Case Law Details
CIT Vs Cochin Port Trust (Kerala High Court)
Conclusion:
Delay of three years in filing of application for registration under section 12A was condonable as assessee which was enjoying exemption from income-tax from its inception was suddenly faced with the prospect of being made liable under the taxing statute and due to same, assessee had filed applications under Section 12AA with considerable delay.
Held:
Assessee was availing exemption from income-tax as a ‘local authority’ under Section 10(20). When an Explanation was added under Section 10(20) by which ‘local authority’ was defined, the restricted meaning; took the assessee along with some others out of the definition of ‘local authority’ and hence, was then on eligible to tax under the IT Act. Assessee then made an application to the CIT to register it as a charitable institution as defined under Section 2(15) for the purpose of claiming exemption as a trust established for charitable purposes in respect of income derived from their properties/businesses as permissible under Section 11. CIT declined the prayer, and in appeal the Tribunal allowed the same. There was an ancillary question insofar as the delay occasioned of about three years, from the date on which the definition of ‘local authority’ was amended and restricted. Whether the delay was condonable or not. In considering condonation of delay one has to look at the nature of the duties, which assessee had been carrying on, and the drastic change in law brought about by the introduction of the Explanation under Section 10(20). The need for registration as a trust carrying on activities of charitable purposes arose only for reason of the exemption having been withdrawn. Assessee which was enjoying exemption from income-tax from its inception was suddenly faced with the prospect of being made liable under the taxing statute. This would have required considerable research and as was rightly pointed out by the assessee, the Ports, all over the Country had been suddenly deprived of their exemption and had filed applications under Section 12AA with considerable delay. Taking all these aspects into account; it was found that the explanation offered was satisfactory and the delay had to be necessarily condoned.
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