Utkarsh Academy, Kanpur V. DCIT, Kanpur

ITA 482/LKW/2011

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 70557 (ITAT-LUCKNOW)
• Duration Of Justice: 2 year(s) 1 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-09-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 12-09-2013
• Assessment Year: misc
• Appeal Filed On: 05-08-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P K DEY
• Keywords: Charitable institution; Maximum Marginal Rate; Competent authority
• Section: 12A; 12AA; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH B, LUCKNOW BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER AND SHRI C.M. GARG, JUDICIAL MEMBER ITA NO.482/LKW/2011 ASSESSMENT YEAR: 2001-02 UTKARSH ACADEMY, VS. DY. COMMISSIONER OF INCOME TAX-I, SWAROOP NAGAR, KANPUR. KANPUR. (PAN: AAATA 9088 J). (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI ABHINAV MEHROTRA, ADVOCATE RESPONDENT BY : SHRI P.K. DEY, D.R. DATE OF HEARING : 12.09.2013 DATE OF PRONOUNCEMENT : 13.09.2013 ORDER PER C.M. GARG, JUDICIAL MEMBER: THIS APPEAL HAS BEEN DIRECTED BY THE ASSESSEE AGAIN ST THE ORDER OF CIT(A)-I, DEHRADUN FOR THE A.Y. 2001-02 DATED 18.03.2011 IN A PPEAL NO.CIT(A)- I/889/DCIT-I/KNP/2006-07/80. 2. THE MAIN GROUNDS RAISED BY THE ASSESSEE READ AS UNDER :- 2 ITA NO.482/LKW/2011 A.Y. 2001-02 THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEA LS) HAS ERRED ON FACTS AND IN LAW IN HOLDING THAT THE ASSESSING O FFICER WAS CORRECT IN REJECTING THE ASSESSEES CLAIM OF EXEMPTION U/S. 11 AND TREATING IT AS COMMERCIAL ENTITY. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL ) IS WRONG IN HOLDING THAT THE ASSESSEE DID NOT PRODUCE THE BOOKS OF ACCOUNT BEFORE THE ASSESSING OFFICER WHEREAS DUE COMPLIANCE OF SUM MON ISSUED U/S.131 OF THE INCOME TAX ACT WAS MADE ON 02.03.200 1. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL ) HAS ERRED ON FACTS AND IN LAW IN HOLDING THAT THE ASSESSEE ACCOU NT ARE NOT RELIABLE EVEN THOUGH THEY ARE AUDITED. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL ) HAS ERRED ON FACTS AND IN LAW IN HOLDING THAT THE CLAIM OF THE A SSESSEE FOR NON- RECEIPT OF FEES DUE TO DROP OUT OF THE STUDENTS CAN NOT BE ACCEPTED. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL ) HAS ERRED ON FACTS AND IN LAW IN HOLDING THAT ASSESSEES CHALLEN GE TO THE ESTIMATE OF NET PROFIT MADE BY THE ASSESSING OFFICER IS NOT MAI NTAINABLE AND IS REJECTED. 