CIT(A) erred in granting Provisional Registration u/s 12AB(1)(a): ITAT

The issue in this appeal of the assessee is granting of provisional registration instead of regular registration u/s 12AB of the Income Tax Act, 1961 (the Act).

In this matter, the assessee was a public charitable trust registered u/s 12AA(1)(b)(i) of the act. The assessee made an application in form 10E for registration as per section 12A(1)(ac)(i) of the Act. However, the DIT (CPC) granted provisional registration in Form 10AC to the assessee trust subject to certain conditions. Being aggrieved, the assessee filed an appeal before tribunal.

ITAT noted that for claiming the benefit under section 11 and section 12 of the Act, the trust or institution had to make an application for registration and such trust or institution should be registered under section 12AB of the Act. Section 12A(1)(ac)(i) of the Act specifically deals with the cases where trust or institution was registered u/s 12A or u/s 12AA. Further, section 12AB of the Act deals with procedure for fresh registration. In the present case, the assessee trust was duly registered under section 12AA of the Act. Thus, the only provision applicable to the assessee trust for the purpose of applying for registration is section 12A(1)(ac)(i) of the Act. Further, section 12AB(1)(a) of the Act provides that where an application is made under section 12A(1)(ac)(i) the Principal Commissioner or Commissioner shall pass an order in writing registering the trust or institution for a period of 5 years. However, in the present case, the assessee trust being registered under section 12AA and thus rightly made an application under section 12A(1)(ac)(i) of the Act, was granted Provisional Registration in Form 10 AC subject to certain conditions. It is pertinent to note that section 12AB(1)(c) deals with granting of Provisional Registration to the trust or institution for a period of 3 years from the assessment year from which registration is sought. Therefore, application filed by the assessee trust under section 12A(1)(ac)(i) was not properly considered for grant of registration under section 12AB of the Act. Accordingly, ITAT direct the designated authority under section 12AB to de novo consider the application of the assessee trust under section 2A(1)(ac)(i) of the Act and grant the registration as per law.

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