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TMI Blog2019 (1) TMI 2056X X X X Extracts X X X X X X X X Extracts X X X X ..... eclaring total income at Nil. As per the Assessing Officer as the assessee trust was not registered U/s 12A(a) of the Income Tax Act, the assessee would be assessed as AOP at the maximum marginal rate in terms of Section 164 of the Act and based on the examination carried out during the course of assessment proceedings and taken into consideration, the submissions of the assessee, the assessed income was determined at Rs. 8,39,300/- which was brought to tax at the maximum marginal rate. 3. On appeal, the ld. CIT (A) confirmed the additions so made by the Assessing officer. As per the ld. CIT(A), though the assessee trust has been granted registration U/s 12AA of the Act, however as per the order dated 08.07.2016 issued by the ld. CIT(E) the provisions of Sections 11 & 12 shall apply in the case of the assessee from 09.02.2016. Therefore, basis the said order passed by the ld. CIT(E), the ld. CIT (A) held that the assessee trust cannot be treated as registered U/s 12AA of the Act in respect of assessment year 2013-14 and therefore, in the absence of registration U/s 12AA, various additions made by the AO was confirmed. 4. During the course of hearing, ld. AR drawn our referen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... celled at any time under section 12AA." 7. In the instant case, the provisions of section 11 and 12 shall apply for assessment year 2016-17. For any assessment year preceding the assessment year 2016-17, it is to be seen that for such assessment year, whether assessment proceedings are pending before the Assessing Officer as on the date of such registration i.e, 8.7.2016 and secondly, the objects and activities of such trust or institution remain the same for such preceding assessment year. 8. For the impugned assessment year, though the assessee trust has moved its application seeking registration u/s 12AA on 19.01.2016, however by the time the assessment order U/s 143(3) of the Act was passed by the Assessing officer on 22.03.2016, the registration was not granted by the ld CIT(E). Thereafter, on matters arising out of such assessment proceedings and consequent assessment order, an appeal was filed by the assessee trust before the ld. CIT (A) on 12.04.2016. Such an appellate proceedings before the ld CIT (A) are in continuation of the original proceedings and the assessment proceedings pending in appeal before the ld CIT (A) shall be deemed to be assessment proceedings pending ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essment year: Provided also that provisions contained in the first and second proviso shall not apply in case of any trust or institution which was refused registration or the registration granted to it was cancelled at any time under section 12AA.]" 7.1 Further it would be relevant to reproduce the explanatory note to the provisions of the Finance (No. 2) Act 2014 as given in CBDT No. 1/15 dated 21.1.2015 "Para 8.2 Non-application of registration for the period prior to the year of registration caused genuine hardship to charitable organizations. Due to absence of registration, tax 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." 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stration u/s 12AA during the pendency of the appeals filed against the orders of the assessing authority, by narrowly interpreting the term, 'pending before the assessing officer' so as to exclude its pendency before the appellate authority, will be doing violence to the provisions of the Statute and, as such, liable to 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 our 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 our 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. 7.4 Taking into acc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y provision is to be interpreted ut res magisvaleat quam pereat, i.e to make it workable rather than redundant. Applying this legal maxim, it would be just and fair to hold that the amendment in section 12A is brought in the statute to confer benefit of exemption u/s 11 of the Act on the genuine trusts which had not changed its objectives and had carried on the same charitable objects in the past as well as in the current year based on which the registration u/s. 12AA is granted by the DIT (Exemptions)." 7.5 In light of the aforesaid reasoning and order of the Tribunal in case of Sree DITI Ramkrishna Samity (supra), we direct the Director of Income-tax (Exemption) to grant registration to the assessee trust for all the assessment years under dispute, subject to the following conditions, namely: "(i) The registration U/s. 12AA (1)(b)(i) of the Income Tax Act, 1961 does not automatically exempt the income of the Trust/Institution. The question of taxability of the income of the Trust/Institution shall be examined and decided upon by the Assessing Officer at the time of assessment based on the conduct of the activities, compliance with various statutory and other requirements, e ..... X X X X Extracts X X X X X X X X Extracts X X X X
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