Shree Vimaljin Religious Charitable Trust, Vapi V. Asstt. Director of Income Tax, CPC, Bengaluru

ITA 239/SRT/2021

• Counselvise Citation: [2022] 103 COUNSELVISE.COM (IT) 9836 (ITAT-SURAT)
• Duration Of Justice: 10 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-10-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 28-07-2022
• Assessment Year: 2016-2017
• Appeal Filed On: 30-11-2021
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: RASESH SHAH
• Keywords: Charitable institution; Opportunity of being heard; Period of limitation; Question of law; Corroborative evidences; Benefit of exemption; Set aside
• Section: 147; 12; 10; 11; 143(3); 12A; 12AA; 143(1); 201; 274; 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT BEFORE SHRI PAWAN SINGH, JM & DR. A. L. SAINI, AM आयकर अपील सं./ITA No. 239/SRT/2021 Ǔनधा[रण वष[/Assessment Year: (2016-17) (Physical Court Hearing) Shree Vimaljin Religious Charitable Trust, 102, Shantinath Apartment, Nehru Street, Vapi-396191. Vs. The ACIT, CPC, Bangaluru. (Assessee) (Respondent) èथायीलेखासं./जीआइआरसं./PAN/GIR No.: AALTS6046F Assessee by Shri Rasesh Shah, CA Respondent by Shri H. P. Meena, CIT(DR) Date of Hearing 29/07/2022 Date of Pronouncement 21/10/2022 आदेश / O R D E R PER DR. A. L. SAINI, AM: Captioned appeal filed by the assessee, pertaining to assessment year (AY) 2016-17, is directed against the order passed by the Learned Commissioner of Income Tax (Appeals), [in short “the ld. CIT(A)”], National Faceless Appeal Centre (in short ‘NFAC’), which in turn arises out of an assessment order passed by the Assessing Officer under section 143(1) of the Income Tax Act, 1961 (hereinafter referred to as “the Act”). 2. Grounds of appeal raised by the assessee are as follows: “1. On the facts and circumstances of the case as well as law on the subject, the learned CIT(A) has erred in confirming the action of assessing officer in not allowing the exemption claimed by the assessee u/s 11 by wrongly considering the assessee as not registered u/s 12AA of the I.T. Act. 2. On the facts and circumstances of the case as well as law on the subject, the learned CIT(A) has erred in confirming the action of assessing officer in not granting deduction of expenses of Rs.20,07,776/- incurred towards the objects of the trust and thereby levying tax on gross total income of Rs.22,05,475/-. 3. Even otherwise, the assessing officer has erred in making the adjustment u/s. 143(1) by treating the claim of exemption u/s. 11 as incorrect although such Page | 2 ITA 239/SRT/2021/AY.2016-17 Shree Vimaljin Religious Charitable Trust incorrect claim was not apparent from any information in the return of income as envisage under clause (ii) of S. 143(1)(a). 4. Assessee craves leave to add, alter or delete any ground(s) either before or in the course of hearing of the appeal. 5. It is prayed that the assessment may please be quashed and/or addition made by the assessing officer and confirmed by CIT(A) may please be deleted.” 3. Brief stated the relevant material facts are summarized as follows: (a) Assessee is a Trust registered under Bombay Public Trust Act. Assessee has not been registered under section 12A of the IT Act, 1961. (b) Assessee filed it return on 31.03.2017 (after the due date) declaring total income at NIL as under: Income from Other Sources  Voluntary Contribution - Rs.22,03,747/-  Sale of Scrap Rs.1,728/- Total Rs.22,05,475/- Adjustment on account of Section 10 and Section 11 of the IT Act, 1961.  Income applied for charitable Rs.20,07,776/- Purpose in India  Accumulation to extent of 15% Rs.1,97,699/- Total Rs.22,05,475/- (c) Total Income NIL (Rs.22,05,475 - Rs.22,05,475) (d) Return was processed under section 143(1) vide order dated 03.01.2018 by CPC, Bangalore. The exemption under section 11 of the Act was not allowed to the assessee by CPC Bangalore. Total income of assessee was assessed at Rs.22,05,475/-. 4. Then after the assessee trust filed appeal before ld CIT(A) against intimation/order under section 143(1) of the Income Tax Act, dated 03.01.2018, passed by DCIT, CPC, Bangalore (hereinafter referred to as the ‘AO’) for AY.2016-17. The ld. CIT(A), has confirmed the action of the assessing officer, observing as follows: Page | 3 ITA 239/SRT/2021/AY.2016-17 Shree Vimaljin Religious Charitable Trust “7.2 Finding a) Assessee has filed its computation of Income for AY. 2016-17 (Page 1-2 of Paper book). Assessee has claimed Adjustment on account of Section 10 and 11 of the Act of Rs.22,05,475/-. As a result, Total Income is assessed at NIL. In Schedule 3 of the computation of Income, the Assessee has claimed as under: Schedule 3 Adjustments on account of Section 10 and 11 Return to be furnished u/s 139(4A) Whether registered u/s 12A/12AA Yes Income available for application u/s. 11 