Delhi tax tribunal rules appellate registration under Section 12AA permits earlier tax exemptions

The Income Tax Appellate Tribunal Delhi held that if Section 12AA registration is granted during appellate proceedings, the associated tax exemption applies to the relevant earlier assessment years under dispute. The ruling addresses cases where trusts faced tax demands because their registration certificates were issued subsequent to the filing of returns for past periods.

Charitable and religious trusts rely on Section 12AA registration to claim tax exemption on their income under the Income Tax Act. Historically, delays in processing registration applications often left trusts exposed to tax liabilities for prior assessment years, even when registration was eventually approved. Tax professionals representing trusts must file appropriate appeals or rectification applications when registration is granted during appellate stages to secure historical exemptions.

CAs should review pending assessment files for clients who received delayed registrations. Bottom line: Securing appellate registration safeguards past financial years from unexpected tax demands.