Sutika Seva Mandit, Pune V. Deputy Commissioner of Income-tax,

ITA 1060/PUN/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 0949 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 1 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-09-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 18-08-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 29-07-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P L KUREEL
• Keywords: Charitable institution; Retrospective amendment; Benefit of exemption
• Section: 143(3); 12A; 12AA; 148; 12; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, PUN E , , !'#'' $ , % & BEFORE SHRI R.K. PANDA, AM AND SHRI VIKAS AWASTHY, JM / ITA NO. 136/PN/2015 %' ( ')( / ASSESSMENT YEAR : 2010-11 SUTIKA SEVA MANDIR, 252, LAXMI ROAD, NARAYAN PETH, PUNE-411030 PAN : AAETS1339Q ....... / APPELLANT ' / V/S. INCOME TAX OFFICER, WARD 6(2), PUNE / RESPONDENT / ITA NO. 1060/PN/2015 %' ( ')( / ASSESSMENT YEAR : 2009-10 SUTIKA SEVA MANDIR, 252, LAXMI ROAD, NARAYAN PETH, PUNE-411030 PAN : AAETS1339Q ....... / APPELLANT ' / V/S. DCIT, CIRCLE 6, PUNE / RESPONDENT ASSESSEE BY : SHRI KISHOR PHADKE REVENUE BY : SHRI P.L. KUREEL / DATE OF HEARING : 21-09-2016 / DATE OF PRONOUNCEMENT : 23-09-2016 2 ITA NOS. 136 & 1060/PN/2015 * / ORDER PER VIKAS AWASTHY, JM : THE ASSESSEE HAS FILED ITA NO. 136/PN/2015 AGAINST THE O RDER OF COMMISSIONER OF INCOME TAX (APPEALS)-III, PUNE DATED 10-1 1-2014 FOR THE ASSESSMENT YEAR 2010-11 AND ITA NO. 1060/PN/2015 BY THE ASSESSEE IS AGAINST THE ORDER OF COMMISSIONER OF INCOME T AX (APPEALS)- 10, PUNE DATED 05-05-2015 FOR THE ASSESSMENT YEAR 200 9-10. IN THE BOTH THE APPEALS THE ASSESSEE HAS IMPUGNED THE FINDINGS OF COMMISSIONER OF INCOME TAX (APPEALS) IN UPHOLDING THE ACTION OF ASSESSING OFFICER IN DISALLOWING THE BENEFIT OF EXEMPTION U/S. 1 1 OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT). 2. THE BRIEF FACTS OF THE CASE AS EMANATING FROM RECORD S ARE: THE ASSESSEE TRUST WAS CREATED IN 1953. THE TRUST WAS RE GISTERED UNDER THE BOMBAY PUBLIC TRUST ACT, 1950 IN 1955. THE OBJECTS OF T HE TRUST INCLUDE WOMEN AND CHILD HEALTH CARE, FAMILY PLANNING ACTIVITIES, OLD AGE HOME, NURSING CARE AND MEDICAL ATTENDANCE TO THE OLD AGE PERSONS ETC. THE ASSESSEE MADE AN APPLICATION FOR REGISTRATION U/S. 12A TO THE COMMISSIONS OF INCOME TAX (EXEMPTIONS) ON 31-05-2007. TH E SAID APPLICATION OF THE ASSESSEE REMAINED UNDECIDED. THE ASSES SEE MADE SECOND APPLICATION FOR REGISTRATION U/S. 12A ON 13-12-2010 . THE COMMISSIONER OF INCOME TAX-III, PUNE VIDE LETTER DATED 30 -06-2011 GRANTED REGISTRATION TO THE ASSESSEE U/S. 12AA W.E.F. 01-0 4-2010. THE ASSESSEE CLAIMED BENEFIT OF SECTION 12A IN ITS RETURN OF INC OME FILED FOR ASSESSMENT YEARS 2009-10 AND 2010-11 ON THE PRINCIPLE OF DEEMED REGISTRATION. THE CLAIM OF THE ASSESSEE WAS REJECTED BY THE ASSESSING OFFICER IN THE ABSENCE OF REGISTRATION U/S. 12A OF THE ACT. 3 ITA NOS. 136 & 1060/PN/2015 AGGRIEVED BY THE ASSESSMENT ORDERS FOR THE IMPUGNED AS SESSMENT YEARS, THE ASSESSEE PREFERRED APPEALS BEFORE THE COMMISS IONER OF INCOME TAX (APPEALS). THE COMMISSIONER OF INCOME TAX (APPE ALS) VIDE IMPUGNED ORDERS UPHELD THE FINDINGS OF ASSESSING OFFICER AND REJECTED THE CLAIM OF THE ASSESSEE. NOW, THE ASSESSEE IS IN SECOND APPEAL FOR BOTH THE ASSESSMENT YEARS I.E. ASSESSMENT YEARS 2009-1 0 AND 2010-11 ASSAILING THE ORDERS OF COMMISSIONER OF INCOME TAX (APPEALS) IN REJECTING THE BENEFIT OF EXEMPTION U/S. 11 OF THE ACT. 3. THE ASSESSEE IN APPEAL FOR ASSESSMENT YEAR 2010-11 HAS RAISED FOLLOWING GROUNDS : 1. THE LEARNED CIT(A)-III ERRED IN LAW AND ON FACTS I N CONFIRMING THE APPELLANT'S ASSESSED INCOME AT RS.28,65,340/- INSTE AD OF RS. NIL AS PER RETURN OF INCOME FILED BY THE APPELLANT. 2. THE LEARNED CIT(A)-III ERRED IN LAW AND ON FACTS IN NOT EXTENDING THE BENEFIT OF EXEMPTION U/S 11 OF THE I.T. ACT, 1961 T O THE APPLICANT ON THE PRINCIPLE OF DEEMED REGISTRATION. THE LEARNED C1T(A )-III PUNE OUGHT TO HAVE APPRECIATED THAT THE APPELLANT WAS NOT AT FAUL T IN NON-ADJUDICATION OF THE APPLICATION FOR 12A REGISTRATION FILED BY TH E APPELLANT ON 31/5/2007. 3. THE LEARNED CIT(A)-III ERRED IN LAW AND ON FACTS IN CONFIRMING THE ADDITION OF RS.15,13,524/- RECEIVED TOWARDS CORPUS FUND OF T HE APPELLANT TRUST DURING THE A.Y. 2010-11 AND DENYING THE DEDUCTION O F APPLICATION TOWARDS CAPITAL EXPENSES OF RS.1,04,77,870/- INCURR ED BY THE APPELLANT TOWARDS OBJECT OF THE TRUST. 4. THE LEARNED C1T(A)-III, PUNE ERRED IN LAW AND ON FA CTS IN NOT APPRECIATING THAT THE APPELLANT'S CASE IS COVERED BY THE 3 RD PROVISO TO SECTION 12A, GRANTING THE BENEFIT OF AMENDMENT TO SECTION 12A. 5. THE LEARNED CIT(A)-III, PUNE ERRED IN LAW AND ON FA CTS IN DENYING THE BENEFIT OF THE 3 RD PROVISO TO SECTION 12A ON THE REASON THAT THE AUDI T OF THE TRUST WAS DONE ON 20/12/2010 AND THE RETURN OF INCOME WAS FILED ON 11/1/2011. THE LEARNED CIT(A)-III, PUNE OUGHT TO HA VE APPRECIATED THAT 4 ITA NOS. 136 & 1060/PN/2015 THE DELAYED RETURN OUGHT NOT TO BE HELD AS AN IMPED IMENT FOR GRANT OF EXEMPTION. 