M/s Institute Management Committee(IMC) , Bagalkot V. Income Tax Officer Ward-1 , Bagalkot

ITA 157/BANG/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 0478 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 4 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-06-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2015-2016
• Appeal Filed On: 28-01-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: S.V.
• Keywords: Charitable institution; Opportunity of being heard; Benefit of exemption; Condonation of delay; Set aside
• Section: 147; 11; 143(3); 12A; 12AA; 13; 10(23C)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : BANGALORE BEFORE SHRI N.V. VASUDEVAN, VICE PRESIDENT AND SHRI B R BASKARAN , ACCOUNTANT MEMBER IT A NO. 157/BANG/2019 ASSESSMENT YEAR: 2015 - 16 INSTITUTE MANAGEMENT COMMITTEE (IMC), GOVT. ITI COLLEGE, BILAGRI CROSS, BILAGI DIST. BAGALKOT 587 116. KARNATAKA. PAN: AAAAI 2631N VS. THE INCOME TAX OFFICER, WARD 1, BAGALKOT. APPELLANT RESPONDENT APPELLANT BY : SHRI RAVISHANKAR, S.V., ADVO CATE RESPONDENT BY : SMT. R. PREMI, JT.C IT(DR)(ITAT ), BENGALURU. DATE OF HEARING : 1 0 .0 6 .2020 DATE OF PRONOUNCEMENT : 19 .0 6 .2020 O R D E R PER N.V. VASUDEVAN, VICE PRESIDENT THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE OR DER DATED 05.12.2018 OF THE CIT(APPEALS), BELAGAVI RELATING T O ASSESSMENT YEAR 2015-16. 2. THE ASSESSEE IS A SOCIETY REGISTERED UNDER THE K ARNATAKA SOCIETIES REGISTRATION ACT WITH SPECIFIC AIM OF UPGRADATION O F INDUSTRIAL TRAINING INSTITUTE INTO A CENTRE OF EXCELLENCE IN SUCH A WAY THAT THE TRAINING PROVIDED IN ITI IS IMPROVED AND BECOMES DEMAND DRIVEN LEADIN G TO BETTER EMPLOYABILITY OF PASSING OUT ITI GRADUATES. ITA NO.157/BANG/2019 PAGE 2 OF 9 3. FOR THE AY 2015-16, THE ASSESSEE FILED A RETURN OF INCOME ON 23.11.2015 CLAIMING EXEMPTION U/S. 10(23C)(IIIAD) O F THE INCOME-TAX ACT, 1961 [THE ACT] AS AN EDUCATIONAL INSTITUTION. THE DENIED THE BENEFIT OF EXEMPTION U/S. 10(23C) OF THE ACT AND TAXED THE SUR PLUS INCOME OF RS.29,82,425 BY AN ORDER U/S. 143(3) DATED 29.8.201 7. 4. AGGRIEVED BY THE ASSESSMENT ORDER, THE ASSESSEE PREFERRED APPEAL BEFORE THE CIT(APPEALS). PENDING PROCEEDINGS BEFOR E THE CIT(APPEALS), THE ASSESSEE HAS APPLIED FOR REGISTRATION U/S. 12AA ON 21.09.2017 IN FORM NO.10. BY AN ORDER DATED 9.3.2018, THE CIT(EXEMPTI ONS), BANGALORE [CIT(E)] GRANTED REGISTRATION U/S. 12AA OF THE ACT TO THE ASSESSEE. THE ASSESSEE CONTENDED BEFORE THE CIT(APPEALS) THAT PRO VISO TO SECTION 12A(2) STATES THAT, WHERE REGISTRATION HAS BEEN GRANTED TO THE TRUST OR INSTITUTION UNDER SECTION 12AA, THEN, THE PROVISIONS OF SECTION S 11 AND 12 SHALL APPLY IN RESPECT OF ANY INCOME DERIVED FROM PROPERTY HELD UNDER TRUST OF ANY ASSESSMENT YEAR PRECEDING THE AFORESAID ASSESSMENT