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2020 (4) TMI 576 - AT - Income TaxExemption u/s.11 denied - assessee trust was not registered u/s.12AA at the time of assessment - HELD THAT - The benefit of change in Law as above by Finance Act, 2014 should be available and for the year under consideration, the benefit of exemption should be available on the date of registration as the assessment of the year was pending because as per chronology of events the assessee had already applied for registration u/s.12A on 03.03.2016 and the assessment order was passed on 15.03.2016 - the registration u/s.12AA was granted on 28.03.2016 and the same was also produced during the First Appellate Authority. Referring to observations of the Co-ordinate Bench of Tribunal in SNDP YOGAM VERSUS ASST DIRECTOR OF INCOME TAX (EXEMPTION) , RANGE 4, KOCHI 2016 (3) TMI 1110 - ITAT COCHIN we are in agreement with the view taken therein by the Co-ordinate Benches. First proviso of section 12A(2) as had been made available to the statute vide the Finance Act, no.2 2014 , being a beneficial provision intended to mitigate the hardship in case of charitable institutions, thus find ourselves to be in agreement with the view taken by the Tribunal in the aforesaid appeals. First proviso of section 12A(2) would be applicable to the case of the present assessee. Therefore, we set-aside the order of the ld.CIT(A), consequently delete the additions. Therefore, this ground raised by the assessee is allowed
Issues Involved:
1. Denial of exemption under section 11 of the Income Tax Act. 2. Non-granting of deduction of ?10,00,340. 3. Disallowance of exemption under section 11(1)(d) of the Income Tax Act. Issue-wise Detailed Analysis: 1. Denial of Exemption under Section 11 of the Income Tax Act: The primary issue was whether the assessee was entitled to exemption under section 11 of the Income Tax Act, given that the trust was not registered under section 12AA at the time of assessment. The assessee argued that they had applied for registration on 03.03.2016, and it was granted on 28.03.2016, while the assessment order was passed on 15.03.2016. The Tribunal noted that the First Proviso to section 12A(2), inserted by the Finance Act, 2014, is intended to mitigate hardships for charitable institutions and should be applied retrospectively. This proviso allows the application of sections 11 and 12 for any income derived from property held under trust for any assessment year preceding the year of registration if the assessment proceedings were pending as of the date of registration and the trust’s objects and activities remained unchanged. The Tribunal referred to several cases, including the Punjab Education Society vs. ITO and SNDP Yogam vs. ADIT(Exemption), which supported the retrospective application of the proviso to section 12A(2). The Tribunal concluded that since the assessee had applied for registration during the assessment proceedings and received it before the appeal, the benefit of exemption under section 11 should be granted. Consequently, the Tribunal set aside the order of the CIT(A) and allowed the appeal of the assessee on this ground. 2. Non-granting of Deduction of ?10,00,340: This ground was not pressed by the assessee before the Tribunal and was withdrawn. Consequently, this ground was dismissed as withdrawn. 3. Disallowance of Exemption under Section 11(1)(d) of the Income Tax Act: The assessee contended that the CIT(A) was not justified in denying exemption under section 11(1)(d) for voluntary contributions received as part of the corpus trust or for specific purposes. The Tribunal reiterated its findings from the first issue, emphasizing that the registration under section 12AA, granted during the pendency of the appeal, should apply retrospectively. Therefore, the benefit of exemption under section 11(1)(d) should also be granted, as the conditions for registration and the charitable nature of the trust were met. Conclusion: The Tribunal allowed the appeal of the assessee, granting the exemption under section 11 based on the retrospective application of the First Proviso to section 12A(2). The other grounds were either withdrawn or consequentially allowed based on the primary issue's resolution. The Tribunal emphasized the beneficial nature of the proviso and its intent to mitigate hardships for genuine charitable institutions.
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