Astt. Commisioner of Income Tax (Exemption), Lucknow V. M/s Maharishi Institute of Creative Intelligence UP, Lucknow

ITA 166/LKW/2017

AI Insights

The case revolves around the dispute concerning the exemption claimed by M/s. Maharishi Institute of Creative Intelligence under section 11 of the Income Tax Act, 1961 for the Assessment Year 2012-13. The Revenue challenged the CIT(A)'s decision which favored the assessee, arguing that the assessee did not possess a formal certificate of registration under section 12A/12AA of the Act. However, the Tribunal and the Apex Court's earlier rulings established that the assessee had been effectively registered under section 12A since 1987, and the exemption was rightly claimed based on the legal provisions at that time.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 123020 (ITAT-LUCKNOW)
• Duration Of Justice: 6 year(s) 2 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-05-2023
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 07-05-2023
• Assessment Year: 2012-2013
• Appeal Filed On: 05-03-2017
• Other Referred Cases: Income Tax Appeal Defective No.55 of 2016, ITA No. 324/Lkw/2015
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: SHEELA CHOPRA
• Keywords: Revision of order; Charitable institution; Benefit of exemption; Set aside
• Section: 263; 11; 143(3); 12A; 12AA; 10B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH ‘B’, LUCKNOW BEFORE SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER AND SHRI ANADEE NATH MISSHRA, ACCOUNTANT MEMBER ITA No.166/Lkw/2017 Assessment Year: 2012-13. ACIT (Exemptions), Lucknow Vs. M/s. Maharishi Institute of Creative Intelligence U.P., Sitapur Road, PO- Diguria, Lucknow-226020 PAN: AAATM4167C (Appellant) (Respondent) O R D E R PER SUDHANSHU SRIVASTAVA, J.M,: This appeal is preferred by the Revenue against the order passed by the Ld. Commissioner of Income Tax (Appeals), Lucknow-4 (hereinafter called ‘CIT(A)’) for Assessment Year 2012-13 wherein vide impugned order dated 14.12.2016, the ld. CIT(A) has directed the Assessing Officer to allow the assessee’s claim of exemption u/s. 11 of the Income Tax Act, 1961 (hereinafter called ‘the Act’). In the impugned order the ld. CIT(A) has also directed the Assessing Officer to examine Form No.10B and its annexures regarding accumulation of income on merit and allow the same in accordance with law. 2.0 The brief facts of the case are that the assessee is running an educational Society and is providing education since the year 1980. As Appellant by Shri Shubham Rastogi, CA Respondent by Smt. Sheela Chopra, CIT(DR) Date of hearing 08/05/2023 Date of pronouncement 12/05/2023 I.T.A. No.166/Lkw/2017 2 per the provisions of Section 12A of the Act, the assessee had applied for registration u/s. 12A of the Act and since, at that point of time, there was no requirement for separate registration certificate to be issued u/s. 12A, the filing of application before the prescribed authority in the prescribed manner was to be deemed as fulfillment of the registration requirement. 2.1 In Assessment Year 2010-11, the assessment was completed u/s. 143(3) of the Act vide assessment order dated 28.01.2013 allowing the assessee the benefit of exemption u/s. 11 of the Act. Subsequently, the ld. Commissioner passed the order u/s. 263 of the Act on 15.03.2016 setting aside the assessment on the ground that there was no registration u/s. 12AA of the Act or approval u/s. 10(23C)(vi) of the Act accorded to the assessee and since the Assessing Officer had not made any necessary or proper enquiries, there was non application of mind by him. 2.2 Against this order passed u/s. 263 of the Act, the assessee approached this Tribunal in ITA No. 324/Lkw/2015. The Tribunal vide order dated 30.07.2015 quashed the order passed u/s. 263 of the Act by observing that as per letter dated 03.06.2015 of ld. Commissioner of Income Tax, Meerut, the assessee society was enjoying registration u/s. 12A of the Act w.e.f. 22.09.1987 and, therefore, the very basis of revisionary proceedings was non existent. 2.3 Against the above order of the Tribunal, the Revenue filed an appeal before the Hon'ble Allahabad High Court. The Hon'ble Allahabad High Court, Lucknow Bench, in Income Tax Appeal Defective No.55 of 2016, vide order dated 12.01.2017, decided the issue in favour of the Income Tax Department by holding that unless and until the registration I.T.A. No.166/Lkw/2017 3 is granted, no exemption can be claimed only on the basis that application has been submitted for registration. 