3. THE BRIEFLY STATED FACTS ARISING OUT OF THIS APP EAL ARE THAT THE ASSESSEE FILED RETURN OF INCOME SHOWING AS NIL AND CLAIMED ITS STA TUS AS CHARITABLE TRUST INSTITUTION. THE ASSESSEE HAS SHOWN RECEIPT AS FEE S AMOUNTING TO RS.30,32,040/- AND THE SAME HAD BEEN CLAIMED AS EXEMPTED UNDER SEC TION 11OF THE INCOME TAX ACT, 1961 (FOR SHORT THE ACT). AS PER THE OBSERV ATIONS OF THE A.O., THE ASSESSEE WAS NOT GRANTED REGISTRATION UNDER SECTION 12A OF T HE ACT BUT IT HAS APPLIED FOR REGISTRATION UNDER SECTION 12A OF THE ACT. THE A.O . DENIED EXEMPTION UNDER 3 ITA NO.482/LKW/2011 A.Y. 2001-02 SECTION 11 OF THE ACT TO THE ASSESSEE AND ESTIMATED 20% NET INCOME ON TOTAL RECEIPT OF THE ASSESSEE WHICH CAME TO RS.7,15,995/-. 4. BEING AGGRIEVED BY THE ABOVE ASSESSMENT ORDER, T HE ASSESSEE PREFERRED APPEAL WHICH WAS ALSO DISMISSED WITH THE FOLLOWING OBSERVATIONS:- 1.3 THE ASSESSEES ARGUMENT THAT IT SHOULD BE DEEM ED TO HAVE BEEN REGISTERED U/S 12A OF THE I.T. ACT HAS ALSO BEEN CO NSIDERED. FIRSTLY, THE CONTENTION THAT THE ASSESSEE MADE A VALID APPLI CATION FOR REGISTRATION U/S 12A BEFORE THE CIT, KANPUR AND THE LATTER FAILED TO DISPOSE THE SAME OF IS NOT SUBSTANTIATED BY THE REL EVANT DOCUMENTARY EVIDENCE. SECONDLY, THE INFERENCE OF DEEMED REGIST RATION IN CASE OF FAILURE TO TAKE A DECISION ON A VALID APPLICATION W ITHIN THE PRESCRIBED TIME-LIMIT COULD AT BEST APPLY ONLY WHEN THE APPLIC ANT IS PRIMA FACIE A CHARITABLE INSTITUTION. IN THIS CASE, IT HAS BEEN NOTED ABOVE THAT THE ASSESSEE IS NOT A CHARITABLE INSTITUTION. HENCE, T HE BENEFIT OF THE LIBERAL INTERPRETATION OF THE PROVISION OF SECTION 12A OF THE I.T. ACT CANNOT BE EXTENDED TO IT. AN INSTITUTION WHICH IS NOT CHARITABLE WOULD NOT BECOME CHARITABLE SIMPLY IF ITS APPLICATION FOR REGISTRATION U/S 12A IS NOT ACTED UPON. IN VIEW OF THE AFORESAID, IT IS HELD THAT THE AO WAS CORRECT IN REJECTING THE ASSESSEES CLAIM OF EXEMPT ION U/S. 11 OF THE I.T. ACT AND TREATING IT AS COMMERCIAL ENTITY. 2. DETERMINATION OF NET PROFIT: AS PER THE ASSESSEES ACCOUNTS FURNISHED WITH THE RETURN OF INCOME, THE SURPLUS OF INCOME OVER EXPENDITURE FOR THE PREVIOUS YEAR WAS RS.4,13,019/- . THE AO NOTED THAT, EVEN THOUGH TOTAL RECEIPT FOUND DURING THE SU RVEY WAS RS.35,75,975/-, THE ASSESSEE SHOWED RECEIPT OF ONLY RS.30,32,040/- IN THE ACCOUNTS. THE ASSESSEE EXPLAINED THAT THE DIFF ERENCE OF RS.5,22,670/- WAS THE AMOUNT OF FEES WHICH WAS NOT ACTUALLY RECEIVED DUE TO STUDENTS OPTING OUT. IT WAS ALSO SUBMITTED THAT THERE WAS TOTALING MISTAKE OF RS.24,650/- IN