S.11 & 12 Exemption Cannot Be Denied Merely Due to Delayed Registration of Trust: ITAT [Read Order]

The Surat Bench of the Income Tax Appellate Tribunal (ITAT) remanded the case concerning the denial of exemption under Sections 11 and 12 of the Income Tax Act, 1961 to Shree Koteshwar Mahadev Public Trust, observing that the lower authorities had not properly evaluated the trust's eligibility post-registration and did not provide adequate opportunity for hearing.

Shree Koteshwar Mahadev Public Trust, the assessee, had claimed exemption of Rs. 8,47,257 under Sections 11 and 12 for the Assessment Year 2013–14. The Centralized Processing Center (CPC), Bangalore, disallowed the claim and raised a demand of Rs. 2,12,580 under Section 143(1). The assessee later obtained registration under Section 12AA on 31.10.2017.

The assessee appealed the CPC’s action, but the Commissioner of Income Tax (Appeals) [CIT(A)] passed an ex parte order confirming the disallowance. The assessee’s counsel argued that it was not given a fair chance to present its case and that similar appeals for AYs 2014–15 and 2015–16 were already restored to the Assessing Officer for fresh consideration.

They further argued that the delay in filing the appeal before CIT(A) was not intentional and was due to a lack of awareness about the CPC’s intimation until it filed its return for AY 2018–19. They relied on a CBDT Circular No. 1/2015, which clarifies that if registration under Section 12AA is obtained during the pendency of an appeal and the trust's objectives remain consistent, exemption under Sections 11 and 12 may still be granted.

The Departmental Representative agreed that the matter could be remanded back in line with the Tribunal’s prior decisions in the assessee’s own cases.

The two-member bench comprising Bijayananda Pruseth (Accountant Member) and Pawan Singh (Judicial Member) considered the arguments from both parties. The tribunal observed that the facts of this case were identical to the assessee’s own appeals for AYs 2014–15 and 2015-16, which were previously restored for fresh assessment.

The tribunal explained the principle of consistency and held that the exemption under Sections 11 and 12 should not be denied solely because registration was obtained later. The tribunal directed the Assessing Officer to re-examine the case and allow the assessee to submit supporting documents before making a fresh decision. The appeal was allowed for statistical purposes.

Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates