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TMI Blog2021 (2) TMI 815X X X X Extracts X X X X X X X X Extracts X X X X ..... spective effect and would operate prospectively from the date on which such rectification saw the light of the day. The ratio laid down by the Hon'ble Supreme Court squarely applies to the facts and circumstances of the present case. The rectification/amendments made to the bye-laws of the Society would only operate prospectively while granting registration under Section 12AA of the Income Tax Act. Following the ratio laid down by the Hon'ble Supreme Court in the judgment reported in Commissioner of Income-Tax Vs. Kamla Town Trust], cited supra, the order passed by the Income Tax Appellate Tribunal is liable to be set aside and the questions of law 1 and 2 are decided in favour of the Revenue appellant. - T.C.A.No.784 of 2010 - - - Dated:- 18-2-2021 - Hon'ble Mr. Justice M. Duraiswamy And Hon'ble Mrs. Justice T.V. Thamilselvi For the Appellant : Mr.J.Narayanasamy, Senior Standing Counsel For the Respondent : Mr.G.Baskar JUDGMENT M.DURAISWAMY, J. Challenging the order passed by the Income Tax Appellate Tribunal, Madras B Bench in I.T.A.No.1879/Mds/2009, the Revenue has filed the above appeal. 2.The assessee - Society filed a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts and in the circumstances of the case, the Income Tax Appellate Tribunal was right in holding that the mode of application of income, and funds and the mode of investment for the Society could be locked into only for assessment purposes and not at the time of considering the application for registration, overlooking the clear mandate provided in Section 12AA of the Income Tax Act? 4.Mr.J.Narayanasamy, learned Senior Standing Counsel appearing for the appellant Revenue submitted that the Hon'ble Supreme Court in the judgment reported in (1996) 84 Taxman 248 (SC) [Commissioner of Income-Tax Vs. Kamla Town Trust] held that the amendments to the Bye-laws/Deed will have only prospective effect and cannot have retrospective application for the purpose of any proceedings, including granting registration. Further, the learned Senior Standing Counsel submitted that the Tribunal grossly erred in holding that the said decision does not apply to the Society and the same is not right in law. The learned Standing Counsel further submitted that granting registration under Section 12AA with effect from 12.09.2012 can only be prospective and shall not operate retrospectively as sought ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... applicable to the case on hand for the reason that the said case pertains to a Trust and the present case pertains to a Society. The Hon'ble Supreme Court in the judgment reported in (1996) 84 Taxman 248 (SC) [Commissioner of Income-Tax Vs. Kamla Town Trust] held as follows: ... The order of rectification of an instrument of trust by a civil court would not be a judgment in rem. it would be a judgment in personam binding on the parties to the rectified instrument, namely, the settlor on the one hand and the trustees on the other, as well as on the ultimate beneficiaries. But a trust deed rectified pursuant to the order of the court would make the rectification order relevant under the provisions of section 11 of the Indian Evidence Act, as the fact in issue in an enquiry before the Income-tax Officer would be whether on the basis of the rectified trust instrument the assessee-trust is entitled to get its income exempted from tax under the relevant provisions of the Income-tax Act. In such proceedings, therefore, the order granting rectification of such instrument of trust would remain relevant. The Income-tax Officer will have to take the instrument as it exists in i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the Tribunal dismissed the assessee's appeals for the assessment years 1949-50 to 1955-56 but allowed those for the assessment years 1956-57 to 1965-66 subject to the rider that the income derived from the trust property by the assessee would be exempt only within the limit permissible under Section 11(1)(a) of the Income-tax Act, 1961. On a reference of the questions, inter alia, whether the assessee was not a public charitable trust and its income was not exempt under section 4(3)(i) of the Indian Income-tax Act, 1922, for the assessment years 1949-50 to 1955-56; whether the second rectification decree dated May 10, 1955, operated prospectively from the assessment years 1956-57 and did not have effect of rectifying the deed of trust dated October 27, 1942, as from the date of its execution and whether the objects and activities of the trust fell within the first limb of the definition of charitable purpose in section 2(15) of the 1961 Act and the residuary clause thereof was not attracted for the assessment years 1962-63 to 1965-66 and whether the Income-tax Officer was entitled to adjudge the validity of the rectification, the High Court answered all the referred questions ..... X X X X Extracts X X X X X X X X Extracts X X X X
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