2021 (8) TMI 744 - AT - Income Tax

Exemption u/s 11 - registration u/s 12A - Scope of amendment to Section 12A - assessee vehemently submitted that the assessee is entitled first Proviso to section 12A(2) of the Act - HELD THAT - It is admitted position under the law that the appeal is continuation of original proceedings. Even otherwise the ld CIT(A) has co-terminus power with that of the assessing officer. In view of the above and going by the principle of purposive interpretation of statues, an assessment proceeding which is pending in appeal before the appellate authority should be deemed to be 'assessment proceedings pending before the assessing officer' within the meaning of that term as envisaged under the proviso. It follows there-from that the assessee who obtained registration under section 12AA of the Act during the pendency of appeal was entitled for exemption claimed under section 11of the Act. Taking the above facts and circumstances of the issue, we are of the view that the ld CIT(A) was also not justified in taking a similar stand that of the AO, without taking cognizance and intention of the amendment to section 12A of the Act. If no judicious or a liberal view is not taken either by the assessing authority or the appellate authority as in the case under consideration, the very purpose for which such an amendment to section 12A would be defeated. We find that similar view was taken by Coordinate bench in Badhte Kadam 2019 (7) TMI 1851 - ITAT RAIPUR and case of Sree Sree Ramkrishna Samity 2015 (11) TMI 119 - ITAT KOLKATA where it was held that amendment to Section 12A w.e.f. 01.10.2014 is retrospective. Thus considering the facts that assessee was granted registration under s.12AA w.e.f. 01.04.2015, vide order dated 09.05.2016, when the appeal of assessee was pending before learned CIT(A). Therefore we direct the Assessing Officer to grant the benefit of Section 11 12 for AY 2008-09. Appeal of the assessee is allowed.

Summary

Issues:
1. Denial of exemption under section 11 of the Income Tax Act, 1961.
2. Reassessment proceedings initiated under section 147 due to lack of registration under section 12A.
3. Confirmation of AO's action in treating corpus donation as income.
4. Interpretation of the first proviso to section 12A(2) regarding registration and exemption.

Analysis:

1. Denial of Exemption under Section 11:
The assessee appealed against the AO's decision not granting exemption under section 11 of the Income Tax Act, 1961. The CIT(A) upheld the AO's decision, leading to the appeal before the Tribunal. The appellant argued that they were eligible for exemption as they held registration under section 12A. The Tribunal considered the appellant's arguments and relevant case laws, ultimately directing the Assessing Officer to grant the benefit of Section 11 & 12 for the relevant assessment year.

2. Reassessment Proceedings under Section 147:
The reassessment proceedings were initiated under section 147 due to the absence of registration under section 12A. The appellant contended that the reassessment should be considered null and void as 'deemed registration' was applicable before the notice under section 148 was issued. The Tribunal analyzed the timeline of events and relevant legal provisions, ultimately ruling in favor of the appellant, emphasizing the retrospective effect of the relevant provisions.

3. Treatment of Corpus Donation as Income:
The AO treated the corpus donation as income of the assessee due to the absence of registration under section 12A. The CIT(A) upheld this decision, leading to the appellant's appeal before the Tribunal. The Tribunal considered the provisions of section 12A and the retrospective effect of relevant amendments. Relying on previous judgments and legal principles, the Tribunal concluded that the corpus donation should not be assessed as income, ultimately allowing the appeal.

4. Interpretation of First Proviso to Section 12A(2):
The Tribunal extensively analyzed the first proviso to section 12A(2) regarding registration and exemption. The Tribunal considered the legislative intent behind the provision, relevant case laws, and the retrospective effect of the amendment. Citing previous judgments and legal principles, the Tribunal held that the appellant, having obtained registration during the pendency of the appeal, was entitled to the benefit of exemption under section 11 of the Act. The Tribunal's decision was based on a purposive interpretation of the statutes and ensuring the legislative intent was upheld.

In conclusion, the Tribunal allowed both appeals of the assessee, directing the Assessing Officer to grant the benefit of Section 11 & 12 for the relevant assessment years. The judgments were based on a thorough analysis of the legal provisions, case laws, and the specific circumstances of the case.