Rs.22,05,475/- b) The above fact mentioned in Computation of Income is incorrect. Assessee is not registered u/s 12A/12AA of the Act. But, it has been wrongly claimed in the Computation of Income that Assessee is registered u/s 12A/12AA of the Act. Therefore, claim u/s 11 of the Act was made. c) The Assessee has not been registered u/s 12A/12AA of the Act. So the question to be decided is whether the Assessee is entitled/not entitled to an exemption of its Income on its application u/s 11 and 12 of the Act. In absence of registration u/s 12A/12AA or even absence of approval u/s 10(23) of the Act whether the Assessee can avail the benefit of exemption u/s 11 of the Act. d) Assessee claims to be a religious and charitable Trust meaning that it has been formed for charitable and religious purpose. Charity has been inclusively defined in Section 2(15) of the Act and is commonly understood as altruistic thought and action with a view to benefit others selflessly. e) Application of Income is allowed as an exemption u/s 11 of the Act for purpose of determination of Total Income only in case of a charitable or religious Trust/Institution, for which law provides a special/defined procedure, beginning with the registration of such Trust with the Revenue u/s 12A r.w.s 12AA of the Act. This basic condition has not been observed by the Assessee in the instant case. Thus, Section 11 itself is not applicable in the present case, in view of non- registration of the Assessee u/s 12A/12AA of the Act. Thus, there is denial of exemption u/s 11 for want of registration u/s 12A/12AA of the Act. The registration u/s 12A/12AA is a precondition for the application of Sections 11 and 12 of the Act. f) Assessee is a Trust with religious and charitable purpose. It is in receipt of voluntary donations including anonymous donations to tune of Rs.22,03,747/- and sale of scrap of Rs.1,728/-, totaling Rs.22,05,475/-. These receipts are 'Income' as per definitions in the Act. Chapter III of the Act (Sec 10 to 13B) exempts Income arising to a charitable and religious Trust u/s 11 of the Act i.e. on application of its Income for its objects. This is subject to satisfaction of conditions laid down. Section 12A(1) stipulates the condition of registration of Trust/Institution in receipt of Income being registered u/s 12AA of the Act. The Assessee is not registered u/s 12A/12AA of the Act, so the benefit of exemption u/s 11 shall not apply there to the Assessee. There is no basis for allowing exemption to the Assessee on its income u/s 11 of the Act. Page | 4 ITA 239/SRT/2021/AY.2016-17 Shree Vimaljin Religious Charitable Trust g) Voluntary contributions to Assessee qualify as Income u/s 2(24)(iia) of the Act and the same is therefore, subject to the provisions of the Act, eligible to exemption u/s 11 on application subject to the condition that it is registered with Revenue u/s 12A/12AA of the Act. Assessee is not entitled to exemption u/s 11 of the Act as it is not registered u/s 12A/12AA of the Act. This issue stands settled by decision of Hon'ble Apex Court in UP Forest Corporation vs. DCIT(2008) reported in 297 ITR 1(SC). It is the correct legal position that is relevant and not the view that the parties may take of their rights in the matter [Refer to the judgments of Hon'ble Apex Court in Kedarnath Jute Manufacturing Co. Ltd. vs. CIT (1971) 82 ITR 363 (SC) and CIT vs C Parikh & co (India) Ltd. (1956) 29 ITR 661 (SC)]. 7.3 In view of the above facts and respectfully following the judgments outlined in para 7.2 of this order, it is held that the Assessee is not entitled to exemption u/s 11 of the Act on account of non-registration u/s 12AA of the Act. On this issue, there is no ambivalence in law and same is consistent with the decision of Hon'ble Apex Court in UP Forest Corporation vs. DCIT. Thus, the addition/adjustment made by the AO u/s 143(1) of the Act is upheld. Grounds of Appeal Nos. 1 to 3 are dismissed. 7.4 Ground of Appeal No. 4 is routine and general in nature and does not require any separate adjudication. 8. As a result, appeal is dismissed.” 5. Aggrieved by the order of the ld. CIT(A), the assessee is in further appeal before us. 6. Shri Rasesh Shah, Learned Counsel for the assessee submitted before the Bench the Form No.10, which was filed by the assessee Trust for registration under section 12A/12AA of the Act. The assessee applied for registration on 11.03.2013, relevant to assessment year 2013-14, however registration has not been granted to the assessee. Thereafter, assessee trust submitted its return of income for assessment years 2013-14, 2014-15 and 2015-16. In the assessment year 2016-17, the assessing officer denied the exemption and assessment was completed by issuing intimation under section 143(1) of the Act. For assessment years 2017-18, 2018-19, 2019-20, 2000-2021 and 2021-22, the assessments were not framed under scrutiny assessments. After this, the assesse-trust has filed fresh Form No.10A, and the fresh registration was granted to the assesse-trust recently on 05.04.2022, which is placed at paper book page no. 1 to 3, therefore ld Counsel contended that assessee-trust was in existence since from the beginning and Page | 5 ITA 239/SRT/2021/AY.2016-17 Shree Vimaljin Religious Charitable Trust therefore the deduction should be allowed to the assessee-trust. To support his plea, the ld Counsel relied on the judgment of Hon`ble Gujarat High Court in the case of Mayur Foundation, 274 ITR 562 (Gujarat). 