VIPS CLUB, RAIPUR,RAIPUR V. INCOME TAX OFFICER(EXEMPTION), RAIPUR, RAIPUR

ITA 380/RPR/2024

AI Insights

The case involves the VIPS Club, a trust, which appealed against the decision of the Commissioner of Income-Tax (Appeals), Raipur-3, confirming the action of the Assessing Officer (A.O.) in denying the trust's claim for exemption under sections 11 and 12 of the Income Tax Act, 1961. The A.O. had initially declined the exemption on the grounds that the trust was not registered under section 12AA of the Act, despite the trust's claims and evidence to the contrary. The CIT(Appeals) upheld the A.O.'s decision, leading to the trust's appeal to the Tribunal.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 35810 (ITAT-RAIPUR)
• Duration Of Justice: 2 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-10-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 23-10-2024
• Assessment Year: 2014-2015
• Appeal Filed On: 13-08-2024
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRIYANKA PATEL
• Assessee Lawyers: B. KUMARLAL
• Keywords: Charitable institution
• Section: 12AA; 12A

Judgement Text

"आयकर अपीलȣय अͬधकरण Ûयायपीठ “एक-सदèय” मामला रायपुर मɅ IN THE INCOME TAX APPELLATE TRIBUNAL RAIPUR BENCH “SMC”, RAIPUR Įी रवीश सूद, ÛयाǓयक सदèय क े सम¢ BEFORE SHRI RAVISH SOOD, JUDICIAL MEMBER आयकर अपील सं. / ITA No.380/RPR/2024 Ǔनधा[रण वष[ / Assessment Year : 2014-15 VIPS CLUB VIP Estate, Shankar Nagar, Khamardih-492 007 (C.G.) PAN: AAATV1907H .......अपीलाथȸ / Appellant बनाम / V/s. The Income Tax Officer (Exemption)-1, Raipur (C.G.) ……Ĥ×यथȸ / Respondent Assessee by : Shri B. Kumarlal, CA Revenue by : Dr. Priyanka Patel, Sr. DR सुनवाई कȧ तारȣख / Date of Hearing : 23.10.2024 घोषणा कȧ तारȣख / Date of Pronouncement : 25.10.2024 2 VIPS CLUB Vs. ITO (Exemption)-1, Raipur ITA No.380 /RPR/2024 आदेश / ORDER PER RAVISH SOOD, JM: The present appeal filed by the assessee trust is directed against the order passed by the Commissioner of Income-Tax (Appeals), Raipur-3, dated 28.06.2024, which in turn arises from the order passed by the A.O under Sec.143(3) of the Income-tax Act, 1961 (in short ‘the Act’) dated 30.12.2016 for the assessment year 2014-15. The assessee trust has assailed the impugned order on the following grounds of appeal: “1. The ld. CIT(A) has erred in law as well as on the facts and circumstances of the case in confirming the action of the A.O. in invoking that there is no registration u/s.12AA of the Income Tax Act, 1961. 2. CIT has erred in law, facts and circumstances of the case by confirming the action of the A.O in treating the surplus as shown in the income and expenditure statement as taxable income of the society. 3. The appellant craves leave to add, amend, alter, vary and/or withdraw any or all the above grounds of appeal.” 2. Succinctly stated, the assessee trust had e-filed its return of income for A.Y.2014-15 declaring its income at Rs. Nil (after claiming exemption u/s 11 of the Act). Subsequently, the case of the assessee trust was selected for scrutiny assessment u/s.143(2) of the Act. 3. During the course of the assessment proceedings, the A.O, after taking cognizance of the fact that the assessee trust had claimed exemption u/ss. 11 & 12 of the Act, had called upon it to place on record a copy of the 3 VIPS CLUB Vs. ITO (Exemption)-1, Raipur ITA No.380 /RPR/2024 order of registration u/s. 12AA of the Act, but the assessee trust failed to comply with the said direction on the ground that the said order of registration was misplaced by him. The A.O., on a perusal of the return of income of the assessee trust, observed that it had therein itself stated that it was not registered u/s. 12AA of the Act. 4. The A.O, observed that the assessee trust had filed a fresh application for registration u/s.12AA of the Act which, however, was rejected. Considering the aforesaid facts, the A.O declined the assessee’s claim