YEAR, FOR WHICH ASSESSMENT PROCEEDINGS ARE PENDING BEFORE THE ASSES SING OFFICER AS ON THE DATE OF SUCH REGISTRATION AND THE OBJECTS AND A CTIVITIES OF SUCH TRUST OR INSTITUTION REMAIN THE SAME FOR SUCH PRECEDING ASSE SSMENT YEAR . THE SAID PROVISO IS SQUARELY APPLICABLE TO THE ASSESSEES CA SE. THE ASSESSEE CONTENDED THAT PROCEEDINGS PENDING BEFORE THE CIT(A PPEALS) IS TO BE CONSIDERED AS ASSESSMENT PROCEEDINGS PENDING BEFORE THE ASSESSING OFFICER AS THE POWER/JURISDICTION OF THE CIT(APPEAL S) ARE CO-EXTENSIVE WITH THE POWERS OF THE ASSESSING OFFICER AND THEREFORE T HE CIT(APPEALS) SHOULD ALLOW THE BENEFIT OF REGISTRATION TO THE ASSESSEE. IT WAS CONTENDED THAT SINCE THE ASSESSEE SOCIETY OBTAINED REGISTRATION U/ S. 12AA, HENCE THE EXEMPTION U/S. 11 IS APPLICABLE TO ASSESSEE SOCIETY FOR ALL THE PRECEDING ASSESSMENT YEARS OF THE PREVIOUS YEAR IN WHICH REGI STRATION U/S. 12AA IS GRANTED. ITA NO.157/BANG/2019 PAGE 3 OF 9 5. THE CIT(A), HOWEVER, REJECTED THE PLEA OF THE AS SESSEE OBSERVING THAT THE REGISTRATION WAS GRANTED TO THE ASSESSEE O NLY ON 9.3.2018 BUT THE ORDER OF AO WAS PASSED ON 29.8.2017. THEREFORE THE ASSESSMENT PROCEEDINGS WERE NOT PENDING AS ON 9.3.2018 AND THE REFORE THE BENEFIT OF PROVISO TO SEC.12A(2) OF THE ACT CANNOT BE EXTENDED TO THE ASSESSEE. THE FOLLOWING WERE HIS OBSERVATIONS IN THIS REGARD:- 5. IN THE WRITTEN SUBMISSIONS AR OF THE APPELL ANT STATED THAT THE ASSESSEE PROVISO TO SECTION 12A(2) STATES THAT, WHERE REGISTRATION HAS BEEN GRANTED TO THE TRUST OR INSTI TUTION UNDER SECTION 12AA, THEN THE PROVISIONS OF SECTION 11 AND 12 SHALL APPLY IN RESPECT OF ANY INCOME DERIVED FROM PROPERT Y HELD UNDER TRUST OF ANY ASST. YEAR PRECEDING THE AFORESAID ASS T. YEAR FOR WHICH ASST. PROCEEDINGS ARE PENDING BEFORE THE A.0 AS ON THE DATE OF SUCH REGISTRATION AND THE OBJECT AND ACTIVI TIES OF SUCH TRUST OR INSTITUTION REMAIN THE SAME FOR SUCH PRECEDING A SST. YEAR. 6. I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CAS E, THE SUBMISSIONS MADE BY THE APPELLANT AND ALSO PERUSED THE ASSESSMENT ORDER. 7. APPLICATION FOR 12AA REGISTRATION WAS MADE BY TH E APPELLANT ON 21/09/2017. ASSESSMENT UNDER CONSIDERA TION WAS PASSED ON 29/08/2017. HERE ASSESSMENT WAS NOT PENDI NG DURING THE PENDING OF REGISTRATION PROCESS OF 12AA. HENCE PROVISION TO 12A IS NOT APPLICABLE TO THE ASSESSES PRESENT CASE. HENCE EXEMPTION UNDER SECTION 11 IS NOT ADMISSIBLE TO THE ASSESSEE. THE A.O HAS CORRECTLY TAXED THE SURPLUS AS INCOME FROM OTHER SOURCES. THE ORDER OF THE A.O IS CORRECT AND IN ACCORDANCE W ITH LAW AND APPELLANT HAVING NO CASE, I THEREFORE HAVE NO REASO N TO INTERFERE WITH THE ORDER OF THE A.O. THE ADDITION MADE BY THE A.O IS CONFIRMED. 8. IN THE RESULT, THE APPEAL OF THE APPELLANT IS DI SMISSED. 