THE CALCULATION DONE AT THE TIME OF SURVEY. THE AO REJECTED THE EXPLANATION AS THE BOO KS OF ACCOUNT WERE NOT FOUND TO BE MAINTAINED IN THE REGULAR COURSE OF THE BUSINESS AND ALSO BECAUSE MANY EXPENSES DEBITED IN THE INCOME AN D EXPENDITURE ACCOUNT DID NOT TALLY WITH THE DETAILS OF EXPENSES FURNISHED BY THE 4 ITA NO.482/LKW/2011 A.Y. 2001-02 ASSESSEE AT THE TIME OF SURVEY. HE ESTIMATED THE A SSESSEES NET PROFIT @ 20% OF THE TOTAL RECEIPT OF RS.35,79,975/-, I.E. RS.7,15,995/-. THIS INCOME WAS ASSESSED TO TAX AT MAXIMUM MARGINAL RATE . 2.1 IT IS A CRUCIAL FINDING THAT, IN COURSE OF THE SURVEY, THE ASSESSEES BOOKS OF ACCOUNT WERE NOT MADE AVAILABLE FOR INSPECTION EVEN THOUGH THE PREVIOUS YEAR WAS COMING TO AN END. THESE BOOKS OF ACCOUNT, HAD THEY ACTUALLY BEEN WITH A PART-TIME AC COUNTED (AS NOW CLAIMED BY THE ASSESSEE), THEY COULD BE PRODUCED BE FORE THE AO DURING THE SURVEY ITSELF OR, AT THE MOST, BY THE NE XT WORKING DAY. THAT WAS NOT DONE. IN THIS SITUATION, THE EVIDENTIARY V ALUE OF THE ENTRIES MADE IN THE BOOKS OF ACCOUNT PREPARED LATER, EVEN I F THEY WERE SUBJECTED TO AUDIT, BECOMES WEAK. AS MENTIONED BY THE AO, THE GROSS RECEIPT OF RS.35,75,975/- WAS COMPILED FROM THE REC EIPT-BOOKS OF THE ASSESSEE FOUND DURING THE SURVEY. NO OBJECTION TO THE CORRECTNESS OF THE FIGURE WAS RAISED AT THAT STAGE. IN FACT, THE ASSESSEE ADMITTED TO HAVE EARNED INCOME OF AT LEAST RS.5,00,000/- AND EV EN PAID ADVANCE TAX OF RS.2,00,000/-. A RECEIPT-BOOK IS A TOKEN OF CASH RECEIPT. IT HAS NOT BEEN EVEN CLAIMED THAT THE AMOUNT RECORDED THER EIN WAS YET TO BE RECEIVED. IT IS NOT HEARD THAT A COACHING INSTITUT E REFUNDS MONEY TO A CANDIDATE IF HE DROPS OUT. HENCE, THE ASSESSEES C LAIM THAT AN AMOUNT OF RS.5,22,670/- WAS NOT RECEIVED DUE TO DROPPING O UT OF STUDENTS CANNOT BE ACCEPTED. THUS, GOING BY THE ASSESSEES AUDIT ACCOUNTS, ADDITION OF RS.5,22,670/- WOULD BE MADE BY THE AO O N ACCOUNT OF THE DIFFERENCE IN RECEIPT ONLY. IF THE SURPLUS OF RS.4 ,13,019/- REPORTED BY THE ASSESSEE IN THE RETURN OF INCOME WERE ADDED TO THE AMOUNT OF RECEIPT-DIFFERENCE, THE TOTAL INCOME WOULD BE RS.9, 35,689/-. THIS WOULD BE THE FIGURE OF TOTAL INCOME WITHOUT REJECTI NG THE BOOKS OF ACCOUNT AND MAKING ANY DISALLOWANCE OUT OF THE EXPE NDITURE CLAIMED BY THE ASSESSEE. AS AGAINST THIS, IT IS SEEN THAT THE AO ASSESSED TOTAL INCOME AT RS.7,15,995/- ONLY. 2.2 IT IS ALSO NOTED THAT, AFTER DISCUSSING THE UNR ELIABLE NATURE OF THE ASSESSEES ACCOUNTS, THE AO