NIRAVADYA FOUNDATION,VADODARA V. THE COMMISSIONER OF INCOME TAX,(EXEMPTION), AHMEDABAD

ITA 1453/AHD/2024

AI Insights

The case involves Niravadya Foundation appealing against the decision of the Commissioner of Income Tax (Exemptions), Ahmedabad, which had rejected their application for registration under section 12A of the Income Tax Act, 1961. The initial rejection was based on the grounds that the application was filed under section 12A(1)(ac)(iii), which required provisional registration under section 12AB, a condition the assessee did not meet. The assessee argued that the application was mistakenly filed under the wrong clause and should have been under section 12A(1)(ac)(i), applicable to trusts already registered under the old scheme. The Tribunal agreed with the assessee's position and directed the CIT(E) to reconsider the application under the correct provision.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 298700 (ITAT-AHMEDABAD)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-01-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: misc
• Other Referred Cases: Late Tilokchand Kuche Shikshan Vs. CIT(E), Pune, Seven Hills Educational Society Vs. ITO, Sri Jeyamkonda Choleeswara Soundaranayaki Amman Khumbhahisheka Malar Kuzhu Vs. ITO, Shree Swaminarayan Gadi Trust Vs. CIT(E)
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V. NANDAKUMAR
• Assessee Lawyers: SANKET BAKSHI
• Keywords: Opportunity of being heard
• Section: 12AA; 12A; 12

