Bhartiya Sadvichar Prasarak Mandal Vs ITO (ITAT Nagpur)
Section 11 Exemption Allowed After Subsequent Section 12AB Registration Covered the Assessment Year
Background of the Case
The assessee, a charitable trust, challenged the denial of exemption under Section 11 of the Income-tax Act, 1961, which had resulted in assessment of total income at ₹11,25,500.
The trust filed its return of income for Assessment Year 2022-23 on 7 November 2022, declaring nil total income after claiming exemption under Section 11. The return was initially processed under Section 143(1).
The trust had also submitted Form 10AB seeking registration under Section 12AB. However, the CIT(Exemptions) rejected the registration application for non-compliance.
The rejection of registration became the basis for denying the exemption claimed in the assessment proceedings.
Assessing Officer Denies Exemption for Absence of Registration
During assessment, the Assessing Officer examined the information and documents furnished by the trust.
He found that the trust did not hold valid registration under Section 12A and was not satisfied with its explanation supporting the exemption claim.
Consequently, the Assessing Officer denied exemption under Section 11 and determined total income at ₹11,25,500, through an order dated 13 February 2024, passed under Section 143(3) read with Section 144B.
The dispute thus arose from the trust’s registration position at the time of assessment. Its application for registration had been rejected, and the Assessing Officer proceeded on that basis.
CIT(A) Confirms the Denial
The trust appealed before the CIT(A)/NFAC.
The first appellate authority considered the grounds of appeal, statement of facts, submissions and findings of the Assessing Officer. It nevertheless confirmed the denial of exemption and dismissed the appeal.
The trust then approached the Tribunal, contending that the subsequent developments concerning its registration had not been properly considered.
Those developments were material because they directly addressed the absence of registration on which the assessment disallowance rested.
Registration Rejection Challenged Separately
The trust had separately challenged the CIT(Exemptions)’s rejection of its registration application before the Tribunal.
In those proceedings, the registration matter was restored to the CIT(Exemptions), Pune, for reconsideration.
Following that remand, the CIT(Exemptions), Pune, passed an order dated 14 August 2025, granting registration under Section 12AB.
Before the Tribunal in the present assessment appeal, the authorised representative relied on this registration order and submitted that the foundation for denying exemption no longer survived.
The representative accordingly requested that the benefit claimed under Section 11 be allowed.
Registration Expressly Covered AY 2022-23
The crucial feature was the period covered by the subsequent registration.
The Tribunal recorded that registration under Section 12AB had been granted for Assessment Years 2022-23 to 2026-27.
Accordingly, although the registration order was passed on 14 August 2025, its stated coverage included AY 2022-23—the very assessment year under appeal.
This distinction was decisive. The trust was not merely relying on a registration granted for a later, unrelated period. It produced an order expressly covering the disputed year.
The Departmental Representative supported the CIT(A)’s order but did not dispute the fact that registration had been granted for the relevant period.
Tribunal Directs Grant of Exemption
After considering the rival submissions and the available record, the Tribunal identified the central issue as denial of Section 11 exemption on the ground that the trust lacked valid registration.
It then took note of the subsequent Section 12AB order covering AY 2022-23.
In view of that undisputed registration, the Tribunal set aside the CIT(A)’s order and directed the Assessing Officer to grant the exemption under Section 11 claimed by the trust.
The appeal was allowed in favour of the assessee.
The relief was a direct direction to grant exemption. The Tribunal did not merely restore the matter for another examination of the registration issue.
Significance of the Decision
The ruling demonstrates the importance of bringing a favourable registration order to the attention of the authority deciding the connected assessment appeal.
Where exemption has been denied because registration was rejected, a subsequent order granting registration for the same assessment year can materially alter the basis of that denial.
Here, the trust successfully pursued the registration dispute and then relied on the resulting order in its assessment appeal. The Tribunal gave effect to the registration’s expressly stated coverage.
Author’s Comments
The effective assessment years specified in a registration order matter as much as the date on which it is passed. In this case, an order issued in August 2025 covered AY 2022-23 and directly answered the registration objection underlying the assessment.
The decision should be understood within those facts. It does not hold that every subsequent registration automatically applies to all earlier years.
Nor did the Tribunal undertake a separate analysis of application of income, accumulation or other exemption conditions. Its direction addressed the registration-based denial presented in this appeal, after registration covering the relevant year had been granted and remained undisputed.
FULL TEXT OF THE JUDGMENT/ORDER OF ITAT NAGPUR
The Assessee has filed this appeal against the order of CIT(A)/NFAC, Delhi sustaining the denial of exemption u/sec. 11 of the Act made by the Assessing Officer.
2. The brief facts of the case are that, the assessee-trust has filed the return of income for A.Y.2022-23 on 07.11.2022 disclosing a total income of Rs.NIL after claiming exemption u/sec. 11 of the Act and the return of income was processed u/sec. 143(1) of the Act. The assessee has filed the Form No.10AB for registration u/sec. 12AB of the Act whereas registration was rejected for non compliance by the CIT(E). The Assessing Officer (AO) find that the assessee is not holding valid registration u/sec12A of the Act and dealt with on the information/ documents submitted by the assessee and was not satisfied with the explanations and denied the claim of exemption u/sec11 of the Act and assessed the total income 2 at Rs. 11,25,500/- and passed order u/sec. 143(3) r.w.s. 144B of the Act dated 13.02.2024.
3. Aggrieved by the order, the assessee has filed the appeal before the CIT(A). Whereas the CIT(A) has considered the grounds of appeal, statement of facts, submission of assessee and findings of assessing officer but has confirmed the action of the A.O and dismissed the assessee’s appeal. Aggrieved by the order of the CIT(A), the assessee has filed the appeal before the Hon’ble Tribunal.
4. At the time of hearing, the Ld. AR submitted that the CIT(A) has erred in sustaining the denial of the claim of exemption overlooking the facts and submissions. The CIT(A) has not considered the information that subsequent to the rejection order of the CIT(Exemption), the assessee has filed the appeal with the Honble ITAT and the matter was restored back to the file of the CIT(E) Pune .Whereas, the CIT(Exemption) Pune vide order dated 14.08.2025 has granted registration u/sec12AB of the Act and prayed for allowing the appeal. Per contra, the Ld.DR supported the order of the CIT(A).
5. Heard the rival submissions and perused the material on record. The sole crux of the disputed issue envisaged by the Ld.AR that the CIT(A) has erred in sustaining the denial of claim u/sec 11 of the Act as the assessee was not having valid registration u/sec12A of the Act and Further, the Ld.AR submitted that, the CIT(Exemption) Pune vide order dated 14.08.2025 has granted registration u/sec12AB of the Act for A.Y.2022-23 to 2026-27 and the Ld.DR has not disputed the facts of granting of registration u/sec12A of the Act .Hence considering the facts, circumstances and submissions set aside the 3 order of the CIT(A) and direct the assessing officer to grant the benefit of exemption u/sec11 of the Act claimed by the assessee. And the grounds of appeal are allowed in favour of the assessee.
6. In the result, the appeal filed by the assessee is allowed.
Order pronounced in the open Court on 12th October, 2026.