MENTIONED THAT HE W OULD ESTIMATE THE EXPENSES AT NOT MORE THAN 1/3 RD OF THE TOTAL RECEIPT, MEANING THEREBY THAT THE NET PROFIT WOULD BE 2/3 RD OF THE TOTAL RECEIPT, I.E. AROUND RS.24,00,000/- (REF: PAGE 4, PARA 1 OF THE ASSESSME NT ORDER). HAVING SAID THAT, HE ENDED UP ESTIMATING THE INCOME @ 20% OF THE TOTAL RECEIPT (REF: PAGE 4, PARA 5 OF THE ASSESSMENT ORDE R), I.E. RS.15,995/-. THE REASON FOR SUCH A CLIMB-DOWN IS NOT DISCERNIBLE FROM THE ORDER. 5 ITA NO.482/LKW/2011 A.Y. 2001-02 SINCE THERE WAS NO SOUND BASIS FOR ESTIMATING THE P ROFIT AT 2/3 RD OF THE GROSS RECEIPT, NO ENHANCEMENT TO ASSESSED INCOME ON THIS ACCOUNT IS CONSIDERED NECESSARY. BUT, IT MAY BE MENTIONED THA T THE AO HIMSELF SCALED DOWN HIS ESTIMATE OF ASSESSEES NET PROFIT S UBSTANTIALLY. THAT WOULD TAKE CARE OF ANY OBJECTION THAT THE ASSESSEE MAY ARISE REGARDING THE QUANTUM OF NET PROFIT ESTIMATED BY TH E AO. THE ASSESSED INCOME, IN FACT, MAKES ALLOWANCE OF RS.2,2 0,000/- FOR FEES FORFEITED WITHOUT THE AO ACCEPTING THE ASSESSEES C ONTENTION IN THIS REGARD. IF THAT HAD NOT HAPPENED, THE ASSESSED INC OME WOULD HAVE BEEN RS.9,35,689/- AS AGAINST RS.7,15,995/-, AS DIS CUSSED ABOVE. I VIEW OF THIS, THE ASSESSEES CHALLENGE TO THE ESTIM ATE OF NET PROFIT MADE BY THE AO IS NOT MAINTAINABLE AND THE SAME IS REJEC TED. 5. WE HAVE HEARD THE RIVAL ARGUMENTS OF BOTH THE PA RTIES ON THE GROUNDS AS MENTIONED HEREINABOVE AND CAREFULLY PERUSED THE REC ORDS AND CITATIONS RELIED UPON BY BOTH THE PARTIES. 6. AT THE OUTSET OF THE ARGUMENT, THE LD. COUNSEL F OR THE ASSESSEE SUBMITTED AN AFFIDAVIT OF DR. PRADEEP KUMAR DIXIT, SECRETARY OF THE ASSESSEE STATING THAT THE ASSESSEE SOCIETY APPLIED FOR REGISTRATION UNDER SEC TION 12A OF THE ACT AND FOR RECOGNITION UNDER SECTION 80G(5) OF THE ACT ON PRES CRIBED FORM BEFORE THE CIT ON 14.12.1994 AND 19.11.1996 RESPECTIVELY. IT HAS ALS O BEEN STATED IN THE AFFIDAVIT THAT THE ASSESSEE SOCIETY RECEIVE D NOTICE DATED 17 .07.1995 FOR MAKING COMPLIANCE AS DETAILED IN THE NOTICE FROM ACIT CIRCLE-I, KANPU R AND COMPLIANCE OF THE SAME WAS MADE ON 22.08.1995. THE COPY OF THE AFOREMENTI ONED NOTICE HAS BEEN ANNEXED AS A PART OF THIS AFFIDAVIT. THE SECRETARY OF THE ASSESSEE SOCIETY IN HIS 6 ITA NO.482/LKW/2011 A.Y. 2001-02 AFFIDAVIT FURTHER MAKES IT CLEAR THAT IN RESPONSE T O APPLICATION FILED BEFORE CIT DATED 14.12.1994 NO ORDER ADJUDICATING SUCH APPLICA TIONS WAS PASSED BY THE AUTHORITIES CONCERNED AND NEVER RECEIVED BY THE ASS ESSEE