Judgement Text

"आयकर अपीलीय अिधकरण आयकर अपीलीय अिधकरण आयकर अपीलीय अिधकरण आयकर अपीलीय अिधकरण, अहमदाबाद \bयायपीठ अहमदाबाद \bयायपीठ अहमदाबाद \bयायपीठ अहमदाबाद \bयायपीठ ‘B’ अहमदाबाद। अहमदाबाद। अहमदाबाद। अहमदाबाद। IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, AHMEDABAD BEFORE SMT.ANNAPURNA GUPTA, ACCOUNTANT MEMBER AND MS. SUCHITRA RAGHUNATH KAMBLE, JUDICIAL MEMBER ITA No.1453/Ahd/2024 Assessment Year : - Niravadya Foundation 322, Florence Pride Sunpharma Road Tandalja Road Vadodara 390 012. PAN : AAGCN 9314 D Vs. The CIT (Exemption) Vejalpur, Ahmedabad. (Applicant) (Responent) Assessee by : Shri Sanket Bakshi, AR Revenue by : Shri V. Nandakumar, CIT-DR सुनवाई क तारीख/Date of Hearing : 16/12/2024 घोषणा क तारीख /Date of Pronouncement: 09/01/2025 आदेश आदेश आदेश आदेश/O R D E R PER ANNAPURNA GUPTA, ACCOUNTANT MEMBER Present appeal has been filed by the Assessee against order passed by the ld.Commissioner of Income (Exemption)-1, Ahmedabad dated 9.7.2024 under section 12A(1)(ii) of the Income Tax Act, 1961 [hereinafter referred to as \"the Act\" for short] rejecting the assessee’s application seeking registration under section 12A of the Act. 2. The grounds raised by the assessee read as under: “1. The learned Commissioner of Income Tax (Exemptions), Ahmedabad (\"the CFT\") erred in fact and in law in rejecting the application for registration of the trust u/s. 12(l)(ac)(iii) of the Income Tax Act, 1961 (\"the Act\"). 2. The learned CIT erred in fact and in law in rejecting the application of registration of the trust without giving a proper opportunity of being heard.” ITA No.1453/Ahd/2024 2 3. The ld.counsel for the assessee pointed out that the Ld.CIT rejected the assessee’s application filed u/s 12A(1)(ac)(iii) of the Act finding it premature and hence non maintainable for the reason that the assessee was not provisionally registered u/s 12AB of the Act , which condition was necessary for seeking registration u/s 12A(1)(ac)(iii) of the Act. He drew our attention to the findings of the Ld.CIT(E) in this regard at para 7-8 of his order as under: “7. From the above it is evident that the applicant/assessee is not provisionally registered u/s 12AB of the Act and therefore it is held that the present application filed in Form No.10AB under section 12A(1)(ac)(iii) of the Act is premature and non maintainable and liable to be rejected as such, without going into the merits. 8. Looking to the above facts, the present application filed in Form No. 10AB for the registration u/s. 12AB of the IT. Act, 1961, is \"rejected\". 4. Ld.Counsel for the assessee contended that in the facts of the present case the assessee was not required to seek provisional registration in the first place and therefore not required to seek registration u/s12A(1)(ac)(iii) of the Act. He contended that the assessee had inadvertently filed its application under section 12A(1)(ac)(iii) when it should have been filed under clause (i) of section 12A(1)(ac) of the Act. 5. He drew our attention to the relevant provisions of law in this regard - 12A(1)(ac) notwithstanding anything contained in clauses (a) to (ab), the person in receipt of the income has made an application in the prescribed form and manner to the Principal Commissioner or Commissioner, for registration of the trust or institution,— (i) where the trust or institution is registered under section 12A [as it stood immediately before its amendment by the Finance (No. 2) Act, 1996 (33 of 1996)] or under section 12AA [as it stood immediately before its amendment by the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (38 of 2020)], within three months from the first day of April, 2021; (ii) where the trust or institution is registered under section 12AB 93[or approved under sub-clause (iv) or sub-clause (v) or sub-clause (vi) or sub-clause (via) of clause (23C) of section 10] and the period of the said registration 93[or approval, as the case may be,] is due to expire, at least six months prior to expiry of the said period; ITA No.1453/Ahd/2024 3 (iii) where the trust or institution has been provisionally registered under section 12AB 93[or provisionally approved under sub-clause (iv) or sub-clause (v) or sub-clause (vi) or sub-clause (via) of clause (23C) of section 10], at least six months prior to expiry of period of the provisional registration 93[or provisional approval, as the case may be,] or within six months of commencement of its activities, whichever is earlier; …. …. …. …. 12AB. (1) The Principal Commissioner or Commissioner, on receipt of an application made under clause (ac) of sub-section (1) of section 12A, shall,— (a) where the application is made under sub-clause (i) of the said clause, pass an order in writing registering the trust or institution for a period of five years; (b) where the application is made under sub-clause (ii) or sub-clause (iii) or sub-clause (iv) or sub-clause (v) 2[or item (B) of sub-clause (vi)] of the said clause,— (i) call for such documents or information from the trust or institution or make such inquiries as he thinks necessary in order to satisfy himself about— (A) the genuineness of activities of the trust or institution; and (B) the compliance of such requirements of any other law for the time being in force by the trust or institution as are material for the purpose of achieving its objects; (ii) after satisfying himself about the objects of the trust or institution and the genuineness of its activities under item (A) and compliance of the requirements under item (B), of sub-clause (i),— (A) pass an order in writing registering the trust or institution for a period of five years; or [(B) if he is not so satisfied, pass an order in writing,— (I) in a case referred to in sub-clause (ii) or sub-clause (iii) or sub- clause (v) of clause (ac) of sub-section (1) of section 12A rejecting such application and also cancelling its registration; (II) in a case referred to in sub-clause (iv) or in item (B) of sub-clause (vi) of sub-section (1) of section 12A, rejecting such application, after affording a reasonable opportunity of being heard;] [(c) where the application is made under item (A) of sub-clause (vi) of the said clause or the application is made under sub-clause (vi) of the said clause, as it stood immediately before its amendment vide the Finance Act, 2023, pass an order in writing provisionally registering the trust or institution for a period of three years from the assessment year from which the registration is sought,] 6. Explaining the provisions of law as above, Ld.Counsel for the assessee pointed out that the scheme for seeking registrations of trusts u/s 12A(1)(ac) /12AB of the Act provided for categorizing trusts as: • Trusts which were already registered as per the old scheme u/s 12A/12AA of the Act .(section 12A(1)(ac)(i) • Trusts which had commenced activities but never claimed their incomes exempt u/s 11, 12 etc. of the Act.(section 12A(1)(ac)(vi) (B) ITA No.1453/Ahd/2024 4 • Trusts which had not commenced activities one month prior to the previous year relevant to the assessment year from which registration was sought. .(section 12A(1)(ac)(vi) (A) 7. That the provisions governing seeking and grant of registration to trusts already registered u/s 12A/12AA of the Act were provided u/s 12A(1)(ac)(i) r.w.s 12AB(1)(a) of the Act. While those seeking registration for the first time, whether new or old trusts were first to be granted provisional registration u/s.12AB(1)(c) of the Act and thereafter required to seek final registration in terms of section 12A(1)(ac)(iii) of the Act. 8. The ld.counsel for the assessee pointed out that in the case of the assessee, it was an old Trust, which already been granted registration under section 12AA of the Act; that accordingly, as per the provision of new scheme, it was required to seek fresh registration in terms of section 12A(1)(ac)(i) of the Act. However, in the instant case, the assessee has inadvertently filed application under section 12A(1)(ac)(iii) of the Act. 9. The ld.counsel for the assessee pointed out that the ld.CIT(E) was well aware of the fact that the assessee had applied for grant of registration under incorrect provision, since his order notes the fact that the assessee was earlier registered under section 12AA of the Act vide order dated 15.2.2024. He, therefore, contended that merely because the assessee had sought registration under an incorrect provision, the same could not be fatal for grant of registration, and he pleaded that the matter be restored back to the ld.CIT(E) to consider the application for grant of registration as per the correct position of law applicable. 10. In his case, he drew our attention to various decisions of the ITAT holding that mere mistake in making an application for grant of ITA No.1453/Ahd/2024 5 registration under a wrong provision/section was not fatal to the grant of registration, and the ld.CIT had directed to treat the application of the assessee under correct section, and consider the case on merit. In this regard, he drew our attention to the following decisions of the ITAT: i) Late Tilokchand Kuche Shikshan Vs. CIT(E), Pune in ITA No.1954/PUN/2024 order dated 13.11.2024; ii) Seven Hills Educational Society Vs. ITO, (2024) 169 taxmann.com 144 (ITAT-Hyd) iii) Sri jeyamkonda Choleeswara Soundaranayaki Amman Khumbhahisheka Malar Kuzhu Vs. ITO, (2024) 159 taxmann.com 502 (Chennai-Trib) iv) Shree Swaminarayan Gadi Trust Vs. CIT(E), (2024) 162 taxmann.com 772 (Surat-Trib) 11. The ld.DR fairly agreed that the submissions of the assessee that the assessee had by mistake filed its application under an incorrect provisions. 12. Considering the above, since the application was inadvertently filed by the assessee under an incorrect provision, we direct the ld.CIT(E) to treat the application filed as per the applicable provision and in the light of the same, consider the case of the assesse on merits. 13. In the result, the appeal of the assessee is allowed for statistical purpose. Order pronounced in the Court on 9th January, 2025 at Ahmedabad. Sd/- Sd/- (SUCHITRA KAMBLE) JUDICIAL MEMBER (ANNAPURNA GUPTA) ACCOUNTANT MEMBER Ahmedabad,dated 9/01/2025 "