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2019 (7) TMI 1851 - AT - Income TaxDisallowance of exemption u/s 11 - assessee trust having been not registered u/s 12A - HELD THAT - AO and the CIT(A) was not justified in taking a stand that registration u/s 12A was not applicable to the assessee for the assessment years under consideration and that the ratio laid down in the case of U.P. Forest Corporation vs. Dy. CIT 2007 (11) TMI 303 - SUPREME COURT that registration of a trust u/s 12A is a condition precedent to claim of exemption u/s. 11 and 12 has been is not applicable to the peculiar facts of the case in view of the amendment to the s. 12A(2) by way of inserting proviso through Finance Act 2014 with retrospective effect and therefore in view of the statutory provisions and the legal propositions we do not approve finding of the CIT(A). Without prejudice to above even if the reopening is to be treated valid then also the learned CIT(A)/AO has not brought any material evidence on record from which it can be inferred that the objects and activities of the assessee trust for the earlier assessment years i.e.. 2008-09 and 2009-10 has been changed as compared the objects and activities of the subsequent assessment year i.e. 2010-11 onwards for which the AO has allowed the exemption u/s 11 to the assessee trust and in the present case there is no change in the objects and activities of the earlier and subsequent assessment years and further there was no finding that the assessee has carried on any activity not in accordance with its objectives and therefore in the absence of any finding of facts being given by the AO or the CIT(A) the exemption under s. 11 of the Act cannot be denied as held by-apex Court in the case of SURAT CITY GYMKHANA 2008 (4) TMI 16 - SUPREME COURT and SREE SREE RAMKRISHNA SAMITY 2015 (11) TMI 119 - ITAT KOLKATA CIT granted registration to the assessee trust before reopening of the assessment which was not disputed by the AO during the course of assessment proceedings and that it is also undisputed that the objects and activities which are charitable in nature remain unchanged. As such the aforesaid proviso to s. 12A(2) is squarely applicable. Therefore we reverse the order of the learned CIT(A) and Accordingly the AO is directed to grant the benefit of ss. 11 and 12 to the assessee for the asst. yr 2008-09 and 2009-10. Thus the grounds of appeal are allowed.
Issues Involved:
1. Disallowance of exemption under Section 11 of the IT Act due to non-registration under Section 12A for the relevant assessment years. 2. Validity of reassessment proceedings initiated under Section 147 based on non-registration under Section 12A. 3. Retrospective application of the amendment to Section 12A(2) by Finance Act, 2014. Issue-Wise Detailed Analysis: 1. Disallowance of Exemption under Section 11: The appellant society, engaged in charitable activities, was registered under the Chhattisgarh Society Registration Act, 1973, and applied for registration under Section 12A of the IT Act on March 26, 2010. The registration was granted effective April 27, 2010. The Assessing Officer (AO) disallowed the exemption claimed under Section 11 for the assessment years 2008-09 and 2009-10, citing the lack of registration under Section 12A during those years. The CIT(A) upheld this decision, referencing the Supreme Court judgment in U.P. Forest Corporation vs. Dy. CIT, which established that registration under Section 12A is a prerequisite for claiming exemption under Sections 11 and 12. 2. Validity of Reassessment Proceedings: The reassessment proceedings were initiated under Section 147 by issuing a notice under Section 148 on July 2, 2012, solely because the appellant trust was not registered under Section 12A for the relevant assessment years. The appellant argued that the reassessment proceedings were invalid as the trust had been granted registration effective April 27, 2010, before the initiation of reassessment proceedings. The appellant also cited the amendment to Section 12A(2) by Finance Act, 2014, which should apply retrospectively, providing relief to trusts that were genuinely engaged in charitable activities but had not applied for registration in time. 3. Retrospective Application of Amendment to Section 12A(2): The appellant contended that the amendment to Section 12A(2) by Finance Act, 2014, intended to alleviate the financial hardship of charitable trusts, should apply retrospectively. This amendment allows the benefits of Sections 11 and 12 to be applied to preceding assessment years if the registration was granted subsequently and the activities remained unchanged. The appellant referred to several case laws, including SNDP Yogam vs. Asstt. Director of IT (Exemption) and Sree Sree Ramkrishna Samity vs. Dy. CIT, where it was held that the amendment to Section 12A(2) should be applied retrospectively to remove hardships for charitable institutions. Tribunal's Findings: The Tribunal observed that the appellant trust was granted registration under Section 12A effective April 27, 2010, before the initiation of reassessment proceedings. The reassessment was initiated solely due to the lack of registration under Section 12A for the relevant assessment years. The Tribunal noted that the amendment to Section 12A(2) by Finance Act, 2014, intended to provide relief to genuine charitable trusts, should be applied retrospectively. The Tribunal cited several judgments supporting the retrospective application of the amendment, including the cases of Shyam Mandir Committee vs. Asstt. CIT and SNDP Yogam vs. Asstt. Director of IT (Exemption). The Tribunal concluded that the reassessment proceedings were not justified as the appellant trust was granted registration before the reassessment and the activities remained unchanged. The Tribunal directed the AO to grant the benefit of Sections 11 and 12 to the appellant for the assessment years 2008-09 and 2009-10, reversing the order of the CIT(A). Conclusion: Both appeals by the appellant were allowed, with the Tribunal directing the AO to grant the benefits of Sections 11 and 12 for the assessment years 2008-09 and 2009-10, recognizing the retrospective application of the amendment to Section 12A(2) by Finance Act, 2014.
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