SOCIETY. THE LD. COUNSEL FOR THE ASSESSEE HAS PLACED RELIANCE ON THE JUDGMEN T OF HONBLE JURISDICTIONAL HIGH COURT OF ALLAHABAD IN THE CASE OF SOCIETY FOR THE P ROMOTION OF EDUCATION ADVENTURE SPORT & CONSERVATION OF ENVIRONMENT VS. C IT, 2008 (171) TAXMAN 0113 ALL. WHEREIN THEIR LORDSHIP HELD AS UNDER :- CONSIDERING THE PROS AND CONS OF THE TWO VIEWS, WE ARE OF THE OPINION THAT BY FAR THE BETTER INTERPRETATION WOULD BE TO HOLD THAT THE EFFECT OF NON-CONSIDERATION OF THE APPLICATION FOR REGISTRATION WITHIN THE TIME FIXED BY SECTION 12AA(2) WOULD BE A DEEMED GRANT OF REGISTRATION. WE DO NOT FIND ANY GOOD REASON TO MA KE THE ASSESSEE SUFFER MERELY BECAUSE THE IT DEPARTMENT IS NOT ABLE TO KEEP ITS OFFICERS UNDER CHECK AND CONTROL, SO AS TO TAKE TIM ELY DECISIONS IN SUCH SIMPLE MATTERS SUCH AS CONSIDERATION OF APPLICATION S FOR REGISTRATION EVEN WITHIN THE LARGE SIX MONTH PERIOD PROVIDED BY SECTION 12AA(2) OF THE ACT. 7. THE LD. COUNSEL FOR THE ASSESSEE HAS ALSO PLACED RELIANCE ON THE ORDER OF I.T.A.T., LUCKNOW A BENCH IN ITA NOS.104 & 105/LU C/2012 WHEREIN RESPECTFULLY FOLLOWING THE JUDGMENT OF HONBLE JURI SDICTIONAL HIGH COURT OF ALLAHABAD IN THE CASE OF SOCIETY FOR THE PROMOTION OF EDUCATION ADVENTURE SPORT & CONSERVATION OF ENVIRONMENT VS. CIT. (SUPRA) IT H A BEEN HELD AS UNDER :- 4. IN OUR CONSIDERED VIEW, PLEA OF THE ASSESSEE DE SERVES TO BE ACCEPTED IN THE LIGHT OF HONBLE JURISDICTIONAL HIG H COURTS JUDGMENT IN THE CASE OF SOCIETY FOR PROMOTION OF EDUCATION, ADVENTURE SPORTS 7 ITA NO.482/LKW/2011 A.Y. 2001-02 AND CONSERVATION OF ENVIRONMENT (SUPRA), WHEREIN TH EIR LORDSHIPS HAVE, INTER ALIA, OBSERVED AS FOLLOWS :- THE APEX COURT HAS ALSO APPLIED DOCTRINE OF PURPOS IVE INTERPRETATION IN FISCAL STATUES THAT WOULD BE EVID ENT FROM ITS DECISION IN CIT VS. ANJUM M.H. GHASWALA & ORS. (200 1) 171 CTR (SC) 1 : JT 2001 (9) SC 61. CONSIDERING THE PR OS AND CONS OF THE TWO VIEWS, WE ARE OF THE OPINION THAT B Y FAR THE BETTER INTERPRETATION WOULD BE TO HOLD THAT THE EFF ECT OF NON- CONSIDERATION OF THE APPLICATION FOR REGISTRATION W ITHIN THE TIME FIXED BY SECTION 12AA(2) WOULD BE A DEEMED GRANT OF REGISTRATION. WE DO NOT FIND ANY GOOD REASON TO MA KE THE ASSESSEE SUFFER BECAUSE THE IT DEPARTMENT IS NOT AB LE TO KEEP ITS OFFICES UNDER CHECK AND CONTROL, SO AS TO TAKE TIMELY DECISIONS IN SUCH SIMPLE MATTERS SUCH AS CONSIDERAT ION OF APPLICATIONS FOR REGISTRATION EVEN WITHIN THE LARGE SIX MONTH PERIOD PROVIDED BY S. 12AA(2) OF