7. The Ld. Counsel also contended that assessee’s case is also squarely covered by the judgment of the Co-ordinate Bench of ITAT, Surat in the case of Shree Surti Modhvanik Hitvardhak vs ITO (in ITA No.149/SRT/2017), wherein it was held as follows: “10. We have considered the rival submission of both the parties and perused the record carefully. We find that the ld.AO disallowed the claim of expenditure by taking view that the assessee failed to produce the registration certificate under section 12AA of the Act. The ld.CIT(A) also held that the assessee would have obtained the copy of registration from the office of Commissioner(Exemption) or to apply it again, which the assessee has not done. 11. Before us, the ld.AR of the assessee vehemently argued that appeal before the Appellate Authority are the continuation of assessment proceedings has been held by various Hon’ble High Courts in Tribunals. The ld.AR further vehemently prayed that as per sub-section (2) of section 12A of the Act, when an application has been made on or after 01.01.2007, the provision of section 11 and 12 shall apply in relation to income of such trust or institution from assessment year immediately following the financial year in which such application is made. The Proviso attached to sub-section (2) of section 12Ashall apply to a trust or institution, where the application is made from the assessment year from such institution or trust was earlier granted registration. The ld. AR for the assessee also vehemently submitted that the assessee was having valid registration since 1974 and the same was not cancelled or revoked and the assessee was always treated as a charitable trust and allowed the benefit under section 11 of the Act. The assessee was denied the benefit of section 11 of the Act only for the year under consideration. Thought the assessee applied for fresh registration and the same was allowed vide registration dated 26.06.2018 w.e.f 15.12.2017. 12. The Hon’ble Gujarat High Court in Mayur Foundation (supra) held that when the matter was pending before the Tribunal by way of an appeal it could be said that the assessment proceeding was pending. The assessing authority is empowered and is duty bound, to pass an order giving effect to the order of the Tribunal for the purposes of assessing the tax liability of the assessee for the assessment year which was under consideration before the Tribunal. In these circumstances, it could not be contended by the revenue that the assessment proceedings came to an end when the assessment order was framed. The proceedings before the Tribunal are meant to correctly assess the tax liability of an assessee. If this be so, it follows that the assessment proceedings cannot be said to be complete and is pending till the appeal is heard and disposed of by the tribunal and the order of the Tribunal is given effect to by the assessing authority by computing the correct tax liability of an assessee. The Hon'ble Court not accepted the contention of the revenue that the assessment proceedings came to Page | 6 ITA 239/SRT/2021/AY.2016-17 Shree Vimaljin Religious Charitable Trust an end when the assessment is framed. Thus, the objection of the Ld. Sr DR that the assessee cannot take the benefit of Proviso of section 12A(2) is not acceptable in view of the decision of Hon’ble High Court. 13.Further, the Co-ordinate Bench of Bangalore Tribunal in ITO Vs CCMP (supra) by referring the decision of Hon’ble Rajasthan High Court held that when registration under section 12AA of the Act and appeal in continuation of original assessment before the Appellate Authorities is also covered by the Proviso sub-section (2) of section 12A of Income Tax Act. 14.Further, we find that the assessee claim was not considered on merit in absence of production of registration under section 12AA of the Act and considering the fact that the assessee was granted registration dated 26.06.2018, though it is effective from 15.10.2017. Further, the contention of the assessee throughout the assessment proceedings and at the first appeal as well as before this Tribunal is that assessee-trust is