6. AGGRIEVED BY THE ORDER OF THE CIT(A), THE ASSESS EE IS IN APPEAL BEFORE THE TRIBUNAL. THE LEARNED COUNSEL FOR THE A SSESSEE SUBMITTED THAT SECTION 12[(2) READS AS FOLLOWS: ITA NO.157/BANG/2019 PAGE 4 OF 9 WHERE AN APPLICATION HAS BEEN MADE ON OR AFTER THE 1ST DAY OF JUNE, 2007, THE PROVISIONS OF SECTIONS 11 AND 12 SH ALL APPLY IN RELATION TO THE INCOME OF SUCH TRUST OR INSTITUTION FROM THE ASSESSMENT YEAR IMMEDIATELY FOLLOWING THE FINANCIAL YEAR IN WHICH SUCH APPLICATION IS MADE: 7. HE BROUGHT TO OUR NOTICE THAT THE FOLLOWING PROV ISO WAS INSERTED THE FINANCE (NO. 2) ACT, 2014, W.E.F. 1-10-2014:- PROVIDED FURTHER THAT NO ACTION UNDER SECTION 147 SHALL BE TAKEN BY THE ASSESSING OFFICER IN CASE OF SUCH TRUST OR I NSTITUTION FOR ANY ASSESSMENT YEAR PRECEDING THE AFORESAID ASSESSMENT YEAR ONLY FOR NON-REGISTRATION OF SUCH TRUST OR INSTITUTION FOR T HE SAID ASSESSMENT YEAR. PROVIDED ALSO THAT PROVISIONS CONTAINED IN THE FIRS T AND SECOND PROVISO SHALL NOT APPLY IN CASE OF ANY TRUST OR INS TITUTION WHICH WAS REFUSED REGISTRATION OR THE REGISTRATION GRANTE D TO IT WAS CANCELLED AT ANY TIME UNDER SECTION 12AA.' 8. HE ALSO DREW OUR ATTENTION TO THE EXPLANATORY NO TE TO THE PROVISIONS OF THE FINANCE (NO.,2) ACT 2014 AS GIVEN IN CBDT NO .1/15 DATED 21.1.2015:- 'PARA 8.2 NON-APPLICATION OF REGISTRATION FOR THE PERIOD PRIO R TO THE YEAR OF REGISTRATION CAUSED GENUINE HARDSHIP TO CHARITABLE ORGANIZATIONS. DUE TO ABSENCE OF REGISTRATION, TAX LIABILITY IS FA STENED EVEN THOUGH THEY MAY OTHERWISE BE ELIGIBLE FOR EXEMPTION AND FULFILL OTHER SUBSTANTIVE CONDITIONS. HOWEVER, THE POWER OF CONDONATION OF DELAY IN SEEKING REGISTRATION WAS NOT AVAILABLE. ' 9. IT WAS CONTENDED BY HIM THAT ASSESSMENT PROCEED ING WHICH IS PENDING IN APPEAL BEFORE APPELLATE AUTHORITY SHOULD BE DEEMED TO BE 'ASSESSMENT PROCEEDINGS PENDING BEFORE ASSESSING OF FICER' WITHIN THE MEANING OF THAT TERM AS ENVISAGED UNDER PROVISO TO SECTION 12A(2) AND THEREFORE AN ASSESSEE WHICH OBTAINED REGISTRATION U NDER SECTION 12AA ITA NO.157/BANG/2019 PAGE 5 OF 9 DURING PENDENCY OF APPEAL WAS ENTITLED TO EXEMPTION CLAIMED UNDER SECTION 11 OF THE ACT. 10. THE LEARNED COUNSEL FOR THE ASSESSEE IN THIS RE GARD PLACED RELIANCE ON A DECISION OF THE ITAT COCHIN BENCH IN SNDP YOGAM V. ASSISTANT DIRECTOR OF INCOME-TAX (EXEMPTION) [2016] 68 TAXMAN N.COM 152 (COCHIN - TRIB.) . THE FACTS OF THE CASE WERE THAT THE ASSESSEE WHIC H WAS A CHARITABLE INSTITUTION HAD NOT OBTAINED THE BENEFIT OF REGISTR ATION U/S.12A OF THE ACT FOR AY. 2006-07 TO 2009-10 & 2011-12. ON 29.7.2013, TH E ASSESSEE WAS GRANTED REGISTRATION U/S.12A OF THE ACT. PRIOR TO 29.7.2013, THE ASSESSMENT FOR AY 2006-07 TO 2009-10 & 2011-12 WERE CONCLUDED BY THE AO AND THE BENEFIT OF SEC.11 & 12 WAS DENIED TO THE ASSESSEE B ECAUSE THE ASSESSEE DID NOT HAVE REGISTRATION