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TMI Blog2024 (9) TMI 279X X X X Extracts X X X X X X X X Extracts X X X X ..... but the registration was granted after the time limit of filing revised return of income and therefore, the question of filing the revised return does not arise for making claim of exemption u/s 11 12 in view of the proviso to section 12A(2) which mandates the applicability of section 11 12 of the Act on the income of the assessee for the assessment year preceding to the assessment year for which the registration was granted but such preceding year is pending assessment before the AO Assessee is entitled for exemption u/s 11 12 for the year under consideration. We find that when there is no change in the objects and activities of the assessee since inception as a certificate to this effect was filed by the assessee before CIT(E) which was duly considered while granting registration u/s 12A therefore, the question of verifying the claim does not arise. Further when the claim u/s 11 12 was made only after the registration was granted by the CIT(E) then filing the audit report in 10B at the time of filing the return of income would amount to asking the assessee to make a compliance for non-existing fact at that point of time. Even otherwise filing of tax audit in form 10B is a direct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at Rs. 7,56,19,050/- by stating that the appellant has not claimed exemption under section 11 and 12 of the Act by way of filing of revised income-tax return even when the appellant had duly longed additional claim to allow exemption under section 11 and 12 of the Act as eligible to the appellant during the course of assessment proceedings itself. 3. That on the facts and in the circumstances of the case and in law, the Ld CIT(A) erred confirming the action of the Ld Assessing Officer in denying the benefit of exemption under section 11 and 12 of the income-tax Act, 1961 and assessing the total income of the appellant at Rs. 7,56,19,050/- by stating that the appellant has not filed audit report in Form No. 10B within time even when the appellant has duly filed Form No. 10B during the course of assessment proceedings itself. 4. That on the facts and in the circumstances of the case and in law, the Ld CIT(A) erred confirming the action of the Ld Assessing Officer in denying the benefit of exemption under section 11 and 12 of the income-tax Act, 1961 and assessing the total income of the appellant at Rs. 7,56,19,050/- even when, in any case, only net income i.e. of Rs. 5,10,38,52 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... remain the same. Thus, Ld. AR has submitted that when the registration u/s 12A was granted to the assessee during the pending of the assessment year under consideration then the claim of exemption u/s 11 & 12 cannot be denied by the AO on the ground of non-filing of revised return of income. Ld. AR has thus submitted that the assessee reiterated its claim of exemption u/s 11 & 12 before the CIT(A) but it was not accepted even by the CIT(A) which has no embargo for entertaining the claim not made in the return of income. Thus, Ld. AR has submitted that in view of second proviso of 12A(2) of the Act the assessee is entitled for exemption u/s 11 & 12 of the Act. In support of his contention he has relied upon following decisions: (i) M/s Barkatullah Vishwavidyalaya vs. DCIT(E) in ITANo. 924/Ind/2018 (ii) Madhya Pradesh Council for Vocational Education & Training vs. CIT(E) in ITANos. 176 & 177/Ind/2022 3.1 Ld. AR has further submitted that during the course of assessment proceedings the assessee filed form no.10B placed at page no.67 to 69 of the paper book. The assessee also filed declaration to the fact that there is no change in the objects and activities of the assessee trust ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... request to accept this revised computation in assessment proceedings. Society is engaged in education activities which are covered u/s 2(15) of Income Tax Act. It is registered under section 12AA and entitled to claim deduction/exemption under section 11. Society request that since they have paid tax along with interest no penalty be levied on them as society is running education institute which are already suffering from financial stress due to covid 19 pandemic/Society prays that lenient view be taken in the case having regard to the fact and circumstance of the case and voluntary tax payment made by the society." In this regard the reliance is placed on the landmark decision of the Hon'ble Supreme Court in the case of Goetze (India) Limited Vs CIT (284 ITR 323) wherein the Apex court has held that "it is necessary for an assessee to revise its return of income for raising any new claim which is not raised in the original return of income". In the instant case the assessee had not revised his Return of Income to claim new exemption for the A.Y.2018-19. Not even Audit Report in Form No. 10B not filed for the A.Y.2018-19 within the stipulated time." 5.1 T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion u/s 12AA has duly considered this fact of activities and objects of the assessee are not changed since its inception and a certificate to this effect was submitted by the assessee before the CIT(E) placed at page no.70 of the paper book as under: "Declaration I Jawed Akhtar, secretary of Akshay Academy, hereby declare that there is no change in the objects and activities of society as mentioned in the bye -laws of the society since its inception." 5.3 Even the AO has not disputed or raised any doubt about the activities and objects of the assessee remained same without any change during this period. Hence, as contemplated by the first proviso to section 12A(2) that the benefit of section 11 & 12 cannot be denied to a genuine charitable trust or society in respect of the income derived from the property held under trust for the preceding assessment year for which assessment proceedings are pending before the AO even if the registration u/s 12A/12AA is granted subsequently and for the subsequent assessment year. Thus, it is clear that provisions of section 12A(2) r.w. proviso provides that registration once granted in subsequent year, the benefit of section 11 & 12 of the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appropriate to refer this matter back to Ld. AO who shall give an opportunity to the assessee to provide the necessary information for computation of exemption u/s 11/12. Based on such information, the Ld. AO shall allow the exemption as admissible u/s 11/12 to the assessee." 