for exemption u/ss. 11 & 12 of the Act. Accordingly, the the net surplus of Rs.12,02,486/- that was disclosed by the assessee trust in its “Income and expenditure account” was held by the A.O as its income from business and brought to tax. 5. Aggrieved, the assessee trust carried the matter in appeal before the CIT(Appeals) but without success. The CIT(Appeals), observed that though the assessee trust had claimed that it was registered u/s. 12AA of the Act, dated 18.01.2018 vide exemption certificate issued on 18.01.2018, but on the contrary, it had itself submitted in its return of income that it was not registered u/s. 12AA of the Act. Also, the CIT(Appeals) observed that the assessee trust had filed a fresh application u/s. 12AA of the Act which, however, was rejected by the concerned authority. Accordingly, the CIT(Appeals) considering the fact that the assessee trust was not registered 4 VIPS CLUB Vs. ITO (Exemption)-1, Raipur ITA No.380 /RPR/2024 u/s.12AA of the Act, thus, upheld the declining of its claim for exemption u/ss. 11 & 12 of the Act by the A.O. For the sake of clarity, the observations of the CIT(Appeals) are culled out as under: “During the course of appeal proceedings, I have carefully perused the assessment order and assessee's submission. I find that assessee is submitted that the exemption certificate was issued on 18.01.2008 which unfortunately misplaced and not traceable. Further as per the assessment order the assessee has claimed exemption u/s. 11 and 12, and the assessee did not file copy of order u/s. 12AA, though, the assessee claimed that it was registered u/s. 12AA. Ongoing through the ITR filed by the assessee, it was noticed that the assessee has itself stated that it is not registered u/s.12AA. The appellant filed fresh application for grant of exemption under section 12AA which was rejected by the concerned authority. The AO categorically mentioned that as the fresh application for grant of exemption under section 12AA was rejected exemption available under section 11 and 12 cannot be allowed to the assesseee. In so far as the plea of the assessee that, the rejection order does not pertain to A.Y. 2014-15 or prior to this year. Sections 11 and 12 of the Act, 1961 provides for exemption of income of charitable trust for the purpose of levy of income tax. Section 12A makes provision for conditions for applicability of Sections 11 and 12 further prescribing the mode and manner in which such application for registration can be moved. The registration under Section 12A is a pre-condition for availing all the benefit under Sections 11 and 12. The application for registration under Section 12A has to be made in Form No. 10A of the Act before the expiry of a period of one year from the date of the creation of the trust or the establishment of the institution, whichever is later, and such trust or institution is registered under Section 12AA. Indisputably, the appellant has moved the application for registration u/s.12AA. While rejecting the application, the CIT(Exemption), Bhopal has opined that the applicant society is not entitled for registration u/s.12AA of the I.T. Act, 1961. Accordingly, the application in form no. 10A, seeking registration u/s 12AA is hereby rejected and registration sought u/s 12AA is refused. Merely because the trust consists of society members, the object itself would not cease to be charitable in nature. 5 VIPS CLUB Vs. ITO (Exemption)-1, Raipur ITA No.380 /RPR/2024 During the course of assessment proceedings as well as appellate proceedings the assessee could not produce exemption certificate u/s 12A/12AA related to year under consideration. Therefore, in absence of exemption certificate, exemption claim u/s 11 and 12 cannot be considered. The appeal is dismissed as the claim of the assessee is not found to be correct. 