Shree Vasupujya Swami Gruh Chaitya Samiti, Vadodara V. Income Tax Officer, Ward-Exemption, Vadodara

ITA 299/AHD/2022

AI Insights

The case involves Shree Vasupujya Swami Gruh Chaitya Samiti, a religious trust, appealing against the order of the Commissioner of Income Tax (Appeals), which confirmed the assessment order denying them the benefits of sections 11 and 12 of the Income Tax Act, 1961. The primary contention was the non-registration under section 12AA at the time of the assessment, which led to the denial of exemptions and deductions claimed. The Tribunal examined whether the exemption under section 11 could be granted based on the registration obtained after the assessment year in question but before the appeal. The Tribunal's decision was influenced by precedents and amendments to the Act, leading to a retrospective application of the exemption for the assessment year 2010-11.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 127172 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-01-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 26-12-2022
• Assessment Year: 2010-2011
• Appeal Filed On: 31-07-2022
• Other Referred Cases: Shiv Kumar Sumitra Devi Smarak Shikshan Sansthan v. Commissioner of Income-tax (Exemption), St. Jude's Convent School, CIT vs. Mayur Foundation
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: TEJ SHAH; BHANUSHALI MITRA MANDAL
• Keywords: Benefit of exemption
• Section: 148; 12; 11; 139; 12AA; 274

