Sec. 11 Exemption Can’t be Availed for ITRs in Which It Wasn’t Claimed If Registration was Granted from Later Date

Case Details: Association of Oral Maxillofacial Surgeons of India vs. ITO - [2023] 156 taxmann.com 332 (Pune-Trib.)

Judiciary and Counsel Details

• • R.S. Syal, Vice-President & Partha Sarathi Chaudhury, Judicial Member
  • Kishor B. Phadke for the Appellant.
  • Ramnath P. Murkunde for the Respondent.

Facts of the Case

Assessee was an association for Oral Maxillofacial surgeons of India, which was set up several years ago having a registered office in Pune. The return for the year under consideration (Assessment Year 2012-13) was not furnished. Assessing Officer (AO), on getting information about the assessee having made FDR issued notice under section 148.

In response, the assessee filed a return, claiming that it was engaged in promoting research in Oral and maxillofacial surgery. In the absence of any registration under section 12A, no benefit of exemption under section 11 was claimed. The assessment was completed at the returned income. The assessee contended that Section 12AA registration was granted dated 18-05-2023, which would also apply to the year under consideration. However, AO denied the benefit.

The matter reached the Pune Tribunal.

ITAT Held

The Tribunal held that the order of the CIT(E) dated 18-05-2023 passed under section 12AA granting registration to the assessee was effective from the A.Y. 2019-20. As such, the assessment year under consideration, namely 2012-13, was not covered by the express registration mandate.

It is material to note the command of the second proviso to section 12A(2), which was operative for the year under consideration, which provides that

“where registration has been granted to the trust or institution under section 12AA or section 12AB, then the provisions of section 11 and 12 shall apply in respect of any income derived from property held under trust of any assessment year preceding the aforesaid assessment year, for which assessment proceedings are pending before the Assessing Officer as on the date of such registration”.

It is apparent from the proviso that notwithstanding the benefit of registration not having been expressly granted by the CIT(E) in his order under section 12AA, such benefit gets automatically extended to all the assessment years for which the assessment proceedings are pending on the date of such registration. Adverting to the facts of the instant case, it was noticed that the assessee had not furnished any return prior to notice under section 148. The solitary return was filed after the notice on 24-04-2019. The consequential assessment was completed under section 147 on 17-12-2019 determining total income equal to the amount of income returned, which attained finality without any challenge thereto.

The benefit of proviso can be granted only when the assessment proceedings are pending on the date of grant of registration by the CIT(E). In the instant case, there was a situation in which the registration was granted by the CIT(E) on 18-05-2023, and the assessment proceedings were concluded much before that, on 17-12-2019. Notwithstanding that, no benefit of exemption under section 11 was ever claimed in the return, and, as such, there was no question of granting or denying such benefit.

Therefore, the assessee cannot claim the benefit of exemption under section 11 for the year under consideration in any manner.