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TMI Blog2020 (4) TMI 576X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 - I.T.A No.272/SRT/2018 - - - Dated:- 7-2-2020 - Shri Sandeep Gosain, Hon'ble Judicial Member And Shri O.P. Meena, Hon'ble Accountant Member For the Assessee : Shri H.R.Vepari CA For the Revenue : Shri O.P.Vaishav CIT - DR ORDER PER SANDEEP GOSAIN, JM: 1. This appeal by the Assessee is directed against the order of Ld.Commissioner of Income Tax(Appeals), Surat-3 dated 07.03.2018 for the assessment year 2013-14. 2. Grounds raised by the Assessee read as under: (I) Denial of exemption u/s.11 of the Act: (1) On the facts and circumstances of the case and as per law, the CIT(A) was not justified in confirming not granting of exemption u/s.11 of the Act. (2) The learned CIT(A) ought to have appreciated the ratio of various decisions and their retrospective application very clearly dem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing order of non-granting of exemption u/s.11 of the Income Tax Act. The ld.AR reiterated the same arguments as was raised by him before the ld.CIT(A) which are contained in para no.6 of the order of ld.CIT(A) and the same are reproduced below: 6. Submission of A R during appellate proceedings :- 6.1 During the hearing, the AR filed two written submission dated 14.11.2017 and 30.01.2018. The same were gone through and placed on record. The AR also relied upon large number of case laws in support of his contention. The gist of the AR s contention is reproduced below:- (1) in the above matter, I reproduce proviso to sec. 12 A(2) of the Act. Provided that where registration has been granted to the Trust or Institution u/s 12 AA then the provisions of sections 11 and 12 shall apply in respect of any income derived from property held under Trust of any assessment year preceding the aforesaid A Y, for which assessment proceedings are pending before the AO as on the date of such registration and the objects and activities of such trust or institution remain the same for such preceding A Y. Gist of the decisions cited by the appellant Assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e years under consideration. (3) Sree SreeRamkrishna Samiti V/s DCIT, Cir.2, Siliguri (Calcutta) 156-ITD-646 Assessment years involved A.V,2003-04 to 2008-05 Application for 12A made on Although not mentioned in the tribunal order, per section 12AA(2), the application could not have exceeded 6 months prior to the registration20-10-2010 1-4-2010 30-3-2010 29-10-2010 12AA registration granted 12AA Registration made effective from Reassessment proceedings u/s.148 started on Assessments concluded on The Tribunal held that as long as objects of the society were charitable in nature in years earlier to year in which registration u/s.12A was granted and no adverse findings were given with regard to existence of the assessee society for charitable purposes, benefit of exemption u/s.11 was to be given. Besides, the tribunal states that receipts brought to tax only on the pretext that the assessee society is not having registration us.12A in A.Y.2003-04 2008-09 does not hold good since pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 68. Taxmann. com 250) ( ahd trib) which is no unclear terms states that the proviso becomes not only applicable retrospectively but also states that assessment proceedings which is pending in appeal before appellate authority, should be deemed to be assessment proceedings pending before AO... Considering the above, it is urged to allow the appeal and oblige ......................... 8. On the other hand, the ld.Departmental Representative (DR) relied upon the order passed by the Revenue Authorities. 9. We have heard the Counsels of both the parties and we have also perused the material placed on record and judgments cited by the parties as well as orders passed by the Revenue Authorities. From the records it was noticed that the claim of the assessee was rejected only in the ground that the assessee trust was not registered u/s.12AA of the Act at the time of assessment. However, as per the facts, we noticed that the application u/s.12A was filed by the assessee on 03.03.2016 and the registration/s.12AA was granted in favour of the assessee trust on 28.03.2016. However, the assessment order in this case was passed on 15.03.2016. All the above facts goes to show that du ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned income. ■ On appeal, the Commissioner (Appeals) upheld the addition made by the Assessing Officer. ■ In instant appeal the assessee contended that the assessee submitted that though the case of the assessee was squarely covered by the first proviso of section 12A(2), however, the Commissioner (Appeals) had wrongly concluded that the same was not applicable to the case of the assessee. As the said statutory provision was made available on the statute to mitigate the hardships being faced by charitable institutions, therefore, the same being a beneficial provision was to be accorded a retrospective applicability. Thus, impugned additions was to be deleted. HELD ■ The issue involved in the present appeal lies in a narrow compass. In the present appeal, it is sought for adjudicating as to whether the Commissioner (Appeals) was right in concluding that the first proviso of section 12A(2) would be applicable to the facts of the present assessee, or not. The first proviso of section 12A(2) had been made available on the statute vide the Finance (No.2) Act, 2014, with effect from 1-10-2014. That a perusal of the Explanatory notes of the Memorandum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tances of the case and in law the ld. CIT(A) erred in holding that the amended provisions of the section 12A/12AA of the Act w.e.f 01.10.2014 as applicable to pending assessments orders does not have retrospective effect as such confirmed the addition. 3. On the facts and in the circumstances of the case and in law the ld. CIT(A) erred in rejecting the additional ground of appeal that the society which was Registered u/s 12A/12AA of the Act on 03.04.2012, was not registered during the period under consideration. 2. Briefly stated, the facts of the case are that the assessee which is an educational institution had filed its return of income for A.Y 2011-12 on 29.09.2011, declaring total income at Rs. Nil. The return of income filed by the assessee was processed as such under Sec. 143(1) of the 'Act' on 21.08.2012. The case of the assessee was thereafter taken up for scrutiny assessment and a notice under Sec. 143(2), dated 27.09.2012 was issued to the assessee. 