6. THE APPELLANT CRAVES LEAVE TO ADD / MODIFY / ALTER / DELETE ALL / ANY OF THE GROUNDS OF APPEAL. 4. THE ASSESSEE HAS ASSAILED THE ORDERS OF COMMISSIONER OF INCOME TAX (APPEALS) IN ASSESSMENT YEAR 2009-10 BY RAISING SIMILAR GROUNDS. THE SAME ARE AS UNDER : 1. THE LEARNED CIT(A)-10, PUNE ERRED IN LAW AND ON FA CTS IN CONFIRMING THE APPELLANT'S ASSESSED INCOME AT RS.30,05,175/- INSTE AD OF RS. NIL AS PER RETURN OF INCOME FILED BY THE APPELLANT. 2. THE LEARNED CIT(A)-10, PUNE ERRED IN LAW AND ON FAC TS IN NOT EXTENDING THE BENEFIT OF EXEMPTION U/S 12A TO A.Y. 2009-10, O N THE BASIS OF 12A REGISTRATION GRANTED W.E.F. 01-04-2010, AS THE APPE LLANTS CHARITABLE OBJECTS AND ACTIVITIES FOR THE A.Y. 2009-10 ARE SAM E AS FOR A.Y. 2011-12. 3. THE LEARNED CIT(A)-10, PUNE OUGHT TO HAVE GRANTED T HE BENEFIT OF THE 3 RD PROVISO TO THE SEC. 12A TO THE APPELLANT CONSIDERIN G THE CO-TERMINUS POWERS ASSUMED BY THE CIT(A). 4. THE LEARNED C1T(A)-10, PUNE ERRED IN LAW AND ON FAC TS IN CONFIRMING ESCAPEMENT OF INCOME BY NOT APPRECIATING THAT THE F ACT THAT THE ACTIVITIES CARRIED OUT BY THE APPELLANT IN A.Y. 2009-10 WERE S AME AS THAT OF CARRIED OUT IN A.Y. 2011-12. 5. THE LEARNED CIT(A)-10, PUNE ERRED IN LAW AND ON FAC TS IN NOT EXTENDING THE BENEFIT OF EXEMPTION U/S. 11 OF THE I.T. ACT, 1 961 TO THE APPLICANT ON THE PRINCIPLE OF DEEMED REGISTRATION. THE LEARNED CIT(A)-10, PUNE OUGHT TO HAVE APPRECIATED THAT THE APPELLANT WAS NOT AT F AULT IN NON- ADJUDICATION OF THE APPLICATION FOR 12A REGISTRATIO N FILED BY THE APPELLANT ON 31/05/2007. 6. THE LEARNED CIT(A)-10, PUNE ERRED IN LAW AND ON FAC TS IN CONFIRMING THE ADDITION OF RS.4,35,323 RECEIVED TOWARDS CORPUS FUN D OF THE APPELLANT TRUST DURING HET A.Y. 2009-10 AND DENYING THE DEDUC TION OF APPLICATION TOWARDS CAPITAL EXPENSES OF RS.90,13,199 INCURRED B Y THE APPELLANT TOWARDS OBJECT OF THE TRUST. 5 ITA NOS. 136 & 1060/PN/2015 7. THE APPELLANT CRAVES LEAVE TO ADD / MODIFY / ALTER / DELETE ALL / ANY OF THE GROUNDS OF APPEAL. 5. SHRI KISHOR PHADKE APPEARING ON BEHALF OF THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAD INITIALLY FILED APPLICATION FOR GRANT OF REGISTRATION U/S. 12A ON 31-05-2007. SINCE, THE COMMISSIO NER OF INCOME TAX DID NOT ADJUDICATE THE APPLICATION OF THE ASSE SSEE FOR MORE THAN 6 MONTHS, THE ASSESSEE WAS UNDER BONAFIDE IMPRESSIO N THAT DEEMED REGISTRATION HAS BEEN GRANTED TO THE ASSESSEE . THE OPINION OF THE ASSESSEE WAS BASED ON THE DECISION OF