Provisional Approval Granted u/s 10(23C) isn’t Equivalent to Grant of Registration for Purpose of Sec. 11(7): ITAT

Case Details: Indian Institute of Banking and Finance v. Commissioner of Income-tax, (Exemption) - [2023] 150 taxmann.com 370 (Mumbai-Trib.)

Judiciary and Counsel Details

• • M. Balaganesh, Accountant Member & Sandeep Singh Karhail, Judicial Member
  • Nitesh Joshi for the Appellant.
  • K.C. Selvamani, for the Respondent.

Facts of the Case

Assessee was a trust registered under section 12A for more than 4 decades. It claimed exemption under section 11 up to the assessment year 2020-21. However, from the assessment year 2020-21 assessee applied for the alternative claim of exemption under section 10(23C)(vi). It received provisional approval under section 10(23C)(vi) in Form No. 10AC for assessment years 2021-22 to 2023-24.

On receipt of provisional approval, the assessee filed an application under section 12A(1)(ac)(iv) in accordance with 2nd proviso to section 11(7) seeking revival of its registration under section 12A. The application was rejected by the CIT (Exemptions), claiming that the assessee applied and received provisional approval under section 10(23C) and the provisional approval granted under section 10(23C) is not equivalent to the grant of registration under section 10(23C) for section 11(7).

Aggrieved assessee preferred an appeal to the Mumbai Tribunal.

ITAT Held

The Tribunal held that 1st proviso to section 11(7) provides where a trust has been granted registration under section 12A; such registration shall become inoperative from the date on which the trust is approved under section 10(23C). As per 2nd proviso to the aforesaid section, the trust whose registration has become inoperative may apply to get its registration operative subject to the condition that in doing so, the approval granted under section 10(23C) shall cease to have any effect.

In the instant case, the application filed by the assessee under section 12A(1)(ac)(iv) was rejected in terms of 2nd proviso to section 11(7), on the basis that the registration granted to the assessee under section 10(23C) was provisional and therefore, same is not identical to the approval granted under section 10(23C) for section 11(7).

The 1st proviso to section 11(7) is not even triggered in the facts of the present case, as the CIT(Exemptions) rejected the submission of the assessee to treat provisional approval under section 10(23C) identical to approval under section 10(23C) for section 11(7). Therefore, in view of the above, once the 1st proviso to section 11(7) is not triggered, there is no question of the registration granted under section 12A becoming inoperative.

Since there is no dispute regarding the fact that the assessee is still holding registration under section 12A, therefore, the issue of the validity of rejection of the assessee’s application under section 12A(1)(ac)(iv) becomes solely academic. Therefore, the grounds raised by the assessee are rendered academic and therefore, dismissed as infructuous.

List of Cases Referred to

• • DIT (Exemption) v. Samundra Institute of Maritime Studies Trust [2014] 49 taxmann.com 510/226 Taxman 297 (Bom.) (para 4).