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TMI Blog2020 (8) TMI 87X X X X Extracts X X X X X X X X Extracts X X X X ..... ore, respectfully following the decision of Co-ordinate Bench we allow grounds of appeal raised by the assessee. - Shri S.S. Godara, JM And Dr. A.L. Saini, AM For the Appellant : Shri B. R. Dutta, CA, Shri Saurabh Bagaria, Advocate Shri Ritesh Goel, Advocate For the Respondent : Shri I. Jamir, CIT, Sr. DR Smt. Ranu Biswas, Addl. CIT ORDER PER DR. A.L. SAINI, AM: The captioned appeal filed by the assessee, pertaining to assessment year 2009-10, is directed against the order passed by the Commissioner of Income Tax (Appeal)-25, Kolkata, in appeal no. 122/CIT(A)-25/Kol/2015-16, which in turn arises out of an assessment order passed by the Assessing Officer u/s 144 of the Income Tax Act, 1961 (in short the Act ) dated 31.03.2015. 2. The grounds of appeal raised by the assessee reads as follows: 1. That the learned Commissioner of Income Tax (Appeals) [here-in-after referred to as CIT(A)] has erred in law and facts in confirming the reopening of the assessment for the assessment year 2009-10. 2. That the learned CIT (A) has erred in holding that the claim of the assessee for exemption under the provisions of section 11 of the Act is not tenable and allowable under the provisions of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se - it is incorporated as a company under section 25 of the Companies Act, 1956, i.e., the objects of the company are to promote the objects of the nature specified in the Section 25 sub-section (1), clause (a) of the said Act, and that it will apply its profits, if any, or other income in promoting its objects and to prohibit the payment of any dividend to its members. In the assessment, the AO assessed the assessee as a company under Chapter IV of the Act - i.e., as a company with profit motive/business income. Though not mentioned in the assessment order, it is obvious that this was because of absence of registration u/s 12AA [for this AY 2011-12]. Thus, while being assessed vis- -vis computation under chapter IV, some disallowances were made and thereafter the AO assessed the total income of assessee at ₹ 2,12,13,110/-. Aggrieved, the assessee preferred an appeal before the Ld. CIT(A) who deleted the addition. Aggrieved, revenue is before us. 4. We have heard rival submissions and gone through the facts and circumstances of the case. We note that the Ld. CIT(A) has held that the 1st proviso to sec. 12A(2) is retrospective in operation by relying on the coordinate bench d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erm assessment in section 2(8) of the Act, wherein it is defined as assessment includes reassessment . Hence even reassessment proceedings that were pending would also come under the ambit of the first proviso to section 12A(2) of the Act. 15. The second proviso to section 12A(2) also provides that no action u/s 147 of the Act shall be taken merely for non-registration of trust or institution. Reading this proviso with the first proviso to section 12A(2) and applying the Rule of Harmonious Construction, it could safely be concluded that the legislature in its wisdom had only brought this proviso to prevent genuine hardship that could be caused on the assessee due to non-registration u/s 12AA of the Act and accordingly in our opinion, the provisos to section 12A(2) of the Act is to be construed as retrospective in operation. 16. The third proviso to section 12A(2) of the Act also provides that the first and second proviso shall not be applicable if the trust or institution had been refused registration earlier or the registration granted earlier is cancelled by the Commissioner u/s 12AA of the Act. This also goes to prove that the first and second proviso shall be made applicable fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he benefit of the same has to be applied in the earlier assessment years for which assessment proceedings are pending before the Learned AO, unless the registration granted earlier is cancelled or refused for specific reasons. The statute also goes on to provide that no action u/s 147 could be taken by the AO merely for non-registration of trust for earlier years. 21. With regard to the arguments of the Learned DR that donations received by assessee falls under the definition of income u/s 2(24)(iia) of the Act, we would like to state that income definition is an inclusive definition. An inclusive definition extends the specific meaning given in the stated items by the general meaning as commonly understood by the said expression which is defined in a statute. The word income as is commonly understood does not include any donation specifically meant for utilization for acquiring, constructing a capital asset, as is the case here. Further section 2(24) had undergone amendment by way of insertion of clause (iia) by Finance Act, 1972 with effect from 1.4.1973. In this connection, it will be relevant to get into the Memorandum explaining the provisions in Finance Act 1972 reported in 8 