Registration of Trust u/s 12AA Once Done, Continues Unless Withdrawn by Specific Order: ITAT Sets Aside Denial of Sec 11 Benefit [Read Order]

The Income Tax Appellate Tribunal (ITAT), Chennai Bench, has recently, in an appeal filed before it, while setting aside the denial of Section 11 benefit, held that a registration of trust once done under Section 12AA would continue, unless it is withdrawn by specific order. The aforesaid observation was made by the Chennai ITAT, when an appeal was preferred before it by the Assessee, as directed against the order passed by the Commissioner of Income-tax (Exemptions), Chennai, dated 15.10.2019. The ground of the assessee’s appeal being that the CIT(E) has failed to consider the fact, that the Appellant having already obtained registration under Section12AA on 03.12.2003, is no more required to re-registration, when there is only change in the trustees, the brief facts of the case were that the appellant had filed an online application in Form no. 10A for registration under Section 12AA of the Income tax Act, 1961, on 23.04.2019. However, the CIT(E), Chennai rejected the application filed by the assessee vide order under Section 12AA of the Income Tax Act, dated 15.10.2019, on the ground that the assessee could not file any evidence in support of its application, in spite of various dates of hearing being provided to file necessary evidences. And, it is being aggrieved by this order of the CIT(E), that the assessee has preferred the instant appeal before tribunal. In the appellate proceedings, Adv. Shri. G. Baskar, the Counsel for the assessee, referring to paper book filed by the assessee dated 28.03.2023, submitted that the assessee trust came into existence by way of trust deed dated 20th August, 2001, and that the trust had got registration under Section 12AA of the Income Tax Act, vide order dated 03.12.2003 from the CIT(E), Madurai w.e.f. assessment year 2004-05. He added that the assessee has amended its trust deed on 11th February, 2015 and by mistake of law, filed a fresh application for registration of trust in Form no. 10A on 23.04.2019, even though, it had got registration w.e.f. assessment year 2004-05. He further contented that since, the trust has already got registration under Section 12AA of the Income Tax Act, a further application for registration, by mistake of law is incorrect and thus, prayed for setting aside the order of the CIT(E). On the other hand, Shri. M. Rajan, the CIT, on behalf of the Revenue, submitted that there is no clarity in copy of order filed by the assessee to prove that trust was registered under Section 12AA of the Income Tax Act, for assessment year 2004- 05. He further added that the appellant had filed application on the basis of amended trust deed dated 11.02.2015, and therefore that, the CIT(E) has rightly rejected application filed by the assessee for non-prosecution. Hearing the opposing contentions of both sides as well as perusing the materials available on record, the ITAT observed: “We have heard both the parties, perused materials available on record and gone through orders of the authorities below. As per provisions of section 12AA of the Act, once a trust is registered under Section 12AA, it is permanent unless it was withdrawn by a specific order from the authority. However, the law has been amended by the Finance Act, 2020 w.e.f. 01.04.2021 and as per said amended provisions, registration of any trust is restricted for a period of five years. In this case, there is no dispute with regard to the fact that the application filed by the assessee on 11.02.2015, is as per pre-amended regime of registration of trust. Therefore, from the above, it is very clear that once the trust has been registered under Section 12AA of the Act, its registration will continue unless it was withdrawn by a specific order. In this case, the assessee claims that the trust has got registration under Section 12AA of the Act from assessment year 2004-05 onwards and said registration is valid. Further, the assessee has filed a fresh application on the basis of amended trust deed dated 11.02.2015, by mistaken of law, as if when the trust deed is being amended fresh registration is required to be taken. The CIT(Exemptions), rejected application filed by the assessee for non-prosecution and non-filing of necessary details and said order is in force.” “Unless the latest order passed by the CIT(E) is withdrawn, the assessee may lose the benefit of exemption under Section 11 of the Act, even though it has got valid registration under Section 12AA of the Act. Therefore, we are of the considered view that an opportunity should be given to the assessee to rectify the mistake committed by the assessee itself for filing a fresh application for registration and said rectification can be done by the CIT(E) itself”, the Coram of Mahavir Singh, the Vice – President and Manjunatha G, the Accountant Member added. Thus, the ITAT held: “Therefore, we set aside the order passed by the CIT(E) and restore the issue back to the file of the CIT(E) to allow one more opportunity of hearing to the assessee to decide the issue in accordance with law. In the result, appeal filed by the assessee is allowed for statistical purposes”. Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates

Registration of Trust u/s 12AA Once Done, Continues Unless Withdrawn by Specific Order: ITAT Sets Aside Denial of Sec 11 Benefit [Read Order]

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