registered under section 12A and the revenue authorities have not examined their own record nor refuted the contention of the assessee that the registration number provided by the assessee in its references are not corrected. We further find that before moving fresh application, the assessee filed application under the provisions of Right to Information Act (RTI), for seeking the copy of registration certificate granted initially. The assessee has also placed on record the reply of CPIO and the order of First Appellate Authority under RTI. Moreover, on further filing fresh application for registration under section 12AA, the assessee was granted fresh registration. In our view, the grounds of appeal raised by the assessee required fresh consideration by the ld.AO in view of the decisions of Hon’ble Jurisdictional High Court in Mayur Foundation (supra) and the Co-ordinate Benches of Tribunal as referred above. Therefore, the appeal is restored back to the file of ld.AO to consider the claim of assessee afresh by considering the various decisions as referred above and pass the order afresh in accordance with law without being influence of any of our observation. The assessee is also directed to provide complete details, evidences and information to the ld. Assessing Officer. 15. In the result, appeal of the assessee is allowed for statistical purpose.” 8. Therefore, Ld. Counsel contended that AO cannot make prima facie adjustment under section 143(1) of the Act to deny the lawful exemption, however, AO can make adjustment in scrutiny assessment under section 143(3) of the Act. The ld Counsel also argued that in any event the exemption is denied then assessee`s trust income and expenses may be assessable as an AOP ( Association of Person) and basic exemption ( maximum amount which is not chargeable to tax) of Rs.2,50,000/- may be granted to the assessee-trust. This way, ld Counsel prays the Bench that addition made by the assessing officer may be deleted. 9. On the other hand, Learned DR for the Revenue argued that assessee-trust applied for registration on 11.03.2013, relevant to assessment year 2013-14. The Page | 7 ITA 239/SRT/2021/AY.2016-17 Shree Vimaljin Religious Charitable Trust assessee`s application for registration was not accompanied with required documents and evidences, therefore, Asst. CIT (Exemption) has issued defect memo and rejected the assessee`s application. Therefore, assessee trust was not registered for the following assessment years Viz: assessment years 2013-14, 2014-15, 2015-16, 2016-17 , 2017-18, 2018-19, 2019-20, 2020-2021 and 2021-22. After this, assessee trust applied for fresh registration in Form No.10A, in the year 2022 and the fresh registration was granted to the assesse-trust on 05.04.2022 therefore, assessee-trust is not entitled to get exemption prior to 05.04.2022. Therefore, ld DR contended that assessing officer has rightly denied the exemption, under section 143(1) of the Act. 10. We have heard both the parties and carefully gone through the submissions put forth on behalf of the assessee along with the documents furnished and the case laws relied upon, and perused the facts of the case including the findings of the ld. CIT(A) and other material brought on record. We note that application of income is allowed as an exemption u/s 11 of the Act for purpose of determination of total income only in case of a charitable or religious Trust/Institution, for which law provides a special/defined procedure, beginning with the registration of such Trust with the Revenue u/s 12A r.w.s 12AA of the Act. This basic condition has not been fulfilled by the Assessee-Trust, that is, it is not registered. Thus, section 11 itself is not applicable in the present case, in view of non-registration of the Assessee-Trust u/s 12A/12AA of the Act. Thus, there is denial of exemption u/s 11 for want of registration u/s 12A/12AA of the Act. The registration u/s 12A/12AA is a precondition for the application of sections 11 and 12 of the Act. Therefore, we note that Assessing Officer has rightly denied the exemption under section 143(1) of the Act, as the assessee has failed to fulfill the basic conditions, that is the assessee is not a registered trust under the Act. 11. We note that assessee-trust applied for registration under section 12A/12AA of the Act on 06.08.2012. After this the Assessing Officer issued a defect-memo within six months stating that assessee-trust has not submitted required documents and evidences for registration. Since, the assessee-trust has Page | 8 ITA 239/SRT/2021/AY.2016-17 Shree Vimaljin Religious Charitable Trust failed to submit the required documents and details for registration therefore ld CIT(Exemption) denied registration, hence assessee-trust could not get registered in assessment year 2013-14. We also note that for subsequent assessment years Viz: 2014-15, 2015-16, 2016-17 , 2017-18, 2018-19, 2019-20, 2020-2021 and 2021-22, the said Trust remains unregistered. After this, assessee trust applied for fresh registration in Form No.10A, in the year 2022 and the fresh registration was granted to the assesse-trust on 05.04.2022 therefore, assessee-trust is not entitled to get exemption prior to 05.04.2022. 