2.1 Aggrieved by the order of the Hon'ble Allahabad High Court, Lucknow Bench, the assessee approached the Hon'ble Apex Court and vide order dated 18.04.2023, in Civil Appeal Nos.2907 – 2908/2023 arising out of SLP (C) Nos. 13966 – 13967/2017, the Hon'ble Apex Court was pleased to hold that it was not disputed that since the year 1987, from the date on which the assessee had applied for registration u/s.12A, the assessee continued to avail the benefit of exemption u/s. 12A of the Act, at least up to assessment year 2007-08. The Hon'ble Apex Court also noted that post 1997, the assessee had continued to avail the exemption u/s.12A of the Act on the basis of its registration granted in the year 1987. The Hon'ble Apex Court held that in this view of the matter, the Assessing Officer was justified in granting the benefit of exemption u/s. 12A of the Act for the Assessment Year 2010-11, because what was required to be considered was the relevant provision prevailing in the year 1987, namely, the day on which the assessee applied for registration and at that relevant time, there was no requirement of issuance of any certificate of registration. The Hon'ble Apex Court further observed that the fact remained that for all the years after 1997 till the year 2007-08, when the assessee had continued to avail the benefit of exemption solely on the basis of the registration in the year 1987, it was never the case of the Revenue that in the earlier years there was any certificate of registration or the registration was not granted. The Hon'ble Apex Court also took cognizance of communication dated 03.06.2015 and observed that this communication was duly considered by this Tribunal and it was apparent that assessee had been granted registration on 22.09.1987 and, therefore, it could not be said that there was no registration at all. The I.T.A. No.166/Lkw/2017 4 Hon'ble Apex Court went on to hold that the order passed by the High Court was erroneous and unsustainable and accordingly deserved to be quashed and set aside and the order of this Tribunal was to be restored. 3.0 It is in this background that we are hearing this appeal filed before us, which has been filed by the Department and which pertains to A.Y. 2012-13. In the year under consideration, the assessee had filed its return of income declaring a deficit of Rs.84,14,574/- after claiming exemption u/s. 11 of the Act. The assessee’s case was selected for scrutiny and the objection of Assessing Officer was that the assessee did not have any formal certificate of registration u/s. 12A/12AA of the Act and, therefore, the assessee’s claim for exemption u/s. 11 was not exempt. The Assessing Officer proceeded to complete the assessment after making an addition of Rs.4,85,45,615/- being the excess of income over expenditure as declared by the assessee in the income and expenditure account and after denying the assessee benefit of exemption u/s. 11 of the Act. 3.1 The assessee preferred an appeal before the ld. CIT(A), which was allowed after making the following observations: “5.1 All the grounds of appeal (from S.No. 1 to 16) relate to denial of claim of exemption u/s 11 of the Act claimed by the appellant in the return filed AND denial of the accumulation of income u/s 11(2) of the Act to the extent of Rs. 3,15,69,430/-. These grounds of appeal are decided and discussed as under after examining the assessment order and written submissions of the appellant. 5.2 I find that the appellant society has applied for registration after its formation on 21.03.1980. This fact has also been stated in the assessment order passed u/s 143(3) for A.Y. 1983-84 dated 18.09.1984 which was placed on record. In the said I.T.A. No.166/Lkw/2017 5 assessment order it is clearly mentioned that "The society has already applied to CIT, Meerut for registration u/s 12A". 5.3 The appellant also filed letter dated 03.06.2015 issued from the Office of Commissioner of Income Tax, Meerut regarding "Grant of 12A- Registration" to the appellant where it has been stated "in this connection you are hitherto informed that 12A Registration Certificate (C. No. 40(5)/Nibandhan Rishikesh/80-87/CIB) was granted to your society on 22.09.1987 as per entry in this respect on page no. 846 of this office register maintained for purpose during that period." This letter is signed by ITO(J&T), O/O CIT, Meerut. 5.4. As per provision of Section 12A of the Act as applicable on 22.09.1987 no registration certificate was required to issued. The society was required to file application before the prescribed authority in the prescribed manner as specified u/s 12A of I.T. Act and after that it will be registered as Charitable Institution by the Commissioner of Income Tax. Provisions of Section 12AA have been amended through an amendment in the Act w.e.f. 01.04.1997. 