COMMISSIONER OF IT V. M/S SHREE SHYAM MANDIR COMMITTEE

ITA/234/2016

AI Insights

The case revolves around an appeal by the Commissioner of Income Tax (Exemptions) against the decision of the Income Tax Appellate Tribunal (ITAT), which had allowed the registration of M/s Shree Shyam Mandir Committee under Section 12A of the Income Tax Act, 1961. The primary legal question was whether the ITAT was justified in applying the Proviso of Section 12A(2), inserted w.e.f. 01.10.2014, retrospectively. The High Court examined previous judgments and the legislative intent behind the amendment to Section 12A, ultimately agreeing with the Tribunal's decision to apply the proviso retrospectively.

• Counselvise Citation: [2017] 140 COUNSELVISE.COM (IT) 726228 (HC-RAJASTHAN)
• Appeal Type: Others
• Pronouncement Date: 23-10-2017
• Assessment Year: misc
• Other Referred Cases: D.B. Income Tax Appeal No.224/2010, D.B. Income Tax Appeal No.273/2016, D.B. Income Tax Appeal No.274/2016, Commissioner of Income Tax-Madras Vs. M Jama Mohammad Sahib, Ratilal Pannachand Gandhi Vs. State of Bombay, Kuberbhai vs. Purshottamdas, Lallubhai G. Parikh vs. Acharya Shri Vrijbhushanlal Balkrishanlalji, Smt. Mansukhi Devi Bihani Jan Hitkari Trust Vs. CIT, Modern Defence Shishkan Sansthan Vs. CIT, Dream Land Educational Trust Vs. CIT, Asstt. DIT Vs. Rajasthani Shiksha Samiti, Sanjeevamma Hanumanthe Gowda Charitable Trust vs. DIT, ACIT vs Surat City Gymkhana, Goodyear India Ltd vs State of Haryana, CIT vs Virgin Creations, CIT vs J.H.Gotla, CIT vs Vijay Vani Charitable Trust, CIT vs Surya Educational & Charitable Trust, St. Jude's Convent School vs. Assistent Commissioner of Incoem-tax, SNDP Yogam vs. ADIT (Exemption)
• Laws Referred To: Income Tax Act, Rajasthan Public Trust Act
• Result in Favour of: Respondent
• Court: HIGH COURT
• Department Lawyers: MAHENDRA GARGIEYA
• Assessee Lawyers: DAKSH PAREEK; SAMEER JAIN
• Keywords: Charitable purpose; Income tax appeal; Public trust; Registration under section 12A
• Section: 12AA; 13(3); 12A(2); 13(1)(a)

Judgement Text

"HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR D.B. Income Tax Appeal No. 234 / 2016 Commissioner of Income Tax ( Exemptions), 3rd Floor, Kailash Heights, Lal Kothi, Tonk Road, Jaipur ----Appellant Versus M/s Shree Shyam Mandir Committee, Khatushyam Ji, Distt. Sikar ( Raj.) ----Respondent _____________________________________________________ For Appellant(s) : Mr. Daksh Pareek for Mr. Sameer Jain For Respondent(s) : Mr. Mahendra Gargieya _____________________________________________________ HON'BLE MR. JUSTICE K.S. JHAVERI HON'BLE MR. JUSTICE VIJAY KUMAR VYAS Order 23/10/2017 1. By way of this appeal, the appellant has challenged the judgment and order of the Tribunal whereby Tribunal has allowed the appeal of the assessee. 2. This Court while admitting the appeal on 07.12.2016 framed following substantial question of law: “1. Whether on the facts and circumstances of the case the Hon’ble ITAT was justified in applying the Proviso of Section 12A(2), inserted w.e.f. 01.10.2014, with retrospective effect in spite of the facts that the proviso has no indication of being applied for the earlier years retrospectively.” 3. In the case of assessee itself this court has already taken view in D.B. Income Tax Appeal No.224/2010 dated 02.08.2017, wherein it has been observed as under:- (2 of 28) [ITA-234/2016] 1. Since in all these appeals, common questions of law and facts are involved, they are decided by this common judgment. 2. By way of these appeals, the appellants have challenged the judgment and order passed by the tribunal whereby the tribunal has allowed the appeals of the assessee, reversing the view taken by the Commissioner of Income Tax Jaipur-III, Jaipur vide judgment and order dated 30.09.2009 whereby the registration under Section 12A was rejected. 3. This court while admitting the appeal has framed the following substantial questions of law:- D.B. Income Tax Appeal No.224/2010 admitted on 13.12.2010:- (i) Whether granting registration to a private trust u/s. 12A was legal and proper especially when Sections 2(15),11,12 & Section 13 specifically restricts use and application of voluntarily contribution/income for the benefit of private person u/s.13(3)? (ii) Whether applications of Rajasthan Public Trust Act, 1959 can be applied to the private trust especially when they are covered by the Indian Trust Act, 1882?” D.B. Income Tax Appeal No.273/2016 admitted on 17.01.2017:- \"(i) Whether on the facts and circumstances of the case and in law, the Hon'ble ITAT was justified in allowing Gujara Bhatta as application of income of the trust by following earlier order in spite of the fact that is as not fixed by the State Government as per Section 65 of the Rajasthan Public Trust Act, 1959 r.w. Rule 38 of the Rajasthan Public Trust Rules, 1962?\" (iii) Whether the provisions of Rajasthan Public Trust Act are applicable to the Trust when the Trust is specifically governed by the Indian Trust Act 1882?\" D.B. Income Tax Appeal No.274/2016 admitted on 7.12.2016:- “Whether on the facts and circumstances of the case and in law, the Hon’ble ITAT was justified in allowing Gujara Bhatta as application of income of the trust by (3 of 28) [ITA-234/2016] following earlier order in spite of the fact that it was not fixed by the State Government as per Section 65 of the Rajasthan Public Trust Act, 1959 r.w. rule 38 of the Rajasthan Public Trust Rules, 1962.” 4. Counsel for the appellant has taken us to the definition of 2(31)(vii), Section 2(24)(iia), 2(15) Section 12A, Section 12AA, Section 13(1)(a), and Section 13(3) of the Income Tax Act. He has also taken us to Section 17A of the Rajasthan Public Trust Act which reads as under:- 2. Utility of the Act.-Shri K.N. Shah in Bombay Public Trust Act 1950, eighty Edition, p.3 has observed- There are instances of how Mahants, Pujaris, Bhatjis and Acharyas who have lived on the temple and its income for years and flourished fat o;n the earnings of the Holy shrines and attempting to devour and appropriate the deity and donations to themselves. Through they may have for generations held out to and invited innumerable devotees for Darshan and hundreds of devotees may have openly come for Darshan, and worshipped the idol for years, and though donations, offerings and emoluments may have been begged, asked for, offered and received uninterruptedly, when it comes to registration of the Temple as a Public Trust and accounting for its income, they would not stop of claiming exclusive rights of ownership not only over the income but over idol, the deity of the temple too. They, the preservers of the deity and the spiritual heads, the supposed saviors of the souls of siners & the sanctity of the holy shrink would go to any length to perjure themselves, if they could not establish their ownership over the endowment and its property, and derive the material benefit of getting its income. Such instances are not few. The richer the endowment, the greater the temptation to swallow the same. To such impious Pujaris, Managers and Mahants, nothing matters, consideration neither of this world nor the next, if they could only serve their selfish end. Such instances, justify the passing of and the utility of this Act. (4 of 28) [ITA-234/2016] These days the Trusts and Temples have assumed great importance. This is because the State has thought it advisable to introduce legislation for the governance for safeguarding the interest of the beneficiaries and for avoiding the cases of magnificence and to check mis-appropriation and criminal breach of trust. As expressed by the late Hon’ble Justice Chagle C.J. of Bombay, in his judgment that “The whole attempt and the whole object is to see that the properties settled on public and charitable trusts are properly managed and are properly administered, that the trustees keep proper accounts that the trustees render those accounts, answer questions put to them arising out of those accounts and every single provision contained in the Act is incorporated from that point of view. Ratilal Pannachand Gandhi Vs. State of Bombay, 55 Bom. LR 86= AIT 1953 Bom. 242= ILR 1953 Bom. 1187. The utility of this Act is being realised by the members of the public and the Bombay High Court had made a survey of this Act in a case reported as C.C. vs. Municipality of Taloda, 65 Bom.LR 27. The Gujarat High Court also had made a survey of this Act in cases reported as Kuberbhai vs. Purshottamdas, (1961) 2 GLR 564; Lallubhai G. Parikh vs. Acharya Shri Vrijbhushanlal Balkrishanlalji, (1967) 8 GLR 42. As the law stands, the trustees of the charity, however small, has to perform onerous duties involving a certain amount of expenses, Gross abuses of public trusts and trust funds by unscrupulous trustees, no doubt demand statutory control and regulation and the law had its inspiration and jurisdiction. The whole object of the Legislature, in passing the Act a highly laudable, e.g. to see that public trusts were properly and efficiently administered.\" He also pointed out Section 2(xi) of Public Trust Act and contended that in view of the definition envisaged under the Act, every public trust registered under the Rajasthan Public Trust Act is deemed to be a society and the benefits which are granted under Section 12A are not available to be granted. (5 of 28) [ITA-234/2016] 5. However, he has taken us to the order of Commissioner of Income Tax which has declined the registration and contended that the view taken by the tribunal is required to be reversed, more particularly in view of the provisions of Section 13(1)(a) and 13(3) of the Income Tax Act. 6. He has relied upon the decision of Madras High Court in the case of Commissioner of Income Tax-Madras Vs. M Jama Mohammad Sahib reported in (1941)9ITR375 (Mad) wherein the courts has observed as under:- In Umar Bakhsh v. Commissioner of Income- tax, Punjab (1931) I.L.R. 12 Lah. 725 : 5 I.T.C. 402 (F.B.), the Lahore High Court expressly held that the expression \"religious or charitable purposes\" in S.4 (3) (i) has to be construed with reference to English law and not to the personal law of the assessee and this opinion was accepted by the Patna High Court in Humayun Rasa Chowdhury v. Commissioner of Income-tax, Bihar and Orissa 10 I.T.C. 7. The learned Advocate for the assessee (muthavalli) has suggested that the decision of the Judicial Committee in The Trustees of Tribune Press, Lahore v. The Commissioner of Income-tax, Punjab, Lahore (1939) 2 M.L.J. 444 : L.R. 66 I.A. 241 : I.L.R. (1939) Lah. 475 (P .C.), has negatived this opinion, but we cannot read the judgment in that sense. The passage which has just been quoted from the judgment of the Privy Council speaks of the test of general public utility. As this is the test so far as the Indian Income-tax Act is concerned it is not necessary to consider whether the trust here would be deemed to be charitable in England. Even assuming that the Court may have regard to Muslim ideas in deciding whether a Muslim trust fulfils the test of general public utility, it cannot be said that that part of the trust deed which relates to the setting aside of income for the descendants of the donor constitutes a trust for general public utility. The beneficiaries are to be members of the donor's own family. The utility is not of a public, but clearly of a private nature. For these reasons we would answer the first question in the negative. The second question calls for no discussion. The position is that the muthavalli has in his (6 of 28) [ITA-234/2016] hands income belonging to a private trust. Income of a private trust is not exempt from taxation and the muthavalli is assessable in respect of it, because he holds it. It follows that the answer to the second question is in the affirmative.” 7. He therefore contended that the view taken by the tribunal is required to be reversed. 8. Mr. Jain has also taken us to the observations made by the tribunal in para 6 which reads as under:- 6. We have heard and considered the arguments advanced by the parties in view of orders of the ld.CIT, material available on record and the decision relied upon. The ld.CIT has raised two issues. Firstly as to whether the assessee is a private trust since it is run by the representative of three families and secondly as to whether it is for their benefit since they are paid 15% of the total receipt as also marriage and other help. We note that there is no specific definition of public or private trust in the Income Tax Act, 1961. Various decided cases provide guidelines in this regard, according to which a trust would be a public trust where the benefit enure to the public at large. The control and management of trust property left in the hands of a body of individual belonging to the settlers family is of no consequence in determining whether the trust is public trust or not. In case of Ganeshram Rami Devi Charitable Trust Vs. CIT 71 ITR 696 (Cal.), the Hon’ble High Court considered the question whether the provision that management is left to private individuals and not tot he public would, in any way, affect the nature of the trust for the purpose of the Income-tax Act. It is observed that the phrase “charitable purpose” in the Income-tax Act “includes relief of the poor, education, medical relief and the advancement of any other object of general public utility”. It is further provided that “nothing contained in clause (i) or clause (ii) shall operate to exempt from the provisions of the Act that part of the income from property held under a trust or other legal obligation for private religious purposes which does not ensure for the (7 of 28) [ITA-234/2016] benefit of the public.” This definition does not deal with the matter of control and management of the fund. There is no reference of the same in it. The implication, therefor, is that the matter of management of the fund is not an essential matter for the purpose of defining “charitable purposes” so far as the Income-tax Act is concerned; it may be essential for other purposes as, for example, for the purpose of section 92 of the Code of Civil Procedure. What is eseential for the