National Real Estate Development Council vs. The Commissioner of Income Tax - (Income Tax Appellate Tribunal) (02 Jul 2024)

Provisions of Section 13 of IT Act would be attracted only at the time of assessment and not at the time of grant of registration

MANU/IB/0275/2024

Direct Taxation

Present is an appeal filed by the assessee against the order of the learned Commissioner of Income-tax (Exemption), rejecting application for registration of the Trust under Section 12AB of the Income Tax Act, 1961.

In the case of Jamiatul Banaat Tankaria, the ITAT held that where objects of assessee-trust were primarily charitable rather than favouring any specific religious community, CIT(E) was not justified in denying registration under Section 12A, by invoking Section 13(1)(b) as said provisions would be attracted only at time of assessment and not at time of grant of registration. In the case of Malik Hasmullah Islamic Educational and Welfare Society, the ITAT held that since provisions of Sections 11, 12 and 13 are intended for exercise of jurisdiction by an Assessing Officer in an assessment proceedings, Commissioner is not competent to invoke such provisions for purpose of declining registration under Section 12AA.

The provisions of Section 13 of the Act can be invoked only at the time of assessment while considering the applicability of section 11/12 with respect to assessee's set of facts and not at the time of grant of registration under Section 12A of the Act. Present Tribunal’s view is further supported by the decision of the Hon'ble jurisdictional High Court in the case of CIT (Exemptions) v. Bayath Kutchhi Dasha Oswal Jain Mahajan (Gujarat) wherein on the issue of denial of grant of registration under Section 12A of the Act by invoking Section 13(1)(b) of the Act, it was categorically held that the provisions of Section 13 would be attracted only at the time of assessment and not at the time of grant of registration.

The matter is restored to the file of CIT (exemptions), for de novo consideration, after giving due opportunity of being heard and with the direction not to disentitle the assessee for grant of registration only on the grounds as mentioned in its order passed for rejecting the application filed by the assessee trust for grant of registration under Section 12A of the Act. Appeal of the assessee is allowed.

Tags : REGISTRATION DENIAL VALIDITY