5.5 In view of the amendment u/s 12AA of I.T. Act, a certificate of registration will be issued by Commissioner of Income Tax after 01.04.1997 if any institution/ society applied for registration u/s 12AA on or after 01.04.1997. 5.6 Further, appellant Society during the course of appellate proceedings also submitted CBDT Circular no. 762 dated 18.02.1998 which was issued after insertion of Section 12AA of L. T. Act w.e.f. 01.04.1997. 5.7 I find that A. O. has considered in the assessment order that the provisions of Section 12A and 12AA of IT Act as applicable for F.Y. 2011/12 will apply on the appellant and as per these amended provision, a certificate u/s 12AA of I.T. Act for grant of registration is required. The A.O. also held that it is clear that even after amendment made by Finance Act 1996, the appellant did not apply for registration and as such no registration was granted to them. Accordingly, she disallowed the claim of Section 11 of I.T. Act. I.T.A. No.166/Lkw/2017 6 5.8 In my view the appellant society was formed on 21.03.1980 and as per Section 12A as defined in the Act on 22.09.1987, when the entry is made at page 846 in the Register maintained in the Office of Commissioner of Income Tax, Meerut for allowing registration u/s 12A then the same is the correct procedure as per the provisions that applicable at that time. 5.9 The amendment made u/s 12AA w.e.f. 01.04.1997 is prospective and is not applicable where society or trust already registered as per earlier provisions of the Act. Further, the amended provision do not require the assessee who had already registered under earlier provision to apply for fresh registration in view of amendment made w.e.f. 01.04.1997. 5.10. Accordingly I direct the A.O. to compute the income of the appellant in accordance with the provisions of Section 11 of 1.T. Act as appellant is registered u/s 12A as per entry on page no. 846 (C.No. 40(5)/Nibandhan Rishikesh/80-87/CIB) in the register maintained at the Office of the Commissioner of Income Tax, Meerut which is also confirmed by the Income Tax Officer (J &T), Meerut vide letter dated 03.06.2015 placed on record. 5.11 This issue has also been considered in order of Hon'ble ITAT, Lucknow dated 25.03.2015 in I.T.A. No. 324/LKW/2015 in the appellants own appeal in A. Y. 2010-11 against the order u/s 263 of CIT(Exemption) where the Hon'ble Jurisdictional Tribunal had held as under: "We have considered the rival submissions. We find that as per the impugned order, the only basis of C.I.T. for holding that the assessment order is erroneous is this that there is no registration certificate u/s 12AA But we find that as per the letter dated 03.06.2015 of C.I.T., Meerut, this assessee society is enjoying 12A registration w.e.f. 22.09.1987 and hence, the very basis of order of C.I.T. is non-existent. Therefore, the impugned order of C.1.T. u/s 263 is not valid and we quash the same." Thus, the said issue of registration u/s 12A of the Act has been decided in favour of appellant by Hon'ble jurisdictional ITAT on the same facts. I.T.A. No.166/Lkw/2017 7 5.12 In view of the above facts and discussion, the appeal of the appellant is allowed. The AO is directed to allow the claim of exemption u/s 11 of the Act to the appellant and compute the income as per provisions of Section 11 of the Act. The AO is further directed to examine Form No. 10B and its annexure regarding accumulation of Income of Rs. 3,15,69,430/- filed by the appellant along with Return on merit and allow it accordingly as per Law.” 3.2 Thus, the ld. CIT(A) has taken a view which had earlier being taken by this Tribunal and the same also now stands affirmed by the Hon'ble Apex Court in its order dated 18.04.2023, as discussed above. 4.0 Before us, the ld. CIT(DR) has fairly accepted that the judgment of the Hon'ble Apex Court has finally settled the issue in the assessee’s favour. 5.0 Therefore, respectfully following the order of the Hon'ble Apex Court in the assessee’s own case, as above mentioned, we find no reason to take a different view from that of the ld. CIT(A) and we uphold the same. 6.0 In the result, appeal of the Department stands dismissed. (Order pronounced in the open court on 12/05/2023) Sd/- Sd/- ( ANADEE NATH MISSHRA ) (SUDHANSHU SRIVASTAVA) Accountant Member Judicial Member Dated: 12 /05/2023 Aks Copy of the order forwarded to : 1. The Appellant 2. The Respondent. 3. Concerned CIT 4. The CIT(E) 5. D.R., I.T.A.T., Lucknow