Income-tax Act is whether “it enures to the benefit to the public” or not, whoever may control the fund. Therefore, even if the funds are controlled by a body of persons which is not a public body in any sense, but if the fund “enures to the benefit of the public”, it wold still be charitable purpose within the meaning of the Income-tax Act. Therefore, it did not agree with the contention that because the control of the fund is not left to the public, it must be concluded that it is not a public charitable trust. The court held that it is not a condition essential for determining a “charitable” trust for the purposed of the Indian Income-tax Act. All that is required is that the fund is spent or accumulated for religious and charitable purposes. The Jodhpur Bench of ITAT in case of Smt. Mansukhi Devi Bihani Jan Hitkari Trust Vs. CIT 277 ITR 140 (AT) (Jodh.) after discussing the facts of the case observed that in the case before them, it is not in dispute that application for registration has been made in the prescribed form i.e. Form No. 10A. It is also not the case of the Department that the property held by the trust and income therefrom had not been utilized for the purposes of charity/public utility. The only reason for not granting registration was that there is a clause in the trust deed that “in the event of a vacancy arising in the board of trustees for whatever reasons, the remaining trustees shall co-opt another major male or female person out of the family members of that person to fill up the vacancy”. Only on that basis, the learned Commissioner of Income-tax considered that the trust was a family (8 of 28) [ITA-234/2016] affair/settlement. However, he has not brought any material on record that by co- opting a person from the family of the previous trustee, how the object of the trust has been changed or by co-opting another family member of the trustee on account of vacancy as to how the income was not utilized for the public charity. Thereafter, ITAT after considering the object of the trust, provisions of section 12A and Rule 17A concluded that Commissioner of Income-tax was not justified in refusing registration to the assessee merely on the basis that in the case of a vacancy in the board of trustees, the remaining trustees are to co-opt another person from the very family of the outgoing trustee as as such the trust appears more in the nature of a family affair/settlement than a charitable trust. Accordingly it directed to grant registration under section 12A of the Income-tax Act, 1961. These cases clearly lay down the proposition that control on management of the fund is no criteria for determining whether the trust is a public or private trust. What is required to be seen is that in enures to the benefit of the public or not who ever may control the fund. It is not in doubt that activities carried out by the assessee enures to the benefit of the public and it is for this reason that it is registered as a public trust under the Rajasthan Public Trust Act, 1959. The object of the trust are also for religious and charitable purpose and is not restricted to any particular cast, colour, or creed. We, therefore, hold that assessee is a public trust and not a private trust. 9. However, Mr. Gagria, counsel for the respondent has taken us to paragraph 10 of the order to the tribunal which reads as under:- “10. We also note that at the time of grant of registration u/s 12AA the ld. CIT is to satisfy himself about the genuineness of the activity of the trust and about the object of the trust. At this stage he is not required to ponder into the provisions of section 13. The applicability of section 13 is to be looked by the AO at the time of assessment. The (9 of 28) [ITA-234/2016] ld.CIT has not brought on record any positive evidence that the activities of the trust are not genuine or the funds of the trust are not applied for its object. He only assumed that since the trusties are getting benefit by way of ‘gujara bhatta’ and other facilities perpetually, the activities of the trust are not genuine. This can not be a reason for refusing the registration u/s 12AA. In case of Modern Defence Shishkan Sansthan Vs. CIT 108 TTJ 732 (Jodh.) it was held that at the stage of consideration of the issue of registration under section 12AA, it is not a sine qua non to examine the aspect of the application of income. When the Commissioner has not doubted the aims and objects of the society, he cannot throw away the application of registration on this pretext. In case of Dream Land Educational Trust Vs. CIT 109 TTJ (Asr.) 850, it was held that for grant of registration under section 12AA, only relevant consideration is satisfaction of Commissioner regarding objects of trust and genuineness of its activities; in absence of any dissatisfaction of Commissioner with regard to either objects or genuineness of activities of trust, if registration is refused to trust, it would be violation of provisions of section 12AA. In case of Asstt. DIT Vs. Rajasthani Shiksha Samiti 23 SOT 124 (Hyd) it was held that when registration to a trust is granted by the Commissioner u/s 12A, then it is for the AO to examine every year whether income has been applied by assessee for charitable purpose or not and if income is not so apply, it wold be duty of AO to tax such income but he cannot further held that trust is not established for charitable purpose. The Hon’ble Karnataka High Court in case of Sanjeevamma Hanumanthe Gowda Charitable Trust vs. DIT 285 ITR 327, (Kar) has held that for the purpose of registration u/s 12A what the authorities have to satisfy is the genuineness of the activities of the trust or institution and how the income derived from trust property is applied to charitable or religious purpose and not the nature of the activity by which the income is derived from trust property is applied for charitable and religious purpose as (10 of 28) [ITA-234/2016] discussed above. Hence, for the detailed reasons stated supra, we direct ld. CIT to grant registration u/s 12A to the assesse.” 10. He has also relied upon the decision of this court in the case of Commissioner of Income Tax Vs. Vijay Vargiya Vani Charitable Trust reported in (2014) 90 CCH 0209 RajHC wherein it has been observed as under:- “In our view, the object of Section 12AA is to examine genuineness of the objects of the trust but not the income of the trust for charitable or religious purpose.the Commissioner cannot sit in the chair of Assessing Officer to look into amount spent on charitable activities at the time of creation of the Trust. The stage for reviewing the application of income has not arrived when such trust or institution files application for registration of the trust/society.” 