 1 had granted stay of demand subject to payment of 20% of the total demand in terms of circulars dated 29.02.2016 and 31.07.2017 of the Central Board of Direct Taxes (CBDT).

Furthermore, the impugned order was issued by respondent No.1 declaring that the petitioner received a new Permanent Account Number (PAN), nevertheless did not apply for any registration under Section 12A of the Income Tax Act employing the new PAN.  As a result, the petitioner is unfit for the exemption due to a lack of proper registration.

The bench observed the issue of the entitlement of the petitioner to exemption from income tax under Section 11 of the Income Tax Act.

The Section 11 of the Income Tax Act of 1961 exempts income derived from property owned by charity trusts/societies for charitable or religious purposes, subject to specific restrictions and limitations.

Based on the submissions of both parties, the court concurred to stay the department's claim until the settlement of the appeals pending before the first appellate body on a deposit of 3 crores by the petitioner.

To Read the full text of the Order CLICK HERE

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