THE ACT. WE ACCORDINGLY DIRECT THE RESPONDENTS, SUBJECT TO A NY ORDER WHICH MAY BE PASSED UNDER S. 12AA(3), TO TREAT THE PETITIONER SOCIETY AS AN INSTITUTION DULY APPROVED AND REGISTE RED UNDER SECTION 12AA AND TO RECOMPUTED ITS INCOME BY APPLYI NG THE PROVISION OF S.11 OF THE ACT. ACCORDINGLY, A FORMA L CERTIFICATE OF APPROVAL WILL BE ISSUED FORTHWITH TO THE PETITIONER BY THE RESPONDENT NO.2 5. APPLYING THE PRINCIPLE SO LAID DOWN, WHERE COMMI SSIONER DOES NOT PASS ANY ORDERS EVEN AFTER SIX MONTHS FROM RECE IPT OF TRIBUNALS ORDER REMITTING THE MATTER TO HIM. THE REGISTRATIO N WILL BE DEEMED TO HAVE BEEN GRANTED. OF COURSE, THIS IS SUBJECT TO E XERCISE OF COMMISSIONERS POWER U/S. 12AA(3) IN APPROPRIATE CA SES, BUT THE REGISTRATION WILL BE DEEMED TO HAVE BEEN GRANTED. 6. FOR THE REASONS SET OUT ABOVE, WE UPHOLD THE PRE LIMINARY OBJECTION RAISED BY THE ASSESSEE AND DIRECT THE COM MISSIONER TO ISSUE APPROVAL OF REGISTRATION FORTHWITH. IN THIS VIEW O F THE MATTER, WE SEE NO NEED TO DEAL WITH OTHER LEGAL AND FACTUAL ISSUES RAISED BY THE ASSESSEE. 8 ITA NO.482/LKW/2011 A.Y. 2001-02 8. IN VIEW OF THE ABOVE JUDGMENTS, LD. DEPARTMENTAL REPRESENTATIVE (D.R.) SUBMITTED THAT THE PROVISIONS CONTAINED IN SECTION 12AA(2) OF THE ACT ARE EFFECTIVE FROM 01.06.2007. THEREFORE, IN THE PRESENT CASE IT CANNOT BE ASSUMED THAT THE REGISTRATION WILL BE DEEMED TO HAVE BEEN GRANTED TO THE ASSESSEE. 9. AFTER CAREFUL CONSIDERATION OF THE CONTENTION AN D SUBMISSIONS OF BOTH THE PARTIES, WE ARE OF THE VIEW THAT THE HONBLE JURISD ICTIONAL HIGH COURT HAS CLEARLY HELD THAT THE EFFECT OF NON-CONSIDERATION OF THE AP PLICATION FOR REGISTRATION WITHIN THE TIME FIXED BY SECTION 12AA(2) OF THE ACT WOULD BE A DEEMED GRANT OF REGISTRATION. THEIR LORDSHIP HELD THAT THERE IS NO ANY GOOD REASON TO MAKE THE ASSESSEE SUFFER MERELY BECAUSE THE INCOME TAX DEPAR TMENT IS NOT ABLE TO KEEP ITS OFFICERS UNDER CHECK AND CONTROL SO AS TO TAKE TIME LY DECISIONS IN SUCH SIMPLE MATTERS SUCH AS CONSIDERATION OF APPLICATION FOR RE GISTRATION EVEN WITHIN THE LARGE SIX MONTHS PERIOD PROVIDED BY SECTION 12AA(2) OF TH E ACT. IN THE INSTANT CASE, AS PER UN-REBUTTED AFFIDAVIT OF THE SECRETARY OF THE A SSESSEE SOCIETY, THE ASSESSEE SUBMITTED APPLICATION FOR REGISTRATION UNDER SECTIO N 12A AND FOR RECOGNITION UNDER SECTION 80G(5) OF THE ACT ON PRESCRIBE FORM NO.10A AND 10G BEFORE THE CIT ON 14.12.1994 AND 19.11.1996 RESPECTIVELY BUT EXCEPT N OTICE DATED 17.07.1995, WHICH WAS