11. He has also relied upon the judgment rendered by the Punjab and Haryana High Court in the case of Commissioner of Income Tax Vs. Surya Educational & Charitable Trust reported in (2013) 355 ITR (P&H) and the judgment rendered by the Allahabad High Court in the case of Commissioner of Income Tax Vs. Red Rose School reported in (2007) 212 CTR 394 (All HC). He has also relied upon para 5.2 of the Circular No.14/2015 (F.No.197/38/2015-ITA.I) dated 17.08.2005 which reads as under:- “There is no provision under the Act which calls for denial of exemption merely on account of appointment or removal of trustees. Although answer to sucha situation would normally depend on the factual implication of such arrangement, the samej should generally not be a ground for denying exemption unless the nature of activities of the trust or institution get changed or modified or no longer remain to exist ‘solely for educational purpose and not for purposes of profit’. Hence denial of exemption would not be justifiable only on the ground of induction of new trustees or removal of existing ones.” 12. We have heard counsel for the parties. (11 of 28) [ITA-234/2016] 13. Before proceeding with the matter, it will not be out of place to mention here that in all the questions of law, the question which consideration before us is whether taking into account, the observations made in paragraph 10, the view taken by the tribunal is just and proper. At the time of registration, the authority is required to look whether it is registered under the state Act or under any other Act. There is no distinction between private trust and public trust. The contention which has been raised by counsel for the appellant regarding the expenses, diversion or control by the private people will come only when the assessment has taken place. For the purpose of trust registered and the income used is for the charitable purpose or not and whether income from public trust if it is going for any private use will negative the very object of the Trust Act which is the main intention of the legislation, is not to be considered at this stage. 14. In that view of the matter, we see no reason for interfere with the finding of the tribunal. Both the issues are answered in favour of the assessee. 15. The appeals stand dismissed.” 4. Counsel for respondent has relied upon the following decisions: 1. Sree Sree Ramkrishna Samity vs. Deputy Commissioner of Income Tax, (2016) 156 ITD 0646, wherein it observed as under:- 6.3. It is relevant at this juncture to get into the amendment brought in section 12A by Finance Act 2014 with effect from 1.10.2014 by way of insertion of first proviso to section 12A(2) of the Act which is reproduced below for the sake of convenience :- Section 12 A (2) Where an application has been made on or after the 1st day of June 2007, the provisions of section 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 assessement year preceding the aforesaid assessment year, for which assessment proceedings are (12 of 28) [ITA-234/2016] pending before the Assessing Officer as on date of such registration and the objects and activities of such trust or institution remain the same for such preceding assessment year: Provided further that no action under section 147 shall be taken by the Assessing Officer in case of such trust or institution for any assessment year preceding the aforesaid assessment year only for non-registration of such trust or institution for the said assessment 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. 6.4. Admittedly, the reassessment proceedings were pending before the Learned AO for the Asst Years 2003-04 to 2008-09 as on the date of granting registration u/s 12AA of the Act on 29.10.2010 with effect from 1.4.2010 as reassessment proceedings got commenced pursuant to issuance of notice u/s 148 on 30.3.2010 as stated supra. Admittedly, the objects and activities of the trust had remained the same in preceding assessment years also i.e Asst Years 2003-04 to 2008-09. Though this first proviso to section 12A(2) talks about pendency of assessment proceedings, it is relevant to get into the definition of the term ‘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. 6.5. 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. 6.6. 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 for the trusts for earlier assessment years also who had not applied for registration u/s 12AA of the Act at all. 6.7. We hold that the registration of trust under section 12A of the Act once done is a fait accompli and the AO cannot thereafter make further probe into the objects of the trust. Reliance in this regard is placed on the decision of the Hon’ble Apex Court rendered in the case of ACIT vs Surat City Gymkhana reported in (2008) 300 ITR 214 (SC). Drawing analogy from this judgement, the logical inference could be that as long as the objects were charitable in nature in the (13 of 28) [ITA-234/2016] earlier years and in the year in which registration u/s 12AA was granted, the existence of trust for charitable purposes in the earlier years cannot be doubted with. Even otherwise, no adverse findings were given by the revenue with regard to the existence of the assessee society for charitable purposes in the assessment years under appeal. 6.8. It will be relevant to get into the Explanatory Notes to the Provisions of the Finance (No. 2), 2014 as given in CBDT Circular No. 01 / 2015 dated 21.1.2015 in reference F.No. 142/13 /2014-TPL which is reproduced hereinbelow for the sake of convenience :- Para 8 – Applicability of the registration granted to a trust or institution to earlier years 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. 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 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. 6.9. 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 83 (14 of 28) [ITA-234/2016] ITR (St.) 173, wherein Paragraphs 24 and 25 clearly define the scope of the amendment wherein in paragraph 25(i) , the concluding sentence is as under:- “contributions received with a specific direction that they will form part of the corpus of the trust or distribution will, however, not be regarded as income.” Thus the relevant clause defining income in section 2(24)(iia) as introduced with effect from 1.4.1973 was clearly not intended to cover contributions / donations received with a specific direction that they will form part of the corpus of the trust for utilization in acquisition / construction of a capital asset. Thus what is not income as per the definition of the word income in the Act cannot be brought to tax under any other provision of the Act. We find that the order of the Learned CITA failed to distinguish between a case where a receipt is not an income at the stage of its receipt and a case where it is not so but is claimed to be exempt because of any exemption provision granting exemption from taxation to receipts which are liable to taxation but for the provision granting exemption. 