3.2 Ground No. 3:- This ground of appeal is general in nature and do not require any specific adjudication. 4. In the result, appeals are dismissed.” 6. The assessee trust being aggrieved with the order of the CIT(Appeals) has carried the matter in appeal before the Tribunal. 7. I have heard the Ld. Authorized Representatives of both the parties, perused the orders of the lower authorities and considered the material available on record. 8. Shri B. Kumarlal, the Ld. Authorized Representative (for short ‘AR’) for the assessee trust, submitted that though the assessee trust was registered by the Commissioner of Income Tax, Raipur u/s. 12AA of the Act on 18.01.2008, but for the reason that the original certificate of registration was misplaced, the same, thus could not be produced in the course of the assessment proceedings. The Ld. AR in order to fortify his claim that the assessee trust was registered u/s.12AA of the Act, had drawn my attention to the “Master data of 12A” stated to have been downloaded from the Income-tax portal, Page 21 of APB, which revealed the approval u/s. 12A of the Act dated 18.01.2008 in the name of the assessee trust, viz. VIPS Club. The Ld. AR, submitted that the assessee trust had filed with the 6 VIPS CLUB Vs. ITO (Exemption)-1, Raipur ITA No.380 /RPR/2024 ITO(Exemption)-1, Raipur letters dated 18.10.2016, Page 24 of APB and dated 01.11.2016, Page 22-23 of APB, wherein it was brought to his notice that the original certificate of registration issued by the Commissioner of Income Tax, Raipur u/s. 12AA of the Act, dated 18.01.2008 had been misplaced and a request for a copy of the same was made. The Ld. AR, submitted that though the fact that the assessee trust was registered by the Commissioner of Income Tax, Raipur u/s. 12AA of the Act on18.01.2008 was brought to the notice of the A.O and the CIT(Appeals), but both the lower authorities had brushed aside the said material aspect and had framed the assessment by treating it as an unregistered trust. Also, the Ld. AR had taken me through the registration u/s. 12A(1)(ac)(i) of the Act, dated 07.04.2022 that was granted by the Pr. CIT to the assessee trust from A.Y.2022-23 to A.Y.2026-27. The Ld. AR submitted that as the aforesaid fresh registration had been granted u/s. 12A(1)(ac)(i) of the Act, which is applicable to a trust or institution that was earlier registered u/s. 12A [as it stood immediately before its amendment by the Finance (No.2) Act, 1963 (33 of 1996)] or u/s. 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)], therefore, the said fact in itself proved that prior to grant of the said registration the assessee trust was registered u/s 12A/12AA of the Act. 7 VIPS CLUB Vs. ITO (Exemption)-1, Raipur ITA No.380 /RPR/2024 9. Per contra, Dr. Priyanka Patel, Ld. Departmental Representative (for short ‘DR’) relied on the orders of the lower authorities. The Ld. DR, submitted that as the assessee trust was not registered u/s. 12AA of the Act, therefore, both the lower authorities had rightly declined its claim for exemption u/s. 11 of the Act. 10. I have thoughtfully considered the issue in the backdrop of the contentions advanced by the Ld. Authorized Representatives of both the parties. 11. Although, at the first blush, I was of the view that as the assessee trust was not registered u/s. 12AA of the Act, therefore, no infirmity did emanate from the orders of the lower authorities who had rightly declined its claim for exemption u/s. 11 of the Act. In the backdrop of the assessee’s claim that although it was registered by the Commissioner of Income Tax, Raipur u/s.12AA of the Act on 18.01.2008, but for the reason that as it had misplaced its certificate of registration and, thus, could not produce the same before the lower authorities that its claim for exemption u/s 11 of the Act was declined by them, I had looked into the records/material available on record. On a perusal of the