HON'BLE, ALLAHA BAD HIGH COURT IN THE CASE OF SOCIETY FOR THE PROMOTION OF EDUCATIO N ADVENTURE SPORT AND CONSERVATION OF ENVIRONMENT VS. COMMISSIONER OF INCOME TAX (372 ITR 222) AND THE SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF BHAGWAD SWARUP SHRI SHRI DEVRAHA BABA MEMORIAL SHRI HARI PARMARTH DHAM TRUST VS. CIT REPORTED AS 111 ITD 175 (DELHI). THE LD. AR SUBMITTED THAT RECENTLY THE HON'BLE SUPREME COURT OF INDIA IN CIVIL APPEAL NO. 1478 OF 2016 (ARISING OUT OF SLP NO. 9705 OF 2009 ) IN THE CASE OF COMMISSIONER OF INCOME TAX VS. SOCIETY FOR THE PRO MOTION OF EDUCATION DECIDED ON 16-02-2016 HAS UPHELD THE PRINCIPLE OF DEEMED REGISTRATION U/S. 12A AFTER SIX MONTHS FROM THE DATE OF APPLICATION, IF THE COMMISSIONER OF INCOME TAX FAILS TO DISPOSE OF THE APPLIC ATION. EVEN THOUGH THE ASSESSEE HAD DEEMED REGISTRATION, YET THE ASSESSEE FILED SECOND APPLICATION FOR GRANT OF REGISTRATION ON 13-12-2010. THE COMMISSIONER OF INCOME TAX GRANTED REG ISTRATION TO THE ASSESSEE U/S. 12A ON THE SECOND APPLICATION W.E.F. 01-0 4-2010. THE ASSESSING OFFICER IN THE IMPUGNED ASSESSMENT YEARS HAS DENIED THE BENEFIT OF EXEMPTION U/S. 11 AND 12 ON THE GROUND THAT T HE ASSESSEE IS NOT REGISTERED UNDER THE PROVISIONS OF SECTION 12A OF THE ACT. THE LD. AR CONTENDED THAT IN THE LIGHT OF RECENT AMENDMENT TO T HE PROVISIONS OF 6 ITA NOS. 136 & 1060/PN/2015 SECTION 12A OF THE ACT, THE BENEFIT OF EXEMPTION U/S. 11 AN D 12 OF THE ACT CAN BE EXTENDED TO THE ASSESSEE IN THE IMPUGNED A SSESSMENT YEARS. THE NEWLY INSERTED PROVISO TO SECTION 12A(2) PROVIDES THA T WHERE REGISTRATION HAS BEEN GRANTED TO THE TRUST U/S. 12AA, T HEN THE PROVISIONS OF SECTION 11 AND 12 SHALL APPLY IN RESPECT OF A NY INCOME OF THE TRUST OF ANY ASSESSMENT YEAR PRECEDING THE AFORESA ID ASSESSMENT YEAR FOR WHICH ASSESSMENT PROCEEDINGS ARE PENDING BEFORE THE ASSESSING OFFICER AS ON THE DATE OF GRANT OF REGISTRATION A ND THE OBJECTS OF THE ACTIVITIES OF SUCH TRUST REMAIN THE SAME FOR THE PRECEDING ASSESSMENT YEARS. IN THE PRESENT CASE IT AN UNDISPUTE D FACT THAT THERE HAS BEEN NO CHANGE IN THE OBJECTS OF TRUST PRIOR TO AND AFTER THE GR ANT OF REGISTRATION U/S. 12A OF THE ACT. THUS, THE OBJECTS O F THE TRUST BEFORE AND AFTER REGISTRATION ARE SAME. THE LD. AR POINTED THAT IN BOTH THE ASSESSMENT YEARS UNDER APPEAL THE ASSESSMENT ORDERS WERE PASSED AFTER THE GRANT OF REGISTRATION U/S. 12A ON 30-06-2011. THE ASSES SMENT ORDER FOR ASSESSMENT YEAR 2010-11 WAS PASSED U/S. 143 (3) OF THE ACT ON 08-03-2013, WHEREAS