Benefit of exemption u/s 11 cannot be denied, only because assessee misplaced and could not produce registration certificate issued u/s 12AA – ITAT
In a recent judgment, ITAT Jaipur held that benefit of exemption u/s 11 cannot be denied only because assessee could not place on record registration certificate issued u/s 12AA because there was no doubt that the assessee was registered under section 12AA of the Act.
ABCAUS Case Law Citation:
4584 (2025) (05) abcaus.in ITAT
In the instant case, the assessee had challenged the order passed by the CIT(A) in confirming the order of AO in denying exemption u/s 11 of the Income Tax Act, 1961 (the Act) for the reason that assessee haD not furnished copy of certificate of registration under section 12AA of the Act ignoring that assessee had furnished sufficient documentary evidences to established that it was registered u/s 12AA of the Act and therefore income of assessee ought to have been computed by allowing exemption u/s 11 of the Act.
The appellant assessee was a charitable society registered under Societies Registration Act. It was engaged in providing medical facility and is running a hospital. It was registered u/s 12A of the Act and also approved u/s 80G of the Act. Subsequently, under new regime, it was also granted fresh registration u/s 12A(1)(ac)(i) of the Act.
The case of the assessee was selected for scrutiny under CASS. Accordingly, notices u/s 143(2) and 142(1) along with questionnaire was issued calling for certain details/information through e-portal. In response, the assessee filed financial statements and other details.
While framing the assessment order, the AO observed that assessee had not submitted the registration certificate under section12AA of the Act stating that the same was missing and at present was not available. The AO, therefore, considered the amount claimed as corpus donation as voluntary donation and included it in the total receipt of the year and did not allow the claim of capital expenditure as application of income.
The CIT(A) upheld the order and held that assessee could not established whether it is approved for exemption and if so whether the same was inforce for the year under consideration.
The Tribunal observed that the assessee could not place on record the registration certificate issued u/s 12AA of the Act but it had placed on record the approval certificate u/s 80G of the Act. Approval u/s 80G cannot be granted unless a trust or institution or society is registered u/s 12AA of the Act as mandated by sub-clause (i) of sub-section 5 of section 80G.
The Tribunal also found that AO in the assessment order passed u/s 143(3) for the previous scrutiny year had accepted that assessee was registered u/s 12AA of the Act. The assessee had subsequently been granted fresh registration u/s 12A(1)(ac)(i) of the Act, the precondition of which is that the trust or institution is registered u/s 12AA of the Act. Thus, there was no doubt that the assessee is registered under section 12AA of the Act.
The Tribunal opined that in given circumstances, only because assessee could not place on record registration certificate issued u/s 12AA of the Act, the benefit of exemption u/s 11 cannot be denied.
Further, it was held that late filing of TDS return u/s 234E of the Act is not a penalty hence this amount has to be considered as application of income in view of decision of Hon’ble Andhra Pradesh High Court.
Accordingly, the AO was directed to compute the income of the assessee by allowing exemption u/s 11 of the Act.
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