Trust is Deemed to be Registered U/S 12AA in the Absence of Refusal of Registration within 6 months: ITAT [Read Order]

The Delhi bench of Income Tax Appellate Tribunal ( ITAT ) has held that trust is deemed to be registered u/s 12AA in the absence of refusal of registration within 6 months.

The Appellant, a charitable society, is registered under the provisions of the Societies Registration Act, 1860, and is engaged in charitable work including maintaining and running a Dharamshala for the benefit of the general public. The assessee had filed its return of income u/s 139 of the Income Tax Act, 1961 for the relevant assessment years at the total income of Nil which was processed u/s 143(1) of the Act.

The income of the assessee for the assessment years 2008-09 and 2009-10 was however reassessed u/s 143(3) r.w.s. 147 of the Act at Rs. 6,54,890 and Rs. 7,67,320 respectively. For the remaining assessment years, that is, 2010-11, 2012-13, and 2014-15, the case of the Appellant was selected for scrutiny and assessed under section 143(3) of the Act at an income of Rs.11,27,795 for AY 2010-11, Rs. 10,99,430 for AY 2012-13 and Rs. 12,49,170 for AY 2014-15. The additions in the relevant assessment years have been made by disallowing the exemption under section 11 of the Act by deeming the assessee as a nonregistered charitable society u/s 12A of the Act and by wrongly assuming the society as being run on a commercial venture. The assessee filed an appeal before CIT (A) which upholds the assessment orders and the consequent additions and disallowances in the aforesaid orders have been challenged in appeal before the Tribunal.

The revenue submitted that it was incumbent upon the assessee to furnish the certificate of Registration u/s 12A of the Act. He contended that for claiming exemption u/s 11 and benefit of Section 12 of the Act, the assessee is required to get itself registered u/s 12 of the Act. He contended that merely making an application is not sufficient for getting exemption u/s 11 and 12 of the Act. Moreover, the assessee failed to produce a copy of the application and other relevant supporting evidence. Therefore, he submitted that the authorities below were justified in rejecting the claim of the assessee.

The counsel for the assessee submitted that in the absence of any order of refusal of registration by the Competent Authority, the assessee trust may be treated as deemed to have been registered u/s 12AA of the Act.

It was observed by the Tribunal that Revenue has not placed any formal order by the Competent Authority regarding the refusal of registration. The Revenue has also not rebutted the fact that the assessee was allowed the claim exemption up to the assessment year 2009-10. In the light of the undisputed fact that the application of the assessee was pending consideration as of 6.7.1999 and no formal order of rejection or grant of registration is available on record. Thereafter, the claim of exemption was allowed for many years. All of sudden, the Officer wakes up out of slumber, issues notices for reopening of assessment purely on the ground that the assessee could not furnish the requisite certificate of registration u/s 12AA of the Act, and proceeded to make the assessment.

The single bench of Sri Kul Bharat, Judicial Member has held that “It is seen that the case of the assessee stands at better footing as in the present case the Revenue itself has been treating the income of the assessee as exempt treating the assessee as a charitable society. Under this peculiarity of facts and circumstances and respectfully following the judgment of the Hon’ble Supreme Court rendered in the case of CIT Vs. Society for Promotion of Education Adventure Sports and Conservation of Environment (2016) 382 ITR 6, I hereby hold that action of the Assessing Officer for not treating the assessee society eligible for the exemption is not justified under the facts and circumstances of the present case. Therefore, I direct the Assessing Officer to give benefit available u/s 11 and 12 of the Act”.  

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