THE ASSESSMENT ORDER FOR ASSES SMENT YEAR 2009-10 PASSED U/S. 143(3) R.W.S. 147 OF THE ACT IS DATED 13-01-2014. THE LD. AR IN SUPPORT OF HIS SUBMISSIONS FURTHER PLACED RELIAN CE ON THE DECISION OF CO-ORDINATE BENCH OF THE TRIBUNAL IN THE CASE O F INCOME TAX OFFICER VS. M/S. SHRI VISHWAKALYAN JIVRAKSHA PRATISHTHAN IN I TA NO. 2013/PN/2014 FOR ASSESSMENT YEAR 2011-12 DECIDED ON 22-07-2 016. 6. ON THE OTHER HAND, SHRI P.L. KUREEL REPRESENTING THE D EPARTMENT VEHEMENTLY SUPPORTED THE FINDINGS OF COMMISSIONER OF INCOM E TAX (APPEALS) IN REJECTING THE CLAIM OF ASSESSEE IN THE ABSENCE OF REGISTRATION U/S. 12A DURING THE IMPUGNED ASSESSMENT YEA RS. THE LD. DR SUBMITTED THAT PROVISO TO SUB-SECTION (2) OF SECTION 1 2 OF THE ACT 7 ITA NOS. 136 & 1060/PN/2015 HAS BEEN INSERTED BY THE FINANCE (NO. 2) ACT, 2014 W.E.F. 01- 10-2014. THUS, IT WOULD NOT APPLY IN THE PRESENT CASE. THE COMM ISSIONER OF INCOME TAX (APPEALS) WHILE REJECTING THE CLAIM OF ASSESSEE O N THE BASIS OF DEEMED REGISTRATION HAS PLACED RELIANCE ON THE JUDGMEN TS RENDERED IN THE CASE OF COMMISSIONER OF INCOME TAX VS. SHEELA CHRIST IAN CHARITABLE TRUST REPORTED AS 354 ITR 478 (MADRAS), COMMIS SIONER OF INCOME TAX VS. MUZAFAR NAGAR DEVELOPMENT AUTHORITY (219 TAXMAN 318-ALL.). THE HON'BLE HIGH COURTS HAVE HELD THAT THE TIME FRAME OF 6 MONTHS FOR DECIDING THE APPLICATIONS OF THE ASSESSEE IN TH E ACT IS ONLY DIRECTORY AND NOT MANDATORY. THE LD. DR FURTHER SUBMITT ED THAT THE AUTHORITIES BELOW HAVE CATEGORICALLY OBSERVED IN THE ORDE RS THAT THE ASSESSEE HAS FILED RETURN OF INCOME WITH THE DELAY OF 130 D AYS FROM THE DUE DATE OF FILING OF RETURN U/S. 139(1) OF THE ACT. THE DU E DATE FOR FILING RETURN IN ASSESSMENT YEAR 2010-11 WAS 30-09-2010, WHEREAS THE ASSESSEE FILED RETURN OF INCOME ON 11-01-2011. THUS, ON T HIS ACCOUNT ALSO THE ASSESSEE IS NOT ELIGIBLE TO CLAIM THE BENEFIT OF EXEM PTION U/S. 11 AND 12 OF THE ACT. 7. CONTROVERTING THE SUBMISSIONS MADE ON BEHALF OF THE DEPARTMENT, THE LD. AR CONTENDED THAT THE COCHIN BENCH OF THE TRIBUNAL IN THE CASE OF SNDP YOGAM VS. ASSISTANT DIRECTOR OF INCOME TAX (EXEMPTION) REPORTED AS 68 TAXMANN.COM 152 (COACHIN- TRIB.) HAS HELD THE AMENDMENT TO SECTION 12A(2) TO BE RETROSPECTIVE IN NATURE. THE LD. AR FURTHER SUBMITTED THAT THE RETURN OF INCOME H AS BEEN FILED BY THE ASSESSEE FOR THE ASSESSMENT YEAR 2010-11 WITHIN THE EXTENDED TIME PROVIDED U/S. 139(4) OF THE ACT. MOREOVER, THERE IS NO BAR UNDER THE ACT TO CLAIM THE BENEFIT OF EXEMPTION U/S. 11 OF THE