6.10. We hold that it is an established position in law that a proviso which is inserted to remedy unintended consequences and to make the provision workable, a proviso which supplies an obvious omission in the section and is required to be read into the section to give the section a reasonable interpretation, requires to be treated as retrospective in operation, so that a reasonable interpretation can be given to the section as a whole and accordingly the said insertion of first proviso to section 12A(2) of the Act with effect from 1.10.20 14 should be read as retrospective in operation with effect from the date when the condition of eligibility for exemption under section 11 & 12 as mentioned in section 12A provided for registration u/s 12AA as a pre-condition for applicability of section 12A. Reliance in this regard is placed on the following decisions :- Allied Motors P ltd vs CIT reported in (1997) 224 ITR 677 (SC) – Judgement by three judges of the Supreme Court The departmental understanding also appears to be that section 43B, the proviso and Explanation 2 have to be read together as expressing the true intention of section 43B. Explanation 2 has been expressly made retrospective. The first proviso, however, cannot be isolated from Explanation 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. (15 of 28) [ITA-234/2016] 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 context of retrospective applicability of amendment to section 40(a)(ia) of the Act held as below:- “The supreme court in the case of Allied Motors P ltd and also in the case of Alom Extrusions Ltd has already decided that the aforesaid provision has retrospective application. Again, in the case reported in 82 ITR 570, the Supreme Court held that the provision, which has inserted the remedy to make the provision workable, requires to be treated with retrospective operation so that reasonable deduction can be given to the section as well”. CIT vs Vatika Township P Ltd reported in (2014) 367 ITR 466 (SC) – Five Judges decision of the Supreme Court “We would also like to point out, for the sake of completeness, that where a benefit is conferred by a legislation, the rule against a retrospective construction is different. If a legislation confers a benefit on some persons but without inflicting a corresponding detriment on some other person or on the public generally, and where to confer such benefit appears to have been the legislators object, then the presumption would be that such a legislation, giving it a purposive construction, would warrant it to be given a retrospective effect. This exactly is the justification to treat procedural provisions as retrospective. In Government of India vs Indian Tobacco Association reported in (2005) 7 SCC 396, the doctrine of fairness was held to be relevant factor to construe a statute conferring a benefit, in the context of it to be given a retrospective operation. The same doctrine of fairness, to hold that a statute was retrospective in nature, was applied in the case of Vijay vs State of Maharashtra reported in (2006) 6 SCC 289. It was held that where a law is enacted for the benefit of community as a whole, even in the absence of a provision the statute may be held to be retrospective in nature. However, we are confronted with any such situation here”. In such cases, retrospectivity is attached to benefit the persons in contradistinction to the provision imposing some burden or liability where the presumption attaches towards prospectivity. In the instant case, the proviso added to section 113 of the Act is not beneficial to the assessee. On the contrary, it is a provision which is onerous to the assessee. Therefore, in a case like this, we have to proceed with the normal rule of presumption against retrospective 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 (16 of 28) [ITA-234/2016] 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. 6.11. We also hold that though equity and taxation are often strangers , attempts should be made that these do not remain always so and if a construction results in equity rather than in injustice, then such construction should be preferred to the literal construction. It is only elementary that a statutory provision is to be interpreted ut res magis valeat 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). 6.12. We hold that the arguments of the Learned AR that, even assuming without conceding, in the worst scenario, the assessee society could only be taxed in the status of an AOP does not require any adjudication as we hold that the assessee society to be construed as a public charitable trust and eligible to claim exemption u/s 11 of the Act for the earlier assessment years, more especially, Asst Years 2003-04 to 2008-09 , the donations received from various donors for construction of an old age home would take the character of corpus donations as they are meant for specific purposes and accordingly would be exempt u/s 11(1)(d) of the Act. Even otherwise, the said donation receipts are only capital in nature as it is received for construction of an old age home on which fact there is absolutely no dispute. The Learned AO also had duly accepted the nature of donations, genuinity of the donors and its utilization in the remand proceedings. Hence in any case, a receipt which is by birth, capital in nature, cannot change its character merely for want of registration of society u/s 12AA of the Act. It is not the case of the revenue that the donations received are meant for general functioning of the charitable objects of the society, in which event, the donations received thereon would take the character of revenue receipts requiring to be credited in the income and expenditure account for utilization towards charitable objects thereon. Hence we hold that in any case, the donations received by the assessee (17 of 28) [ITA-234/2016] society cannot be brought to tax in the assessment. 6.13. We hold that since the only reason for denial of exemption u/s 11 was absence 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. 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. Respectfully following the various judicial precedents relied upon and in the facts and circumstances of the case, we allow the ground nos. 3 to 8 raised by the assessee. 2. SNDP Yogam vs. ADIT (Exemption), (2016) 46 CCH 0736, wherein it observed as under:- 7. We have carefully considered the rival submissions, perused the relevant materials on record and the case law on which the learned AR had placed strong reliance. The primary issue for our consideration is whether the CIT(A) is justified in confirming the AO's action, for all the assessment years under consideration, in assessing the entire incomes of the assessee from all the institutions at the maximum marginal rate. In this context, it is appropriate to refer the amendment to section 12A(2) of the Act and its proviso. For ready reference the same is reproduced below: (Section 12A(2) & its proviso) \"[(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 objects (18 of 28) [ITA-234/2016] and activities of such trust or institution remain the same for such preceding assessment year: Provided further that no action under section 147 shall be taken by the Assessing Officer in case of such trust or institution for any assessment year preceding the aforesaid assessment year only for non-registration of such trust or institution for the said assessment 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 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 action u/s. 147 could be taken by the AO merely for nonregistration of trust for earlier years. 