Judgement Text

आयकर अपील य अ धकरण, अहमदाबाद यायपीठ IN THE INCOME TAX APPELLATE TRIBUNAL, ‘’SMC’’ BENCH, AHMEDABAD BEFORE SHRIWASEEM AHMED, ACCOUNTANT MEMBER आयकरअपीलसं./ITA No.299/AHD/2022 नधा रणवष /Asstt. Year: 2010-11 Shree Vasupujya Swami Gruh Chaitya Samiti, F-13, Mehul Society No. 2, Subhanpura, Vadodara PAN: AAITS4999L Vs. ITO Ward-Exemption, Vadodara (Applicant) (Respondent) Assessee by : Shri Tej Shah, A.R. Revenue by : Shri Purushottam Kumar, Sr. D.R स ु नवाईक तार ख/Date of Hearing : 27/12/2022 घोषणाक तार ख/Date of Pronouncement: 25/01/2023 आदेश/O R D E R The captioned appeal has been filed at the instance of the Assessee against the order of the Learned Commissioner of Income Tax(Appeals), National Faceless Appeal Centre (in short “NFAC”), Delhi dated 10/06/2022 arising in the matter of assessment order passed under s.143(3) of the Income Tax Act, 1961 (here-in- after referred to as "the Act") relevant to the Assessment Year 2010-11. 2. The assessee has raised following grounds of appeal: “1. The NFAC erred in law and in the facts of the case in confirming the order of the AO in not granting benefit of registration u/s 11 and 12 of the act in view of the 2 nd proviso to S. 12A(2) of the act. 2. The NFAC erred in law and in the facts of the case in confirming the order of the AO in disallowing exemption of Rs. 12,82,189/- u/s 11(1)(d) of the act. 3. The NFAC erred in law and in the facts of the case in confirming the order of the AO in not allowing deduction of expenses of Rs. 5,88,222 towards donation. 4. The NFAC erred in law and in the facts of the case in confirming the order of the AO in not computing the income of the appellant as per the accounting principles.” ITA No.299/AHD/2022 A.Y. 2010-11 2 3. The interconnected issue raised by the assessee in this appeal is that NFAC erred in not granting exemption u/s 11 and 12 of the Act and accordingly sustaining the addition of Rs. 12,82,189/- and further disallowing the deduction of expenses of Rs. 5,88,222/- towards donation. 4. Briefly stated facts are that the assessee in the present case is a religious trust and claiming exemption u/s 11 of the Act. The AO found that the cash amounting to Rs. 14,75,350/- was deposited in the assessee’s bank account. However,the return of income under section 139 of the Act was not filed for the year under consideration. Thus,a notice under section 148 of the Act was issued. The assessee in the return filed under section 148 of the Act has shown receipts of Rs. 5,05,066/- and Rs. 6,00,076/- on account of donation and interest income and after application of income towards its object declared net profit of Rs. 1,40,056/- only. 5. On question with regard to sources of cash deposit of Rs. 14,75,350/-, the assessee submitted that the cash was deposited out of receipts of charitable purposes. The detailsof the same stand as under: 1. Angi Dagina Fund Rs. 5,61,221/- 2. Dev Dravya Fund Rs. 7,20,968/- 3. Donation Rs. 1,93,161/- 6. The assessee submitted that the receipts on account of “Angi Dagina Fund” was utilized during the year. The receipt on account of “Dev Dravya Fund” were shown in balance sheet as corpus fund and in this regard receipts were also issued to the donor. The remaining amount of cash deposits of Rs, 1,93,161/ was on account of general donation and the same is included in the computation of income. 7. However, the AO during the assessment proceedings observed that the assessee was not registered under section 12AA of the Act. Therefore, the assessee was eligible for benefit under section 11 and 12 of the Act. Hence the ITA No.299/AHD/2022 A.Y. 2010-11 3 corpus fund being “Dev Dravya Fund” and “Angi Dagina Fund” is not eligible for deduction u/s 11(1)(d) of the Act and disallowed the claim of the assessee made u/s 11(1)(d) of the Act for Rs. 12,82,189/- and added to the total income of the assessee. 8. The AO also observed that the assessee claimed deduction under section 11 of the Act being expenses towards its objects. The AO disallowed the expenses except administrative expenses for Rs. 5,88,222/- for the reason that the assessee is not registered under section 12AAof the Act. Hence, the assessee is not entitled to get the benefit of section of 11 and 12 of the Act. 9. Aggrieved, assessee preferred an appeal before ld. CIT(A) who also confirmed the action of the AO by holding that the assessee was not registered under the provision of section 12AA of the Act. 10. Being aggrieved by the order of the learned CIT(A), the assessee is in appeal before me. 11. The learned AR before me submitted that the registration under section 12A of the Act was pending during the assessment proceedings and therefore the assessee should be allowed the benefit of exemption under section 11 of the Act. 12. On the other hand, the learned DR before me contended that the benefit of section 11 should be granted to the assessee from the financial year in which the application for registration was made. The learned DR in support of his contention has relied on the judgement of Hon’ble Supreme Court in the case of Shiv Kumar Sumitra Devi Smarak Shikshan Sansthan v. Commissioner of Income-tax (Exemption) reported in 138 Taxmann.com 197. The learned DR vehemently supported the order of the authorities below. 13. I have heard the rival contentions of both the parties and perused the materials available on record. In the instant case, the AO denied the exemption ITA No.299/AHD/2022 A.Y. 2010-11 4 claimed by the assessee u/s 11 and 12 of the Act for the reason that the assessee was not registered u/s 12AA of the Act at that point of time. Therefore, the AO treated corpus donation of Rs. 12,82,189/- as income and also disallowed the donation expenses of Rs. 5,88,222/-. The view taken by the AO was subsequently confirmed by the ld.CIT(A). 14. Regarding the non-availability of registration certificate u/s 12AA of the Act, we note that the assessee has applied for registration u/s 12AA of the Act which was accorded by the ld. CIT(exemption) vide order dated 23-09-2021. The copy of the certificate granted u/s 12AA of the Act is available on record. On perusal of the same, it was noted that the same is effective from the AY 2022-23. Now the issue arises whether the exemption u/s 11 can be granted on the basis of the certificate issued in the F.Y. 2021-22. In this regard, we note that there was an amendment in the first proviso to Section 12A(2) of the Act stating that the provisions of section 11 and 12 shall be made applicable for the assessment year pending before the AO as on the date of registration. However, the courts have held that such amendment is applicable retrospectively even for the proceedings pending before the higher authorities. In this regard, we find support and guidance from the order of Amritsar Tribunal in the case of St. Jude’s Convent School reported in 77 taxmann.com 173, wherein it was held as under: “30. This brings us to the next question, i.e., whether the assessment proceeding "pending before the Assessing Officer", as stated in the first proviso to Section 12A(2) can be taken as "pending in appeal", or, in other words, whether proceedings pending in appeal can be taken to be proceedings pending before the Assessing Officer. This issue also stands answered in favour of the assessee by Shree Bhanushali Mitra Mandal Trust (supra), wherein, it was held that appeal is a continuation of the original proceedings and assessment proceedings pending before an appellate authority should be deemed to be "assessment proceedings pending before the Assessing Officer" within the meaning of Section 12A. SNDP Yogam (supra), is to the same effect. Again, no contrary decision has been brought to our notice. Accordingly, it is held that the appellate proceedings before the appellate authorities are deemed to be assessment proceedings pending before the Assessing Officer.” 15. In this regard, we also find support and guidance from the judgment of Hon’ble Gujarat High Court in case of CIT vs. Mayur Foundation reported in 274 ITR 562 where it was held as under: ITA No.299/AHD/2022 A.Y. 2010-11 5 “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. 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.” 16. Thus, we hold that the proceedings pertaining to the A.Y. 2010-11 were pending at the time of registration under section 12AA of the Act. Therefore, the benefit of exemption u/s 11 of the Act will be extended to the assessee. However, such benefit provided under section 11 of the Act shall be subject to the provisions contained therein. In other words, the AO while granting the benefit of exemption provided under section 11 of the Act shall adhere the relevant provisions of the Act. The judgement referred by the learned DR of the Hon’ble Supreme Court cannot be applied to the case on hand for the reason that it is refers the withdrawal of appeal by the assesse. As such no principle has been laid down by the Hon’ble Supreme Court in the case cited by the learned DR. Hence, the ground of appeal of the assessee is allowed for the statistical purposes. 17. In the result, the appeal filed by the assessee is allowed for the statistical purposes. Order pronounced in the Court on 25/01/2023 at Ahmedabad. - Sd/- (WASEEM AHMED) (True Copy) ACCOUNTANT MEMBER Ahmedabad; Dated 25/01/2023 Tanmay, Sr. PS TRUE COPY