S.13 attracts during Assessment, Not at Grant of Registration: ITAT restores matter to Grant Final Registration u/s 12AB [Read Order]

In a recent ruling, the Ahmedabad bench of the Income Tax Appellate Tribunal (ITAT) restored income tax matters to grant Final Registration under Section 12AB of the Income Tax Act, 1961 and held that S.13 of the Act is attracted during assessment and not at the grant of registration.

The assessee is a trust that has been engaged in providing educational activities since July 1999. On 19-01-2023, the assessee was granted provisional registration, and later on, the assessee filed an application for grant of final registration under Section 12AB of the Income Tax Act,1961 in Form 10AB on 16-03- 2023.

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Although submissions were made by the assessee to the Commissioner of Income Tax ( Exemption ) [ CIT( E ) ] regarding why the registration of trust should not be denied under Section 12 AB of the Income Tax Act,1961, the CIT( E ) was not satisfied with the same.

The CIT ( E ) rejected the final registration as it was of the opinion that the objects of the trust were for the benefit of a particular community or caste, namely the Patel Samaj. CIT ( E ) observed that the applicant has not furnished any documentary evidence to prove that the Patel community falls under the Scheduled Castes, backward classes.

The assessee, who was aggrieved by the above order, appealed before the ITAT.

It was submitted by the counsel on behalf of the assessee that the activities that were carried out by the trust were aimed at the public at large and not in relation to a particular community. It was contended that Section 13(1)(b) of the Income Tax Act cannot be invoked for the purpose of denial of grant of registration under Section 12A of the Act.

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The ITAT observed that in the case of Bhojalram Leuva Patel Seva Samaj Trust [2024] 162 taxmann.com 270, the ITAT had held that provisions of Section 13(1)(b) can be invoked only at the time of assessment and not at the time of grant of registration under Section 12A of the Income Tax Statute.

The bench, by going through various judicial precedents, concluded that the provisions of Section 13 of the Income Tax Act can be invoked only at the time of assessment and not at the time of grant of registration under Section 12A of the Act.

The ITAT, comprising Annapurna Gupta ( Accountant Member ) and T. R Senthil Kumar ( Judicial Member ) allowed the appeal filed by the trust, restored the file back to the CIT ( E ), and directed to grant final registration under 12AB of the Income Tax Act, after giving due opportunity of hearing to the assessee.  

The assessee was represented by Mr. Mohit Balani and the revenue by Dr. Darsi Suman Ratnam.

To Read the full text of the Order CLICK HERE

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