7.2 When section 12A of the Act was amended by introducing new provisos to sub-section (2) of s. 12A by Finance Act, 2014 with effect from 01.10.2014, the assessment orders passed by the assessing officer in respect of the present assessee were pending in appeal before the (19 of 28) [ITA-234/2016] first appellate authority. During such pendency, the assessee was granted registration u/s. 12AA of the Act on 29.07.2013 w.e.f. the assessment year 2013-14. Those appeals were the continuation of the original proceedings and that the power of the Commissioner of Income-tax was co-terminus with that of the assessing officer [ADIT (Exemption) in the present case] were two well established principles of law. In view of the above and going by the principle of purposive interpretation of statues, an assessment proceeding which is pending in appeal before the appellate authority should be deemed to be 'assessment proceedings pending before the assessing officer' within the meaning of that term as envisaged under the proviso. It follows there-from that the assessee which obtained registration u/s. 12AA of the Act during the pendency of appeal was entitled for exemption claimed u/s. 11of the Act. 7.3. The explanatory Memorandum to Finance (No. 2) Bill, 2014 which sought to amend section 12A explains the objects and reasons for making such amendments. The explanation makes it clear that it was in order to provide relief to such trusts in respect of which, due to absence of registration u/s. 12AA tax liability got attached though otherwise they were eligible for exemption by fulfilling other substantive conditions that the amendment was brought in. That being so, denying such benefit to a trust like the assessee who had obtained registration 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 account the above facts and circumstances of the issue, we are of the view that the AO was not justified in taking a stand that registration u/s. 12A was not applicable to the assessee for the AYs under dispute and the condonation petition for delay in filing the application for registration u/s. 12A [for the AYs under dispute] has not yet been decided by the CBDT and, therefore, the total incomes of the assessee were to be assessed as per commercial (20 of 28) [ITA-234/2016] principles. The CIT(A) was also not justified in taking a similar stand that of the AO, without taking cognizance and intention of the amendment to s. 12A of the Act. If no judicious or a liberal view is not taken either by the assessing authority or the appellate authority as in the case under consideration, the very purpose for which such an amendment to s. 12A of the Act enacted, in our view, would be defeated. We are also supported by the order of Kolkata Bench of ITAT in case of Sree Sree Ramkrishna Samity v. 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 finding of the Hon'ble Kolkata Bench in case of Sree Sree Ramkrishna Samity v. DCIT (supra) read as follows: \"6.10. We hold that it is an established position in law that a proviso which is inserted to remedy unintended consequences and to make the provision workable, a proviso which supplies an obvious omission in the section and is required to be read into the section to give the section a reasonable interpretation, requires to be treated as retrospective in operation, so that a reasonable interpretation can be given to the section as a whole and accordingly the said insertion of first proviso to section 12A(2) of the Act with effect from 1.10.2014 should be read as retrospective in operation with effect from the date when the condition of eligibility for exemption under section 11 & 12 as mentioned in section 12A provided for registration u/s. 12AA as a pre-condition for applicability of section 12A.\" Further, the Kolkata Tribunal observed as under: \"6.11. We also hold that though equity and taxation are often strangers, attempts should be made that these do not remain always so and if a construction results in equity rather than in injustice, then such construction should be preferred to the literal construction. It is only elementary that a statutory provision is to be interpreted ut res magis valeat 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 Sree 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: (21 of 28) [ITA-234/2016] \"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, etc., as referred to in Sections 2(15), 11, 12 & 13 of the Income Tax Act, 1961, without prejudice to the fact of granting merely in principle registration by DIT(E). ii) With effect from the Assessment Year 2009-10, the advancement of any object of general public utility other than relief of the poor, education and medical relief as defined in section 2(15) of the Income Tax Act shall not be a charitable purpose, if it involves the carrying on of any activity in the nature of trade, commerce or business, or any activity of rendering any service in relation to any trade, commerce or business, for a cess or fee or any other consideration, irrespective of the nature of use or application, or retention, of the income from such activity. iii) Amendments to the Deed/Memorandum, Rules and Regulations, if any, of the Trust/Institution shall be made only with the prior approval of the Commissioner of Income Tax(Exemptions) or any other prescribed authority under the Income Tax Act, 1961. iv) The registration may be withdrawn on violation of any of the stipulations laid down in the Income Tax Act, 1961, v) The SOCIETY/TRUST shall regularly file its Income Tax Return.\" 3. Allied Motors (P) Ltd. ETC. vs. Commissioner of Income Tax, (1997) 224 ITR 0677, wherein it has been observed as under:- “8. In the case of Goodyear India Ltd. v. State of Haryana and Anr. [1991] 188 ITR 402 (SC) this Court said that the rule of reasonable construction must be applied while construing a statute. Literal construction should be (22 of 28) [ITA-234/2016] avoided if it defeats the manifest object and purpose of the Act. Therefore, in the well known words of Judge Learned Hand, one cannot make a fortress out of the dictionary; and should remember that statutes have some purpose and object to accomplish whose sympathetic and imaginative discovery is the surest guide to their meaning. In the case of R.B Jodha Mai Kuthiala v. Commissioner of Income-Tax, [1971] 82 ITR 570 (SC) , TC 40R.279, this Court said that one should apply the rule of reasonable interpretation. A proviso which is inserted to remedy unintended consequences and to make the provision workable, a proviso which supplies an obvious omission in the section and is required to be read into the section to give the section a reasonable interpretation, requires to be treated as retrospective in operation so that a reasonable interpretation can be given to the section as a whole. 