U/S.12A OF THE ACT. AGAI NST THE ORDERS OF ASSESSMENT FOR THE AFORESAID AYS, THE ASSESSEE FILE D APPEAL BEFORE THE FIRST APPELLATE AUTHORITY. DURING PENDENCY OF APPE AL BEFORE FIRST APPELLATE AUTHORITY, ASSESSEE OBTAINED REGISTRATION UNDER SEC TION 12AA I.E., ON 29.7.2013 AND CLAIMED EXEMPTION UNDER SECTION 11. IT WAS CONTENDED THAT ASSESSMENT PROCEEDING WHICH IS PENDING IN APPEAL BE FORE APPELLATE AUTHORITY SHOULD BE DEEMED TO BE 'ASSESSMENT PROCEE DINGS PENDING BEFORE ASSESSING OFFICER' WITHIN MEANING OF THAT TERM AS E NVISAGED UNDER PROVISO TO SECTION 12A(2) AND THEREFORE AN ASSESSEE WHICH O BTAINED REGISTRATION UNDER SECTION 12AA DURING PENDENCY OF APPEAL WAS EN TITLED TO EXEMPTION CLAIMED UNDER SECTION 11. THE TRIBUNAL HELD AS FOL LOWS:- 7.2 WHEN SECTION 12A OF THE ACT WAS AMENDED BY I NTRODUCING NEW PROVISOS TO SUB-SECTION (2) OF S. 12A BY FINANC E ACT, 2014 WITH EFFECT FROM 01.10.2014, THE ASSESSMENT ORDERS PASSED BY THE ASSESSING OFFICER IN RESPECT OF THE PRESENT ASSESSE E WERE PENDING IN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY. DUR ING SUCH PENDENCY, THE ASSESSEE WAS GRANTED REGISTRATION U/S 12AA OF THE ACT ON 29.07.2013 W.E.F. THE ASSESSMENT YEAR 2013-1 4. THOSE APPEALS WERE THE CONTINUATION OF THE ORIGINAL PROCE EDINGS AND THAT THE POWER OF THE COMMISSIONER OF INCOME-TAX WAS CO- TERMINUS ITA NO.157/BANG/2019 PAGE 6 OF 9 WITH THAT OF THE ASSESSING OFFICER [ADIT (EXEMPTION ) IN THE PRESENT CASE] WERE TWO WELL ESTABLISHED PRINCIPLES OF LAW. IN VIEW OF THE ABOVE AND GOING BY THE PRINCIPLE OF PURPOSIV E INTERPRETATION OF STATUES, AN ASSESSMENT PROCEEDING WHICH IS PENDING IN APPEAL BEFORE THE APPELLATE AUTHORITY SH OULD BE DEEMED TO BE 'ASSESSMENT PROCEEDINGS PENDING BEFORE THE ASSESSING OFFICER' WITHIN THE MEANING OF THAT TERM AS ENVISAGED UNDER THE PROVISO. IT FOLLOWS THERE-FROM THAT THE A SSESSEE WHICH OBTAINED REGISTRATION U/S 12AA OF THE ACT DURING TH E PENDENCY OF APPEAL WAS ENTITLED FOR EXEMPTION CLAIMED U/S 11OF THE ACT. 7.3 THE EXPLANATORY MEMORANDUM TO FINANCE (NO.2) BILL, 2014 WHICH SOUGHT TO AMEND SECTION 12A EXPLAINS THE OBJECTS AND REASONS FOR MAKING SUCH AMENDMENTS. THE EXPLANA TION MAKES IT CLEAR THAT IT WAS IN ORDER TO PROVIDE RELI EF TO SUCH TRUSTS IN RESPECT OF WHICH, DUE TO ABSENCE OF REGISTRATION U/S 12AA TAX LIABILITY GOT ATTACHED THOUGH OTHERWISE THEY WERE E LIGIBLE FOR EXEMPTION BY FULFILLING OTHER SUBSTANTIVE CONDITION S THAT THE AMENDMENT WAS BROUGHT IN. THAT BEING SO, DENYING SU CH BENEFIT TO A TRUST LIKE THE ASSESSEE WHO HAD OBTAINED REGIS TRATION U/S 12AA DURING THE PENDENCY OF THE APPEALS FILED AGAIN ST THE ORDERS OF THE ASSESSING AUTHORITY, BY NARROWLY INTERPRETIN G THE TERM, 'PENDING BEFORE THE ASSESSING OFFICER' SO AS TO EXC LUDE ITS PENDENCY BEFORE THE APPELLATE AUTHORITY, WILL