assessee’s paper book (APB), I find that he had placed on record “Master data of 12A” downloaded from Income-tax portal, Page 21 of APB, which reads as under: 8 VIPS CLUB Vs. ITO (Exemption)-1, Raipur ITA No.380 /RPR/2024 Apart from that, I find that the assessee trust on two occasions, i.e. vide its letter dated 18.10.2016, Page 24 of APB and dated 01.11.2016, Page 22-23 of APB addressed to the ITO(Exemption)-1, Raipur, had brought to his notice that though it was registered u/s.12AA of the Act by the Commissioner of Income Tax, Raipur on 18.01.2008 (extract of the registration details as per the income tax portal were enclosed with the letters) but the original certificate had been misplaced. The assessee trust had, vide its aforesaid letter requested the ITO(Exemption)-1, Raipur to make available a copy of the registration certificate. 12. As stated by the Ld. AR, and rightly so, though the assessee trust had brought the aforesaid facts to the notice of the A.O and CIT(Appeals), but I find that the said aspect had not been looked into and adjudicated by them. In fact, the aforesaid claim of the assessee trust that it was registered u/s. 9 VIPS CLUB Vs. ITO (Exemption)-1, Raipur ITA No.380 /RPR/2024 12A of the Act, dated 18.01.2008 had been culled out by the CIT(Appeals) at Page 4-5 of his order. At his stage, I may herein observe that the fact that the fresh registration granted by the Pr. CIT to the assessee trust vide his order u/s. 12A(1)(ac)(i) of the Act, dated 07.04.2022 from A.Y.2022-23 to A.Y.2026-27, Page 47 to 49 of APB apparently fortifies the assessee’s claim. I, say so, for the reason that the registration u/s. 12A(1)(ac)(i) of the Act is to be granted to a trust or institution which was earlier registered u/ss. 12A/12AA of the Act. For the sake of clarity, Section 12A(1)(ac)(i) of the Act is culled out as under: (relevant extract) “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:— xxxxxx [(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 Finance Act, 2020] within three months from the date on which this clause has come into force; Xxxxxx\" 13. Considering the aforesaid facts, I am of a firm conviction that the assessee’s claim that it was registered by the Commissioner of Income Tax, Raipur u/s. 12AA of the Act on 18.01.2008 could not have summarily been brushed aside by the lower authorities. Accordingly, I am of the view, that the matter in all fairness requires to be restored to the file of the 10 VIPS CLUB Vs. ITO (Exemption)-1, Raipur ITA No.380 /RPR/2024 ITO(Exemption)-1, Raipur with a direction to verify the aforesaid claim of the assessee trust. In case the claim of the assessee trust that it was registered u/s. 12AA of the Act vide order of the Commissioner of Income Tax, Raipur on 18.01.2008 is found to be in order, then the A.O shall reconsider the assessee’s claim for exemption u/s 11 of the Act. Thus, the Grounds of appeal No. 1 & 2 raised by the assessee trust are allowed for statistical purposes in terms of the aforesaid observations. 14. Ground of appeal No.3 being general in nature is dismissed as not pressed. 15. In the result, the appeal of the assessee trust is allowed for statistical purposes in terms of the aforesaid observations. Order pronounced in open court on 25th day of October, 2024. Sd/- (रवीश सूद /RAVISH SOOD) ÛयाǓयक सदèय/JUDICIAL MEMBER रायपुर/ RAIPUR ; Ǒदनांक / Dated : 25th October, 2024. **#SB, Sr. PS आदेश कȧ ĤǓतͧलͪप अĒेͪषत / Copy of the Order forwarded to : 1. अपीलाथȸ / The Appellant. 2. Ĥ×यथȸ / The Respondent. 3. The CIT(Appeals)-1, Raipur (C.G) 4. The Pr. CIT-1, Raipur (C.G) 5. ͪवभागीय ĤǓतǓनͬध, आयकर अपीलȣय अͬधकरण,रायपुर बɅच, रायपुर / DR, ITAT, Raipur Bench, Raipur. 11 VIPS CLUB Vs. ITO (Exemption)-1, Raipur ITA No.380 /RPR/2024 6. गाड[ फ़ाइल / Guard File. आदेशानुसार / BY ORDER, // True Copy // Senior Private Secretary आयकर अपीलȣय अͬधकरण, रायपुर / ITAT, Raipur. "