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2 and the main body of section 43B. Without the first proviso, Explanation 2 would not obviate the hardship or the unintended consequences of section 43B. The proviso supplies an obvious omission. But for this proviso the ambit of section 43B become unduly wide bringing within its scope those payments, which were not intended to be prohibited from the category of permissible deductions. In the case of Goodyear India Ltd vs State of Haryana (1991) 188 ITR 402 , this court said that the rule of reasonable construction must be applied while construing a statute. Literal construction should be avoided if it defeats the manifest object and purpose of the Act. As observed by G.P.Singh in his Principles of Statutory Interpretation, 4th Edn., Page 291, It is well settled that if a statute is curative or merely declaratory of the previous law, retrospective operation is generally intended . In fact the amendment would not serve its object in such a situation, unless it is construed as retrospective. The view, therefore, taken by the Delhi High Court cannot be sustained. CIT vs Virgin Creations in ITAT No. 302 of 2011 in GA 3200 / 2011 dated 23.11.2011, the Hon ble Calcutta High Court in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... trospective operation. Thus, the rule against retrospective operation is a fundamental rule of law that no statute shall be construed to have a retrospective operation unless such a construction appears very clearly in the terms of the Act or arises by necessary and distinct implication. Dogmatically framed, the rule is no more than a presumption, and thus could be displaced by out weighing factors. CIT vs J.H.Gotla reported in (1985) 156 ITR 323 (SC) If the purpose of a particular provision is easily discernible from the whole of the scheme of the Act which in this case, is to counteract the effect of transfer of assets so far as computation of income of the assessee is concerned, then bearing that purpose in mind, we should find out the intention from the language used by the legislature and if strict literal construction leads to an absurd result, i.e., result not intended to be subserved by the object of the legislation found in the manner indicated before, then another construction is possible apart from strict literal construction then that construction should be preferred to the strict literal construction. 24. We also hold that though equity and taxation are often strangers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce of registration u/s 12AA (which was granted to assessee society on 29.10.2010 with effect from 1.4.2010) for the relevant assessment years and on no other ground, the benefit of change in law as above by Finance Act 2014 should be available and for all the years, the benefit of exemption should be available on the date of registration as all the assessments were pending as shown above. In this connection, it requires mention specifically that all the receipts of the donation were proved on enquiry to have been received from the claimed donors and utilized for the specific purpose (construction of old age home) for which they were received. 27. In conclusion, we hold that the insertion of the proviso to section 12A(2) of the Act has to be construed as retrospective in operation. 5. We note that the assessee before us has got registration from Ld. CIT(E) u/s. 12AA of the Act vide order dated 03.05.2013 w.e.f. 01.04.2012. The question of retrospective operation of 1st proviso to sub-section (2) of section 12A of the Act has been answered as retrospective in operation by the Ld. CIT(A) after taking note of the order of coordinate bench s decision of this Tribunal in SreeSreeRamkrish ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch had examined the issue on the retrospectivity operation of the 1st proviso to Sub-section (2) of Section 12A, as follows: In conclusion we hold that the insertion of the proviso to section 12A(2) of the Act has to be construed as retrospective in operation. As such the exemption claims in respect of the income for the assessment years 2003-04 to 2008-09, the assessments of which were pending on the date of registration under section 12AA of the Act on 29.10.2010 with effect from 01.04.2010, needs to be assessed under section 12A read with section 11 and 12 of the Act. 7.As the issue is squarely covered in favour of the assessee by the decision of Coordinate Bench in the assessee s own case and there is no change in facts and law and the Revenue is unable to produce any material to controvert the above said findings of the Co-ordinate Bench (supra). Therefore, respectfully following the decision of Co-ordinate Bench we allow grounds of appeal raised by the assessee. 8. Since we have allowed the appeal of the assessee on merits therefore technical ground raised by the assessee challenging the reopening of the assessment U/s 147 of the Act is rendered academic and infructuous as pe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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