Pinned connection in structural context doesn't mean free rotation/zero moment. Pinned connection means much bigger rotations and much lower strength compared to the connected members. According to Eurocode 3 (EN1993-1-8:2005 section:5.2), if the moment strength is below 0.25 of the connected beam and its stiffeness is below a limit (relative to the beam) then it should be considered nominally pinned, provided adequate rotational capacity is available (for example through ductile critical mechanism of failure).
Normally one should find the moment strength and stiffness of the connection and classify it against the limits. A connection can be classified either as full strength/rigid or pinned or semirigid.
For the connection in question, it is obvious that no transfer of force occurs through the beam flanges. The bending moment finds its way through the flanges mostly. So this connection is ineffective to transfer enough of the beam end moment. Also take into account that the connection is bolted to the web of the column which is quite flexible.
Finally, i want to emphasize that the following statement is not accurate:
once the beam is loaded, their is no room for rotation of the beam.
Don't assume that based on the undeformed geometry!