COMPLIED BY THE ASSESSEE ON 22.08.1995, THE ASS ESSEE DID NOT RECEIVE ANY ORDER OF ADJUDICATION OF THESE APPLICATIONS. RATIO OF TH E JUDGMENT OF HONBLE 9 ITA NO.482/LKW/2011 A.Y. 2001-02 JURISDICTIONAL HIGH COURT IN THE CASE OF SOCIETY FO R THE PROMOTION OF EDUCATION ADVENTURE SPORT & CONSERVATION OF ENVIRONMENT VS. C IT (SUPRA) IS SQUARELY APPLICABLE TO THE PRESENT CASE BECAUSE THE REVENUE AUTHORITIES DID NOT DECIDE THE APPLICATION FOR REGISTRATION UNDER SECTION 12A OF T HE ACT DURING PRETTY LONG TIME AND IN THE CIRCUMSTANCES WHEN THE REVENUE AUTHORITI ES HAS NOT COMMUNICATED ANY DEFECT OR ORDER OF REJECTION TO THE ASSESSEE, THEN IT WOULD BE DEEMED GRANT OF REGISTRATION IN FAVOUR OF THE ASSESSEE. ACCORDINGL Y, WE HOLD THAT IF THE EFFECT OF NON-CONSIDERATION OF APPLICATION FOR REGISTRATION W ITHIN REASONABLE TIME THEN WE ARE BOUND TO HOLD THAT IT WOULD BE A DEEMED GRANT O F REGISTRATION IN FAVOUR OF THE ASSESSEE UNDER SECTION 12A OF THE ACT. 10. WE, THEREFORE, DIRECT THE A.O., THAT SUBJECT TO ANY ORDER WHICH MAY BE PASSED UNDER SECTION 12AA(3) OF THE ACT, TO TREAT T HE ASSESSEE SOCIETY AS INSTITUTION DULY APPROVED AND REGISTERED UNDER SECTION 12AA OF THE ACT AND TO RECOMPUTE ITS INCOME BY APPLYING THE PROVISIONS OF SECTION 11 OF THE ACT. ACCORDINGLY, WE DIRECT TO THE COMPETENT AUTHORITY TO ISSUE A FORMAL CERTIFICATE OF APPROVAL UNDER SECTION 12A OF THE ACT IN FAVOUR OF THE ASSESSEE SO CIETY. 11. BEFORE WE PART WITH THE ORDER, WE MAKE IT CLEAR THAT SINCE WE HAVE HELD THAT THE ASSESSEE PETITIONER SHALL BE TREATED AS AN INST ITUTION DULY APPROVED AND 10 ITA NO.482/LKW/2011 A.Y. 2001-02 REGISTERED UNDER SECTION 12AA OF THE ACT, THEREFORE , WE RESTORE THE ISSUE OF EXAMINATION OF CLAIM OF THE ASSESSEE FOR EXEMPTION UNDER SECTION 11 OF THE ACT AND OTHER RELEVANT PROVISIONS TO THE FILE OF A.O. WITH THE DIRECTION THAT THE A.O. SHALL EXAMINE THE CLAIM OF THE ASSESSEE IN THE LIGHT OF P ROVISIONS OF SECTION 11 AND OTHER RELEVANT PROVISIONS OF THE ACT. 12. ACCORDINGLY, APPEAL OF THE ASSESSEE IS DISPOSED OF IN THE MANNER AS INDICATED ABOVE AND MAY BE TREATED AS ALLOWED FOR STATISTICAL PURPOSES. 13. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D. (ORDER PRONOUNCED IN THE OPEN COURT ON 13.09.2013) SD/- SD/- (SHAMIM YAHYA) (C.M. GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER DATE: 13.09.2013 PBN/* COPY OF THE ORDER FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT (APPEALS) 4. CIT 5. D.R. ASSISTANT REGISTER