12. The ld Counsel argued before us that since assessee-trust got registration on 05.04.2022, therefore, assessee-trust is entitled to get exemption for the past assessment years, Viz: 2013-14, 2014-15, 2015-16, 2016-17 , 2017-18, 2018-19, 2019-20, 2020-2021 and 2021-22 and to support his arguments, the ld Counsel relied on the Judgment of Hon`ble High Court of Gujarat in the case of Mayur Foundation, 274 ITR 562 (Guj), wherein it was held that if dispute is going on in respect of any particulars assessment and adjudicated by the Tribunal, then assessment would be completed after giving appeal effect of the Tribunal order. That is, assessment would be completed after giving appeal effect of Tribunal order. The findings of the Hon`ble Court is reproduced below: “The facts, as stated hereinbefore, are not in dispute. The only question which the court is required to decide is, as to whether, in the absence of any specific time- limit prescribed under section 11(2) of the Act, whether the time-limit prescribed in rule 17 for submission of Form No. 10 by the rule-making authority is valid. In the case of Nagpur Hotel Owners' Association [2001] 247 ITR 201 (SC), the following two questions came up for consideration before the Bombay High Court (page 203): "(1)Whether, on the facts and circumstances of the case, the Income-tax Appellate Tribunal is correct in holding that the application in Form No. 10 under rule 17 of the Income-tax Rules, 1962, could be filed even after the assessment is completed? (2)Whether, on the facts and circumstances of the case, the Income-tax Appellate Tribunal is correct in holding that the Income-tax Rules could not fix any time- limit for submitting an application in Form No. 10 under rule 17 of the Income- tax Rules, 1962?" The High Court of Bombay held that, once rule 17 of the Rules did not prescribe any time-limit and the limitation of six months commencing from the end of the previous year for issuing the notice as required under section 11(2) of the Act, Page | 9 ITA 239/SRT/2021/AY.2016-17 Shree Vimaljin Religious Charitable Trust was only in Form No. 10, it was not permissible for the rule-making authority to fix such a period of limitation because the Legislature did not impose a limitation for giving a written notice to the assessing authority. The Revenue having carried the matter before the apex court, after referring to the provisions of section 11 of the Act, the apex court has enunciated the law in the following words (page 204) : "It is abundantly clear from the wording of sub-section (2) of section 11 that it is mandatory for the person claiming the benefit of section 11 to intimate to the assessing authority the particulars required, under rule 17 in Form No. 10 of the Rules. If during the assessment proceedings, the Assessing Officer does not have the necessary information, the question of excluding such income from assessment does not arise at all. As a matter of fact, this benefit of excluding this particular part of the income from the net of taxation arises from section 11 and is subjected to the conditions specified therein. Therefore, it is necessary that the assessing authority must have this information at the time he completes the assessment. In the absence of any such information, it will not be possible for the assessing authority to give the assessee the benefit of such exclusion and once the assessment is so completed, in our opinion, it would be futile to find fault with the assessing authority for having included such income in the assessable income of the assessee. Therefore, even assuming that there is no valid limitation prescribed under the Act and the Rules, even then, in our opinion, it is reasonable to presume that the intimation required under section 11 has to be furnished before the assessing authority completes the concerned' assessment because such requirement is mandatory and without the particulars of this income, the assessing authority cannot entertain the claim of the assessee under section 11 of the Act. Therefore, compliance with the requirement of the Act will have to be any time before the assessment proceedings. Further, any claim for giving the benefit of section 11 on the basis of information supplied, subsequent to the completion of assessment, would mean that the assessment order will have to be reopened. In our opinion, the