9. This view has been accepted by a number of High Courts. In the case of Commissioner of Income-Tax v. Chandulal Venichand [1994] 118 CTR (Guj) 257: (1994) 209 ITR 7(Guj): TC 19R.748, the Gujarat High Court has held that the first proviso to Section 43B is retrospective and sales-tax for the last quarter paid before the filing of the return for the assessment year is deductible. This decision deals with assessment year 1984-85. The Calcutta High Court in the case of Commissioner of Income-Tax v. Sri Jagannath Steel Corporation [1991]191ITR676(Cal) , has taken a similar view holding that the statutory liability for sales-tax actually discharged after the expiry of the accounting year in compliance with the relevant statute is entitled to deduction under Section 43B. The High Court has held the amendment to be clarificatory and, therefore, retrospective. The Gujarat High Court in the above case held the amendment to be curative and explanatory and hence retrospective. The Patna High Court has also held the amendment inserting the First proviso to be explanatory in the case of Jamshedpur Motor Accessories Stores v. Union of India and Ors. [1991]189ITR70(Patna) . It has held the amendment inserting first proviso to be retrospective. The special leave petition from this decision of the Patna High Court was dismissed. The view of the Delhi High Court, therefore that the first proviso to Section 43B will be available only prospectively does not appear to be correct. 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.” (23 of 28) [ITA-234/2016] 10. In the premises the appeals are allowed and the Income-tax references are answered in favour of the assessees and against the revenue. In the circumstances, however, there will be no order as to costs. 4. St. Jude’s Convent School vs. Assistent Commissioner of Incoem-tax, [2017] 77 taxmann.com 173 (Amritsar – Trib.), wherein it has been observed as under:- 12. In response to this, the ld. Counsel for the assessee has contended that the assessment proceedings pending in appeal are deemed to be assessment proceedings pending before the Assessing Officer. For this proposition, the ld. Counsel has placed reliance on the decisions in the cases of SNDP Yogam v. Asstt. DIT (Exemption) [2016] 161 ITD 1/68 taxmarm.com 152 (Coch. - Trib.) and Shree Bhanushali Mitra Mandal Trust v. ITO [2016] 68 taxmann.com 250 (Ahd. Trib.). 13. The ld. DR has further submitted that in any case, the said first proviso has been inserted by Finance (No. 2) Act, 2014 w.e.f. 01-4-2014 and as such, it is not applicable retrospectively. 14. For this, the ld. Counsel for the assessee has, again, cited the decision in the case of SNDP Yogam (supra). 15. We have heard the rival contentions of both the parties with reference to the merits of the additional ground. The relevant portion of Section 12A of the Act is as follows:- \"Section 12A - (1) Conditions as to registration of trusts, etc.- The provisions of section 11 and section 12 shall not apply in relation to the income of any trust or institution unless the following conditions are fulfilled, namely :- (aa) the person in receipt of the income has made an application for registration of the trust or institution on or after the 1st day of June, 2007 in the prescribed form and manner to the Principal Commissioner or Commissioner and such trust or institution is registered under section 12AA; (24 of 28) [ITA-234/2016] (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 objects and activities of such trust or institution remain the same for such preceding assessment year. Provided further that no action under section 147 shall be taken by the Assessing Officer in case of such trust or institution for any assessment year preceding the aforesaid assessment year only for non-registration of such trust or institution for the said assessment year\". 16. Thus, as per the provisions of Section 12A, if a Trust or Institution has applied for registration on or after 01- 6-2007 and such registration has been granted to it the provisions of Sections 11 and 12 shall not apply to its income. If the application for registration has been made on or after 01-6-2007, the provisions of Sections 11 and 12 shall apply for any assessment year preceding the assessment year immediately following the financial year in which the application for registration was made, for which year, the assessment proceedings are pending before the Assessing Officer as on the date of the registration and the objects and activities of the Trust or Institution remained the same as those on the basis of which the registration was granted, According to the second proviso to Section 12A(2), where for the assessment year immediately following the financial year. In which the application for registration was made, the Trust or Institution is not registered, no action u/s. 147 shall be taken for any assessment year preceding the said assessment year. 17. The first issue before us is as to whether the two provisos to Section 12A(2) are applicable to all the appeals before us, respectively, as contended by the ld. Counsel for the assessee, or whether, since the provisos have been brought in w.e.f. 01-10-2014 and they have not been made applicable, retrospectively, the same are not applicable for earlier periods, as submitted by the department. 18. Now, a bare reading of the first proviso to Section 12A(2) shows that it has not been made applicable (25 of 28) [ITA-234/2016] retrospectively. It has been inserted in the Act w.e.f. 01- 10-2014, by virtue of the Finance (No. 2) Act, 2014. Thus, ordinarily, it ought to be taken as applicable only prospectively, and not retrospectively. However, the law is well settled to the effect that if the proviso brought in as a procedural or beneficial one, intending to remove hardship, it is applicable retrospectively. 19. In C.B. Richards Ellis Mauritius Ltd. v. Asstt. DIT [2012] 208 Taxman 322/21 taxmann.com 535 (Delhi) (copy on record), it has been held that \"procedural law, when amended\" or substituted, is generally retrospective and applies from the date of its enforcement and to this extent, it can be retrospective\". 20. In Allied Motors (P.) Ltd. v. CIT [1997] 224 ITR 677/91 Taxman 205 (SC), it has been held that a proviso, which is intended to intended to remedy unintended consequences and to make the provision workable, a proviso which supplies an obvious omission in the section and is required to be read into the section to give the section a reasonable interpretation, is required to be treated as retrospective in operation, so that a reasonable interpretation can be given to the section as a whole. It is, thus, trite that if a provision is curative or merely declaratory of the previous law, retrospective operation thereof is generally intended. 21. In CIT (Central) v. Vatika Township (P.) Ltd. [2014] 367 ITR 466/227 Taxman 121/49 taxmann.com 249 (SC), the Constitutional Bench of the Hon'ble Supreme Court held that \"if a legislation confers a benefit on some persons but without inflicting a corresponding detriment on some other person or on the public generally, and where to confer such benefit appears to have been the legislators' object, then the presumption would be that such a legislation, giving it a purposive construction, would warrant it to be given a retrospective effect.