3. That during the course of the assessment proceedings it was observed by the A.O that the assessee society during the year under consideration had shown excess of income over expenditure of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted before the CIT(A) that the first proviso to Sec. 12A(2) was made available on the statute in order to mitigate the hardships cause to the charitable institutions. It was submitted by the assessee that where registration under Sec. 12AA was granted to an assessee under Sec. 12AA, then the assessee would also be entitled for the benefit of Secs. 11 and 12 in the prior years, subject to satisfaction of two fold conditions, viz. (i) that assessment proceedings in such preceding years was pending before the A.O on the date of grant of registration; and (ii) the objects and activities of the assessee during the said year were the same which had been considered by the Commissioner of Income Tax while granting the registration. It was thus submitted by the assessee that as in its case on 03.04.2012 when the registration under Sec. 12AA was granted by the CIT, the assessment proceedings for the year under consideration, viz. A.Y 2011-12 were pending, and the objects and activities of the assessee society had also not witnessed any change, therefore, the first proviso of Sec. 12A(2) was clearly attracted. Thus it was submitted by the ld. A.R that the provisions of Secs. 11 and 12 were cl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss his aforesaid contention took support of the memorandum explaining the provisions of the Finance (No.2) bill, 2014, in context of the incorporation of the first proviso to Sec.12A(2). The ld. A.R in order to fortify his aforesaid claim that retrospective effect was to be given to the aforesaid statutory provision, therein relied on the judgment of the Hon'ble Supreme Court in the case of CIT v. Vatika Township (P.) Ltd. [2014] 367 ITR 466/227 Taxman 121/49 taxmann.com 249. The ld. A.R submitted that the issue that the first proviso of Sec. 12A(2) was to be given a retrospective effect had already been looked into and adjudicated by the Income Tax Appellate Tribunal, Cochin Bench, Cochin in the following cases:- (i) SNDP Yogam v. Asstt. DIT (Exemption) [2016] 161 ITD 1/68 taxmann.com 152 (Cochin - Trib.) (ii) Santhula Charitable Trust v. Dy. DIT (Exemption) [ITA No. 538/Coch/2015, dated 10.06.2016.] The ld. A.R further submitted that a similar view had also been taken by the ITAT, B Bench, Pune in the case of Shri Vishwa Kalyan Jivraksha Pratisthan v. ITO (ITA No. 2013/PN/2014); dated 22/07/2016 and ITAT, Ahmedabad, 'SMC' Bench in the case of Shri Bha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... asons for making available the first proviso to Sec. 12A(2) on the statute reveals that it was in order to mitigate the hardships caused to charitable institutions, which despite having satisfied the substantive conditions rendering them eligible for claim of exemption, however, for technical reasons were saddled with tax liability in the prior years, due to absence of registration under Sec. 12AA. We find that the issue before us, as to whether the beneficial provisions made available on the statute by the legislature in all its wisdom, vide the Finance (No. 2) 'Act', 2014 with effect from 01.10.2014 were to be given a retrospective effect, or not, had already deliberated upon and adjudicated by this Tribunal in bunch matters of St. Judes Convent School v. Asstt. CIT [2017] 164 ITD 594/77 taxmann.com 173 (Asr.). We find that the Tribunal after giving a thoughtful consideration to the issue as regards the retrospective applicability of the aforesaid statutory provision, had therein concluded as under:- 17. The first issue before us as to whether the two provisos to Section 12A(2) are applicable to all the appeals before us, retrospectively, as contended by the ld. Cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e operations. 23. In 'Vijay v. State of Maharashtra', [2006] 6 SCC 286, the Hon'ble Supreme Court went to the extent of holding that where a law is enacted for the benefit of the community as a whole, even in the absence of a provision, the statute may be held to be retrospective in nature. 24. Now, undeniably, the assessment of income is a matter of procedure. Even the heading of Chapter (xiv) of the Act, which deals with assessment, itself is 'PROCEDURE FOR ASSESSMENT . Likewise, grant of registration is also a procedural aspect, since registration is but a step in aid for exemption u/s 11. As such, the provisos to Sec. 12A(2) are also procedural. 25. So far as regards the bringing in of the first proviso to Section 12A(2), the Memorandum explaining the provisions of the Finance (No.2) Bill, 365 ITR (statute) 175 itself elaborates the intention of the Legislature behind insertion thereof in the statute book. It states, inter alia, that non- application of registration for the period prior to the year of registration causes genuine hardship to charitable organization. Due to absence of registration, tax liability gets attached even though they may ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (supra). 28. In view of the above discussion and respectfully following these decisions, in the absence of any decision to the contrary having been cited before us by the department, we hold that the first proviso to section 12A(2) of the Act is applicable retrospectively. 8. We have given a thoughtful consideration to the aforesaid observations of the Tribunal and are persuaded to be in agreement with the view taken therein. We thus finding no reason to take a different view, thus, are of the considered view that the first proviso of Sec. 12A(2) as had been made available on the statute vide the Finance (No. 2) 'Act'. 2014, with effect from 01.10.2014, being a beneficial provision intended to mitigate the hardships in case of genuine charitable institutions, thus, find ourselves to be in agreement with the view taken by the Tribunal in the aforesaid appeals. We thus, are of the considered view that the first proviso of Sec. 12A(2) would be applicable to the case of the present assessee. We therefore set aside the order of the CIT(A) and consequently delete the addition of ₹ 34,31,521/- sustained by her. The Ground of appeal Nos. 1 to 3 raised by the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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