Act does not contemplate such reopening of the assessment." At first blush, the reading of the aforesaid pronouncement gives an impression that the stand of the Revenue is correct, inasmuch as a notice in writing furnishing the prescribed particulars should be submitted before the assessing authority and a completed assessment cannot be reopened, if such particulars are furnished subsequent to the completion of the assessment. However, it is apparent that the apex court has stated that the details have to be furnished before completion of the assessment proceedings and any information supplied subsequent to the completion of assessment cannot be taken into consideration. The question, therefore, that arises is when can an assessment be said to be complete or till what point of time the assessment proceedings can be said to be alive. In the case of Rambhai Jethabhai Patel v. CIT [1977] 108 ITR 771 , this court was called upon to decide the question as to till what point of time an assessment can be said to be pending. This court referred to various interpretations of the word "pending" at page 784 of the reported decision, and ultimately, relied upon the decision of the apex court in the case of Asgarali Nazarali v. State of Bombay, AIR 1957 SC 503, to hold that it can safely be said that a matter can be said to be pending in a court of justice when any proceedings can be taken in it and that is the test to be applied. In Stroud's Judicial Dictionary, Fourth Edition, Volume 4, at page 1975, it is stated : Page | 10 ITA 239/SRT/2021/AY.2016-17 Shree Vimaljin Religious Charitable Trust "A legal proceeding is 'pending' as soon as commenced and until it is concluded, i.e. , so long as the court having original cognisance of it can make an order on the matters in issue, or to be dealt with, therein." Applying the aforesaid principle, can it be stated that when the matter is pending before the Tribunal by way of an appeal, the assessment proceeding is pending? The answer has to be in the affirmative. The assessing authority is empowered and is duty bound, to pass an order giving effect to the order of the Tribunal for the purposes of assessing the tax liability of the assessee for the assessment year which was under consideration before the Tribunal. In these circumstances, it cannot be contended on behalf of the Revenue that the assessment proceedings come to an end when the assessment order is framed. The contention on behalf of the Revenue to equate the assessment order with assessment proceeding is based on a fallacious premise. The aforesaid view that this court is taking finds support from the decision of the apex court in the case of National Thermal Power Co. Ltd. v. CIT [1998] 229 ITR 383 . The apex court held that the Tribunal has jurisdiction to examine a question of law which arose from the facts as found by the income-tax authorities and having a bearing on the tax liability of the assessee. The powers of the Tribunal under section 254 of the Act and the discretion that the Tribunal has to entertain or not to entertain a new ground, have been explained in the following words, in the aforesaid decision (headnote): "Under section 254 of the Income-tax Act, 1961, the Appellate Tribunal may, after giving both the parties to the appeal an opportunity of being heard, pass such orders thereon as it thinks fit. The power of the Tribunal in dealing with appeals is, thus, expressed in the widest possible terms. The purpose of the assessment proceedings before the taxing authorities is to assess correctly the tax liability of an assessee in accordance with law. If, for example, as a result of a judicial decision given while the appeal is pending before the Tribunal, it is found that a non-taxable item is taxed or a permissible deduction is denied, there is no reason why the assessee should be prevented from raising that question before the Tribunal for the first time, so long as the relevant facts are on record in respect of the item. There is no reason to restrict the power of the Tribunal under section 254 only to decide the grounds which arise from the order of the Commissioner of Income-tax (Appeals). Both the assessee as well as the Department have a right to file an appeal/cross-objections before the Tribunal. The Tribunal should not be prevented from considering questions of law arising in assessment proceedings, although not raised earlier. The view that the Tribunal is confined only to issues arising out of the appeal before the Commissioner of Income-tax (Appeals) is too narrow a view to take of the powers of the Tribunal. Undoubtedly, the Tribunal has the discretion to allow or not to allow a new ground to be raised. But where the Tribunal is only required to consider the question of law arising from facts which