\" 22. In Government of India v. Indian Tobacco Association [2005] 7 SCC 396, the doctrine of fairness was held to be a relevant factor to construe a statute conferring a benefit, in the context of it to be given a retrospective operation. 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 (26 of 28) [ITA-234/2016] is but a step-in- aid for exemption u/s. 11. As such, the provisos to Section 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 organizations. Due to absence of registration, tax liability gets attached even though they may otherwise be eligible for exemption and fulfil the other substantive conditions. The power of condonation of delay is not available under the section. In order to provide relief to such Trusts and remove hardship in genuine cases, it is proposed to amend Section 12A of the Act to provide that in a case where a Trust or Institution has been granted registration u/s. 12AA of the Act, the benefit of Sections 11 and 12 shall be available in respect of any income derived from property held under Trust in any assessment proceedings for any earlier assessment year, which is pending before the Assessing Officer as on the date of such registration, if the objects and activities of such Trust or Institution in the relevant earlier assessment year are the same as those on the basis of which such registration has been granted. 26. Thus, clearly, the provisions of Section 12A of the Act entailed unintended consequences of non-application of registration for the period prior to the year of registration and, thereby, non-grant of exemption u/ss. 11 and 12 up to grant of registration. This position was also recognized by the CBDT while issuing the Explanatory Notes to the provisions of the Finance (No. 2) Act, 2014, vide CBDT circular No. 1 of 2015 : dated 21/1/2015. It was this anomaly, which was cured by bringing in the first proviso to Section 12A(2), This proviso, even as avowed by the above quoted Memorandum explaining the provisions of the Finance (No. 2) Bill, has sought to remedy the said unintended hardship visiting Trusts and Institutions. It has supplied the aforesaid omission in the section and has thereby made the provision of the section workable, providing a reasonable interpretation to it by providing the benefit mandated by it. It is, thus, a curative proviso, which is but merely declaratory of the previous law. It has, by removal of the hardship, rendered the procedure more relief-oriented. It adequately complies with the natural justice principle of fairness to all. Hence, it has to be presumed and construed as retrospective in nature, in order to give the section a purposive interpretation. 27. In Sree Sree Ramkrishna Samity v. Dy. CIT [2016] 156 ITD 646 : [2015] 64 taxmann.com 330 (Kol.), the (27 of 28) [ITA-234/2016] above position has elaborately been considered to hold the first proviso to Section 12A(2) to be retrospectively applicable. The said decision has been followed in SNDP Yogam (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. 29. Likewise, for the same reasoning, it is also held, regarding the second batch of appeals, that even the second proviso to Section 12A(2) is retrospective in nature and the completed assessments in these cases ought not to have been reopened only for non-registration for the relevant assessment years. 30. This brings us to the next question, i.e., whether the assessment proceeding \"pending before the Assessing Officer\", as stated in the first proviso to Section 12A(2) can be taken as \"pending in appeal\", or, in other words, whether proceedings pending in appeal can be taken to be proceedings pending before the Assessing Officer. This issue also stands answered in favour of the assessee by Shree Bhanushali Mitra Mandal Trust (supra), wherein, it was held that appeal is a continuation of the original proceedings and assessment proceedings pending before an appellate authority should be deemed to be \"assessment proceedings pending before the Assessing Officer\" within the meaning of Section 12A. SNDP Yogam {supra), is to the same effect. Again, no contrary decision has been brought to our notice. Accordingly, it is held that the appellate proceedings before the appellate authorities are deemed to be assessment proceedings pending before the Assessing Officer. 31. In all these cases, the impugned orders were passed after the respective dates of grant of registration. Thus, we hold that subsequent grant of registration in all these cases operates retrospectively for all the relevant years under consideration.” 5. CBDT Circular No. 1/2015, dated 21.1.2015, reads as under:- “8.1 The provisions of section 12A of the Income-tax Act, before amendment by the Act, provided that a trust or an institution can claim exemption under sections 11 and 12 only after registration under section 12AA of the said Act (28 of 28) [ITA-234/2016] has been granted. In case of trusts or institutions which apply for registration after 1st June, 2007, the registration shall be effective only prospectively. 8.2 Non-application of registration for the period prior to the year of registration caused genuine hardship to charitable organisations. Due to absence of registration, tax liability is fastened even though they may otherwise be eligible for exemption and fulfil other substantive conditions. However, the power of condonation of delay in seeking registration was not available. 8.3 In order to provide relief to such trusts and remove hardship in genuine cases, section 12A of the Income-tax Act has been amended to provide that in a case where a trust or institution has been granted registration under section 12AA of the Income-tax Act, the benefit of sections 11 and 12 of the said Act shall be available in respect of any income derived from property held under trust in any assessment proceeding for an earlier assessment year which is pending before the Assessing Officer as on the date of such registration, if the objects and activities of such trust or institution in the relevant earlier assessment year are the same as those on the basis of which such registration has been granted. 8.4 Further, it has been provided that no action for reopening of an assessment under section 147 of the Income-tax Act shall be taken by the Assessing Officer in the case of such trust or institution for any assessment year preceding the first assessment year for which the registration applies, merely for the reason that such trust or institution has not obtained the registration under section 12AA for the said assessment year. 8.5 However, the above benefits would not be available in the case of any trust or institution which at any time had applied for registration and the same was refused under section 12AA of the Income-tax Act or a registration once granted was cancelled.” 5. Issue is required to be answered in favour of assessee. 6. The appeal stands dismissed. (VIJAY KUMAR VYAS),J. (K.S. JHAVERI),J. Chouhan/35 "