9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2016 (9) TMI 1382 - AT - Income TaxBenefit of Section 11 and 12 - amendment to sec 12A(2) - Retrospectivity - whether payment of Education Extension Services to the Diocese of Jalandhar notified U/s 10(23C)(vi) as well as registered U/s. 12A of the Act and persuing the object of prompting education through running various schools can be regarded as application of income? - Held that - The first proviso to section 12A(2) of the Act is applicable retrospectively. Likewise for the same reasoning it is also held regarding the second batch of appeals that even the second proviso to Section 12A(2) is retrospective in nature and the completed assessments in these cases ought not to have been reopened only for non-registration for the relevant assessment years. Whether the assessment proceeding pending before the Assessing Officer as stated in the first proviso to Section 12A(2) can be taken as pending in appeal ? - Held that - This issue also stands answered in favour of the assessee by Shree Bhanushali Mitra Mandal Trust 2016 (4) TMI 578 - ITAT AHMEDABAD wherein it was held that appeal is a continuation of the original proceedings and assessment proceedings pending before an appellate authority should be deemed to be assessment proceedings pending before the Assessing Officer within the meaning of Section 12A. Accordingly it is held that the appellate proceedings before the appellate authorities are deemed to be assessment proceedings pending before the Assessing Officer Whether payment of Education Extension Services to the Diocese of Jalandhar notified U/s 10(23C)(vi) as well as registered U/s. 12A of the Act and persuing the object of prompting education through running various schools can be regarded as application of income - Held that - ere it is not in dispute that the Diocese of Jalandhar is not only registered U/s 12A of the Act it is also notified U/s. 10(23C)(vi) of the Act. Besides for A.Ys. 2007-08 to-2013-14 vide orders passed U/s 143(3) of the Act (copies on record) its stands taken note of that the Diocese of Jalandhar is running various schools and that exemption U/ss. 11 and 12 of the Act has been allowed with regard to its income. Therefore it has wrongly been held in the impugned order that the payment of education extension services made by the assessee to the Diocese of Jalandhar out of the current year income as is also available from the income and expenditure account of the relevant financial years is not allowable as application of income. The restriction/embargo in donation by one charitable Trust to another is only restricted to accumulations made in excess of 15% of income of the Trust as referred to in Section 11(2) of the Act; and that the said prohibition does not apply to current year income or even to accumulations up to 15% U/s. 11(l)(a) of the Act. It may be reiterated that the Diocese of Jalandhar stands notified U/s. 10(23C)(vi) of the Act. This provision it may be noted is applicable to universities and educational institutions which exist solely for educational purposes and not for purposes of profit. Neither the assessment order/s of the assessee/s nor the assessment order/s of the Diocese of Jalandhar carry any finding of the Diocese of Jalandhar pursuing religious objects. Merely having religious objects does not amount to pursuing religious objects It is the actual objects perused and the actual activities undertaken which are of consequence so far as regards our present purposes. Therefore it cannot be denied that the Diocese of Jalandhar is engaged solely in pursuing the object of education. It runs various schools. Hence it is but a charitable institution pursuing objects which are similar to those of the assessee. That being so the amount paid to the Diocese of Jalandhar being out of the current year income and not out of accumulated income such payment of education extension services to the Diocese of Jalandhar is to be allowed as application of the income. It is so ordered. In view of the above discussion we hold that (1) the subsequent grant of registration in all the cases respectively operates retrospectively for all the years under consideration; and (2) payment of education extension services to the Diocese of Jalandhar is application of income duly satisfying the provisions of Sections 11(l)(a) and 11(3)(d) of the Act. - Decided in favour of assessee.
Issues Involved:
1. Applicability of the first proviso to Section 12A(2) of the Income Tax Act, 1961. 2. Applicability of the second proviso to Section 12A(2) of the Income Tax Act, 1961. 3. Whether assessment proceedings pending in appeal can be considered as pending before the Assessing Officer. 4. Whether payment of Education Extension Services to the Diocese of Jalandhar can be regarded as application of income. Detailed Analysis: 1. Applicability of the First Proviso to Section 12A(2): The first proviso to Section 12A(2) was inserted by the Finance (No. 2) Act, 2014, effective from 01/10/2014. The Tribunal examined whether this proviso, which grants exemption benefits for pending assessment proceedings as of the date of registration, applies retrospectively. The Tribunal noted that procedural laws, particularly those intended to remove hardships, are generally retrospective. Citing various judicial precedents, including the Supreme Court's decision in *Vatika Township (P.) Ltd.*, the Tribunal concluded that the first proviso to Section 12A(2) is procedural and curative, thus applicable retrospectively. 2. Applicability of the Second Proviso to Section 12A(2): Similarly, the second proviso to Section 12A(2) prevents reopening of assessments under Section 147 solely for non-registration of the trust for the relevant assessment years. The Tribunal held that this proviso is also procedural and curative, intended to prevent undue hardship. Consequently, it should be applied retrospectively. 3. Assessment Proceedings Pending in Appeal: The Tribunal addressed whether assessment proceedings pending in appeal can be considered as pending before the Assessing Officer. It referred to judicial precedents such as *Shree Bhanushali Mitra Mandal Trust* and *SNDP Yogam*, which established that appellate proceedings are a continuation of the original assessment proceedings. Thus, the Tribunal held that assessment proceedings pending in appeal are deemed to be pending before the Assessing Officer. 4. Payment of Education Extension Services: The Tribunal examined whether payments made by the assessee to the Diocese of Jalandhar could be considered as application of income. The Diocese of Jalandhar is registered under Section 12A and notified under Section 10(23C)(vi). The Tribunal noted that the payment was made out of current year income, not accumulated income, and cited judicial precedents such as *Sarladevi Sarabhai Trust (No. 2)* and *Thanthi Trust* to support the view that donations to another charitable trust with similar objects meet the requirements of Section 11(1)(a). Additionally, the Tribunal found no evidence that the Diocese of Jalandhar pursued religious objects, reinforcing that the payment was for educational purposes. Therefore, the Tribunal concluded that such payments should be allowed as application of income. Conclusion: The Tribunal allowed all the appeals, holding that: 1. The first and second provisos to Section 12A(2) are applicable retrospectively. 2. Assessment proceedings pending in appeal are deemed to be pending before the Assessing Officer. 3. Payments made to the Diocese of Jalandhar qualify as application of income under Sections 11(1)(a) and 11(3)(d). The Tribunal's decision provided significant relief to the assessee by ensuring that the benefits of exemption under Section 12A were applied retrospectively and that payments to another charitable trust were recognized as legitimate applications of income.
|