are on record in the assessment proceedings, there is no reason why such a question should not be allowed to be raised when it is necessary to consider that question in order to correctly assess the tax liability of an assessee." Thus, the proceedings before the Tribunal are meant to correctly assess the tax liability of an assessee: If this be so, it follows that the assessment proceeding cannot be said to be complete and is pending till the appeal is heard and disposed Page | 11 ITA 239/SRT/2021/AY.2016-17 Shree Vimaljin Religious Charitable Trust of by the Tribunal and the order of the Tribunal is given effect to by the assessing authority by computing the correct tax liability of an assessee. In other words, whether an assessee is required to pay tax or becomes entitled to a refund, would be ascertained by the assessing authority after giving effect to the order of the Tribunal. In these circumstances, in the present case, the Tribunal was well within its jurisdiction to entertain the new ground by which the assessee claimed the benefit under section 11(2) of the Act and adjudicate the tax liability of the assessee. As already noticed hereinbefore, the Tribunal has categorically found that "the additional ground involves the question relating to interpretation of section 11(2) and the facts on the basis of which such a decision is to be given regarding interpretation of section 11(2) are not at all in dispute". In the circumstances, there is no infirmity in the order of the Tribunal, holding that the assessee is entitled to benefits allowable under section 11(2) of the Act. The question referred to the court is accordingly answered in the light of the opinion expressed hereinbefore in favour of the assessee and against the Revenue. There shall be no order as to costs.” 13. In our view, this judgment of Hon`ble High Court of Gujarat in the case of Mayur Foundation(supra) is not applicable, as the dispute were not going on in respect of past assessment years Viz: 2013-14, 2014-15, 2015-16, 2016-17 , 2017- 18, 2018-19, 2019-20, 2020-2021 and 2021-22. That is, the assessee applied for registration in A.Y. 2013-14 for which no dispute is going on before this Tribunal. We note that issue before the Hon`ble High Court of Gujarat in the case of Mayur Foundation(supra) was that when the matter is pending before the Tribunal by way of an appeal, the assessment proceeding is pending. Here in the assessee`s case the matter pertaining to assessment year 2013-14, in which the assessee has applied first time for registration under section 12A/12AA, is not pending before this Tribunal, rather it was rejected, and in subsequent assessment years 2014-15 to 2021-22 the trust remains unregistered. Therefore, the judgment of Hon`ble High Court of Gujarat in the case of Mayur Foundation(supra) is not applicable, to the assessee under consideration. 14. Before us, assessment year under consideration is AY.2016-17 and the assessee-trust applied for registration in A.Y. 2013-14 that is on 06.08.2012, the assessee cannot claim the exemption for assessment year 2016-17, as the application for registration of the Trust was rejected in assessment year 2013-14 itself. The Ld Counsel also relied on the judgment of Co-ordinate Bench of ITAT Surat in the case of Shree Surti M. Hitvardhak Mandal – ITA No.149/SRT/2017. Page | 12 ITA 239/SRT/2021/AY.2016-17 Shree Vimaljin Religious Charitable Trust In our view, the said judgment of the Co-ordinate Bench does not assist the assessee under consideration, as in this case the registration granted was still in existence, and it was neither cancelled nor revoked by Revenue Authorities whereas in assessee`s case under consideration, no registration was granted at all. Hence, the judgment cited by ld Counsel is distinguishable on facts. 15. We note that Hon`ble Gujarat High Court in the case of Addor Foundation 117 taxmann.com 359(Guj.); held that non-disposed of an application filed for seeking registration under section 12AA within six months, as fixed by section 12AA(2) would not result in a deemed grant of registration. Hence, assessee cannot be treated as registered Trust for assessment years 2013-14, 2014-15, 2015- 16, 2016-17 , 2017-18, 2018-19, 2019-20, 2020-2021 and 2021-22. 