BE DO ING VIOLENCE TO THE PROVISIONS OF THE STATUTE AND, AS SUCH, LIABLE TO BE INTERFERED WITH. MOREOVER, UNDER THE SCHEME OF THE ACT, SECTIO NS 11 AND 12 ARE SUBSTANTIVE PROVISIONS WHICH PROVIDE FOR EXEMPT IONS TO A RELIGIOUS OR CHARITABLE TRUST. SECTIONS 12A AND 12A A DETAIL THE PROCEDURAL REQUIREMENTS FOR MAKING AN APPLICATION T O CLAIM EXEMPTIONS UNDER SECTIONS 11 AND 12 BY THE ASSESSEE AND THE GRANT OR REJECTION OF SUCH APPLICATION BY THE COMMI SSIONER. THUS, IN OUR VIEW, SECTIONS 12A AND 12AA ARE ONLY PROCEDU RAL IN NATURE. HENCE, IT IS NOT THE REGISTRATION U/S 12AA BY ITSELF THAT OFFERS IMMUNITY FROM TAXATION. A RECEIPT WHETHER IT IS REVENUE OR CAPITAL IN NATURE IS TO BE DECIDED AT THE ASSESSMEN T STAGE. BEING PROCEDURAL IN NATURE, IN OUR VIEW, LIBERAL INTERPRE TATION WILL GIVE EFFECT TO THE INTENTION OF THE AMENDMENT, THEREBY R EMOVING THE HARDSHIP IN GENUINE CASES LIKE THE PRESENT ASSESSEE UNDER CONSIDERATION. ITA NO.157/BANG/2019 PAGE 7 OF 9 7.4 TAKING INTO ACCOUNT THE ABOVE FACTS AND CIRCU MSTANCES OF THE ISSUE, WE ARE OF THE VIEW THAT THE AO WAS NOT J USTIFIED IN TAKING A STAND THAT REGISTRATION U/S 12A WAS NOT AP PLICABLE TO THE ASSESSEE FOR THE AYS UNDER DISPUTE AND THE CONDONAT ION PETITION FOR DELAY IN FILING THE APPLICATION FOR REGISTRATIO N U/S 12A [FOR THE AYS UNDER DISPUTE] HAS NOT YET BEEN DECIDED BY THE CBDT AND, THEREFORE, THE TOTAL INCOMES OF THE ASSESSEE WERE T O BE ASSESSED AS PER COMMERCIAL PRINCIPLES. THE CIT (A) WAS ALSO NOT JUSTIFIED IN TAKING A SIMILAR STAND THAT OF THE AO, WITHOUT TAKI NG COGNIZANCE AND INTENTION OF THE AMENDMENT TO S. 12A OF THE ACT . IF NO JUDICIOUS OR A LIBERAL VIEW IS NOT TAKEN EITHER BY THE ASSESSING AUTHORITY OR THE APPELLATE AUTHORITY AS IN THE CASE UNDER CONSIDERATION, THE VERY PURPOSE FOR WHICH SUCH AN A MENDMENT TO S. 12A OF THE ACT ENACTED, IN OUR VIEW, WOULD BE DE FEATED........ 11. THE LEARNED COUNSEL RELYING ON THE AFORESAID DE CISION SUBMITTED THAT THE ASSESSEE SHOULD BE ALLOWED THE BENEFIT OF EXEMP TION U/S.11 OF THE ACT. 12. THE LEARNED DR RELIED ON THE ORDER OF THE CIT(A ) AND SUBMITTED THAT THE REGISTRATION WAS GRANTED TO THE ASSESSEE ONLY O N 9.3.2018 BUT THE ORDER OF AO WAS PASSED ON 29.8.2017. THEREFORE THE ASSES SMENT PROCEEDINGS WERE NOT PENDING AS ON 9.3.2018 AND THEREFORE THE B ENEFIT OF PROVISO TO SEC.12A(2) OF THE ACT CANNOT BE EXTENDED TO THE ASS ESSEE. 13. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSI ONS. THE DECISION OF THE ITAT COCHIN BENCH IN THE CASE OF SNDP YOGAM (SUPRA) IS ON IDENTICAL FACTS OF THE CASE OF THE ASSESSEE IN THIS APPEAL AN D THEREFORE THE RATIO LAID DOWN THEREIN WILL APPLY TO THE PRESENT CASE ALSO. AS LAID DOWN THEREIN, IF DURING PENDENCY OF APPEAL BEFORE FIRST APPELLATE AU THORITY, ASSESSEE OBTAINED REGISTRATION UNDER SECTION 12AA AND CLAIME D EXEMPTION UNDER SECTION 11, THE ASSESSEE SHOULD BE ALLOWED THE BENE FIT OF THE PROVISO TO SEC.12A(2) WHICH PROVIDES THAT WHERE REGISTRATION HAS BEEN GRANTED TO THE TRUST OR INSTITUTION UNDER SECTION 12AA, THEN, THE PROVISIONS OF SECTIONS 11 AND 12 SHALL APPLY IN RESPECT OF ANY INCOME DERIVED FROM PROPERTY HELD UNDER TRUST OF ANY ASSESSMENT YEAR PRECEDING THE AF ORESAID ASSESSMENT ITA NO.157/BANG/2019 PAGE 8 OF 9 YEAR FOR WHICH ASSESSMENT PROCEEDINGS ARE PENDING B EFORE THE ASSESSING OFFICER AS ON THE DATE OF SUCH REGISTRATION AND THE OBJECTS AND ACTIVITIES OF SUCH TRUST OR INSTITUTION REMAIN THE SAME FOR SUCH PRECEDING ASSESSMENT YEAR. IT HAS TO BE HELD THAT AN ASSESSMENT PROCEEDING WHICH IS PENDING IN APPEAL BEFORE APPELLATE AUTHORITY SHOULD BE DEEMED TO BE 'ASSESSMENT PROCEEDINGS PENDING BEFORE ASSESSING OFFICER' WITHI N MEANING OF THAT TERM AS ENVISAGED UNDER PROVISO TO SECTION 12A(2). CONS EQUENTLY, AN ASSESSEE WHICH OBTAINED REGISTRATION UNDER SECTION 12AA DURI NG PENDENCY OF APPEAL WAS ENTITLED TO EXEMPTION CLAIMED UNDER SECTION 11. 14. IN THE PRESENT CASE, HOWEVER, WE FIND THAT THE ASSESSEE DID NOT CLAIM BENEFIT OF EXEMPTION U/S.11 OF THE ACT BEFORE THE AO AND THE AO DID NOT HAVE THE BENEFIT OF EXAMINING SUCH A CLAIM. ME RE EXISTENCE OF REGISTRATION U/S.12A WILL NOT CONFER BENEFIT OF EXE MPTION U/S.11 OF THE ACT AND THE OTHER CONDITIONS FOR AVAILING BENEFIT OF EX EMPTION U/S.11 OF THE ACT HAS TO BE EXAMINED BY THE AO. IN THE GIVEN FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE OF THE VIEW THAT IT WOULD BE JUST AND PROPER TO SET ASIDE THE ORDER OF THE CIT(A) AND REMAND TO THE AO THE QUESTI ON OF ALLOWING EXEMPTION U/S.11 OF THE ACT AS BY REASON OF THE PRO VISO TO SECTION 12A(2), THE ASSESSEE SHOULD BE DEEMED TO HAVE HAD REGISTRAT ION U/S.12A OF THE ACT. THE REGISTRATION U/S. 12AA(1)(B)(I) OF THE INCOME T AX ACT, 1961 DOES NOT AUTOMATICALLY EXEMPT THE INCOME OF THE TRUST/IN STITUTION. THE QUESTION OF TAXABILITY OF THE INCOME OF THE TRUST/INSTITUTIO N SHALL BE EXAMINED AND DECIDED UPON BY THE ASSESSING OFFICER BASED ON THE ACTIVITIES, COMPLIANCE WITH VARIOUS STATUTORY AND OTHER REQUIREMENTS, ETC. , AS REFERRED TO IN SECTIONS 2(15), 11, 12 & 13 OF THE INCOME TAX ACT, 1961. THE AO WILL AFFORD OPPORTUNITY OF BEING HEARD TO THE ASSESSEE I N THE SET ASIDE PROCEEDINGS. ITA NO.157/BANG/2019 PAGE 9 OF 9 15. IN THE RESULT, APPEAL OF THE ASSESSEE IS TREATE D AS ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON THIS 19 TH DAY OF JUNE, 2020. SD/- SD/- ( B R BASKARAN ) ( N V VASUDEVAN ) ACCOUNTANT MEMBER VICE PRESIDENT BANGALORE, DATED, THE 19 TH JUNE, 2020. / DESAI S MURTHY / COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. BY ORDER ASSISTANT REGISTRAR ITAT, BANGALORE.