5.4 A similar view has been taken by this Tribunal in case of Madhya Pradesh Council for Vocational Eeducation & Training vs. CIT(E) (supra) in para 9 to 11 as under: "9. The assessee claims that it is entitled to benefit of exemption on the basis of 1st Proviso to section 12A(2). For ready reference, the provision of section 12A(2) as existing at the relevant time, is re-produced below: "12A(2) Where an application has been made on or after the 1st day of June, 2007, the provisions of sections 11 and 12 shall apply in relation to the income of such trust or institution from the assessment-year immediately following the financial year in which such application is made: Provided that where registration has been granted to the trust or institution under section 12AA, then, the provisions of sections 11 and 12 shall apply in respect of any income derived from property held under trust of any assessment yea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eads as under: "12A(2) Where an application has been made on or after the 1st day of June, 2007, the provisions of sections 11 and 12 shall apply in relation to the income of such trust or institution from the assessment-year immediately following the financial year in which such application is made. Provided that where registration has been granted to the trust or institution under section 12AA, 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 assessment year, for which assessment proceedings are pending before the Assessing Officer as on the date of such registration and the object and activities of the trust or institution remain the same for such preceding assessment year:" Analyzing the above Proviso, the Ld. AR submitted that once the registration has been granted u/s 12AA, the exemption u/s 11 and 12 shall apply in respect of any preceding assessment-year for which the assessment-proceeding is pending before the AO on the date of registration. Ld. AR submitted that in the present case, the assessee has been granted registration u/s 12AA on 17.06.2019 for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... liability is fastened even though they may otherwise be eligible for exemption and fulfill other substantive conditions. However, the power of condonation of delay in seeking registration was not available." This clearly goes to prove that the first proviso to section 12A(2) was brought in the statute only as a retrospective effect with a view not to affect genuine charitable trusts and societies carrying on genuine charitable objects in the earlier years and substantive conditions stipulated in section 11 to 13 have been duly fulfilled by the said trust. The benefit of retrospective application alone could be the intention of the legislature and this point is further strengthened by the Explanatory Notes to Finance (No.2) Act, 2014 issued by the Central Board of Direct Taxes vide its Circular No. 01/2015 dated 21.1.2015. Apparently, the statute provides that registration once granted in subsequent year, the benefit of the same has to be applied in the earlier assessment years for which assessment proceedings are pending before the ld. A.O., unless the registration granted earlier is cancelled or refused for specific reasons. The statute also goes on to provide that no acti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be interfered with. Moreover, under the Scheme of the Act, sections 11 and 12 are substantive provisions which provide for exemptions to a religious or charitable trust. Sections 12A and 12AA detail the procedural requirements for making an application to claim exemptions under sections 11 and 12 by the assessee and the grant or rejection of such application by the commissioner. Thus, in my view, sections 12A and 12AA are only procedural in nature. Hence, it is not the registration u/s 12AA by itself that offers immunity from taxation. A receipt whether it is revenue or capital in nature is to be decided at the assessment stage. Being procedural in nature, in my view, liberal interpretation will give effect to the intention of the amendment, thereby removing the hardship in genuine cases like the present assessee under consideration. 7.5 I am also supported by the order of Kolkata Bench of ITAT in case of Sree Sree Ramkrishna Samity vs. DCIT (ITA No. 1680/2012, order dated 09.10.2015) where it was held that amendment to Section 12A w.e.f. 01.10.2014 is retrospective. The relevant funding of the Hon'ble Kolkata Bench in case of Sree Sree Ramkrishna Samity vs. DCIT (supra) re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ). XXX (not reproduced being ir-relevant in present appeal). 11. Now we proceed to examine the alternative claim of exemption u/s 11/12 demanded by the assessee. On perusal of the Proviso to section 12A(2) and the decision of Hon'ble Co-ordinate Bench of ITAT, Ahmedabad in Shri Bhanushali Mitra Mandal Trust (supra), we agree to the proposition that the assessee is entitled to the benefit of exemption u/s 11/12 for the assessment-year 2014-15 under consideration as the requirements prescribed in the Proviso stand satisfied, viz. (i) the revenue had already granted registration u/s 12AA from assessment-year 2019-20, (ii) the assessment-year under consideration is 2014-15 which falls within "any preceding assessment year", and (iii) the objects and activities of the assessee remain same. We also find that the Ld. DR did not make any objection to this claim argued by Ld. AR. But, however, we have to ascertain one important aspect i.e. can we entertain this new claim made by assessee for the first time before us? In this respect we find that the Hon'ble Supreme Court has held in Goetze India Ltd. Vs. CIT (2006) 284 ITR 323 (SC) that a fresh claim can be made only by filing a revised ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w because he did not grant exemption for want of registration u/s 12A. For these reasons, we feel it most appropriate to remand these matters back to the file of AO for carrying out verification of fulfillment of condition (iii) discussed above and if that is held to be satisfied, to verify and allow exemption u/s 11/12. Needless to mention that the AO shall give necessary opportunities to assessee and pass order in accordance with law without being influenced by his previous order. Ordered accordingly. 5.5 Accordingly in the facts and circumstances of the case as discussed above and following the earlier decisions of this Tribunal we hold that the assessee is entitled for exemption u/s 11 & 12 for the year under consideration. We find that when there is no change in the objects and activities of the assessee since inception as a certificate to this effect was filed by the assessee before CIT(E) which was duly considered while granting registration u/s 12A therefore, the question of verifying the claim does not arise. Further when the claim u/s 11 & 12 was made only after the registration was granted by the CIT(E) then filing the audit report in 10B at the time of filing the retur ..... X X X X Extracts X X X X X X X X Extracts X X X X
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