16. The ld Counsel also argued that as per proviso to sub-section (2) of section 12A of the Act where registration has been granted to the trust or institution under section 12A/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 aforesaid assessment year, for which assessment proceedings are pending before 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. However, we do not agree with the plea taken by ld Counsel, as the assessee`s trust under consideration applied for registration under section 12A in assessment year 2013-14, on dated 06.08.2012 (vide Pb-31). Then after Assistant Commissioner of Income Tax issued defect memo to the assessee, on dated 18.10.2012, to submit certain documents and evidences(vide - 30). The assessee submitted its part reply (vide Pb-24). After this, Asstt.Commissioner of Income Tax issued letter dated 08.11.2013 stating that certain documents for registration has not been submitted and also asked to appear Authorized Representative before him. Since the assessee failed to provide required documents and details therefore registration has been denied by the Income Tax Authorities. Page | 13 ITA 239/SRT/2021/AY.2016-17 Shree Vimaljin Religious Charitable Trust 17. We note that registration has been denied to the assessee, as the assessee has failed to provide required documents and details. At this juncture, it is appropriate to quote the proviso to sub-section (2) of section 12A of the Act, which reads as follows: “Conditions for applicability of sections 11 and 12. 12A. [(1)] The provisions of section 11 and section 12 shall not apply in relation to the income of any trust or institution unless the following conditions are fulfilled, namely:........... (2) Where an application has been made on or after the 1st day of June, 2007, the provisions of sections 11 and 12 shall 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:] [Provided that the provisions of sections 11 and 12 shall apply to a trust or institution, where the application is made under— (a) sub-clause (i) of clause (ac) of sub-section (1), from the assessment year from which such trust or institution was earlier granted registration; (b) sub-clause (iii) of clause (ac) of sub-section (1), from the first of the assessment year for which it was provisionally registered: Provided further that where registration has been granted to the trust or institution under section 12AA or section 12AB], 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 aforesaid assessment year, for which assessment proceedings are pending before 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: [Provided also] that no action under section 147 shall be taken by the Assessing Officer in case of such trust or institution for any assessment year preceding the aforesaid assessment year only for non-registration of such trust or institution for the said assessment year: Provided also that provisions contained in the first and second proviso shall not apply in case of any trust or institution which was refused registration or the registration granted to it was cancelled at any time under [section 12AA or section 12AB]. 18. From the third proviso of sub-section (2) of section 12A, it is vivid that when trust is refused for registration then in that situation the trust cannot claim benefit of first proviso to sub-section (2) of section 12A of the Act. In the assessee`s case under consideration, the assessee was refused for registration in the year 2012-13 hence assessee is not entitled to claim benefit of first proviso to sub- section (2) of section 12A of the Act, therefore the plea taken by the ld Counsel is not acceptable. Page | 14 ITA 239/SRT/2021/AY.2016-17 Shree Vimaljin Religious Charitable Trust 19. The ld Counsel also argued before us that if exemption is not granted under section 11 of the Act, then in that event the income of the assessee-trust should be computed on commercial principles bases, that is net profit should be taxable. We find merit in the contention of the assessee and noted that net profit of the assessee should be taxable, as if the assessee is doing business in the capacity of association of person (AOP). Therefore, we are of the view that the said lis should be remitted back to the file of the assessing officer to examine income and expenditure of assessee. Hence, we set aside the order of ld CIT(A) and remit this issue back to the file of the assessing officer with the direction to examine the Profit and loss account/or income and expenditure account of the assessee and compute the net taxable profit by applying the commercial principles. The assessee is also directed to submit before the assessing officer the Profit and loss account/or income and expenditure account, with supporting evidences and documents. The appeal of the assessee is treated to be allowed for statistical purposes. 20. In the result, appeal of the assessee is allowed for statistical purposes. Order is pronounced on 21/10/2022 by placing the result on the Notice Board. Sd/- Sd/- (PAWAN SINGH) (Dr. A.L. SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER lwjr /Surat Ǒदनांक/ Date: 21/10/2022 SAMANTA Copy of the Order forwarded to 1. The Assessee 2. The Respondent 3. The CIT(A) 4. CIT 5. DR/AR, ITAT, Surat 6. Guard File By Order // TRUE COPY // Assistant Registrar/Sr. PS/PS ITAT, Surat