A CT IF THE RETURN HAS BEEN FILED WITHIN THE EXTENDED PERIOD, PERMISSIBLE UNDER THE ACT. 8 ITA NOS. 136 & 1060/PN/2015 8. WE HAVE HEARD THE SUBMISSIONS MADE BY THE REPRESEN TATIVES OF RIVAL SIDES AND HAVE PERUSED THE ORDERS OF THE AUTHORITIE S BELOW. THE ASSESSEE IS AGGRIEVED AGAINST THE ORDERS OF COMMISSIONER OF INCOME TAX (APPEALS) IN THE IMPUGNED ASSESSMENT YEARS IN UPHOLDING THE FINDINGS OF ASSESSING OFFICER IN REJECTING THE BENEFIT OF EXEMPTION CLAI MED BY THE ASSESSEE U/S. 11 AND 12 OF THE ACT. THE BENEFIT OF EXE MPTION U/S. 11 AND 12 OF THE ACT HAS BEEN DENIED FOR WANT OF REGISTRATIO N U/S. 12A OF THE ACT. 9. THE ASSESSEE WAS GRANTED REGISTRATION ON 30-06-201 1 W.E.F. 01- 04-2010. THE COMMISSIONER OF INCOME TAX GRANTED REGISTR ATION TO THE ASSESSEE ON THE APPLICATION MADE ON 13-12-2010. INITIALLY , THE ASSESSEE HAD MADE APPLICATION FOR GRANT OF REGISTRATION U/ S. 12A ON 31-05-2007 ON WHICH NO ACTION WAS TAKEN BY THE COMMISS IONER OF INCOME TAX. IT IS AN UNDISPUTED FACT THAT THE ASSESSEE WAS ENGAGED IN THE CHARITABLE ACTIVITIES, AS THERE WAS NO CHANGE IN THE O BJECTS OF ASSESSEE PRIOR TO THE REGISTRATION AND AFTER THE GRANT OF REGISTRATION U/S. 12AA ON 30-06-2011. DURING THE IMPUGNED ASSESSMENT YE ARS THE ASSESSEE BASED ITS CLAIM FOR EXEMPTION U/S. 11 AND 12 ON THE PRINCIPLE OF DEEMED REGISTRATION. THE HON'BLE APEX COURT IN AN APP EAL BY THE DEPARTMENT IN THE CASE OF SOCIETY FOR THE PROMOTION OF ED UCATION (SUPRA) HAS APPROVED THE DOCTRINE OF DEEMED REGISTRATION U/S. 12A IN CASE THE COMMISSIONER OF INCOME TAX FAILS TO DECIDE THE AP PLICATION FOR GRANT OF REGISTRATION U/S. 12A OF THE ACT WITHIN THE PERIOD OF SIX MONTHS AS PROVIDED UNDER THE ACT. THE RELEVANT EXTRACT OF JUD GMENT OF HON'BLE APEX COURT READS AS UNDER : 3. THE SHORT ISSUE IS WITH REGARD TO THE DEEMED RE GISTRATION OF AN APPLICATION UNDER SECTION 12AA OF THE INCOME TAX AC T. THE HIGH COURT HAS TAKEN THE VIEW THAT ONCE AN APPLICATION IS MADE UNDER THE SAID 9 ITA NOS. 136 & 1060/PN/2015 PROVISION AND IN CASE THE SAME IS NOT RESPONDED TO WITHIN SIX MONTHS, IT WOULD BE TAKEN THAT THE APPLICATION IS REGISTERED U NDER THE PROVISION. 4. THE LEARNED ADDITIONAL SOLICITOR GENERAL APPEARI NG FOR THE APPELLANTS, HAS RAISED AN APPREHENSION THAT IN THE CASE OF THE RESPONDENT, SINCE THE DATE OF APPLICATION WAS OF 24.02.2003, AT THE WORST , THE SAME WOULD OPERATE ONLY AFTER SIX MONTHS FROM THE DATE OF THE APPLICATION. 5. WE SEE NO BASIS FOR SUCH AN APPREHENSION SINCE T HAT IS THE ONLY LOGICAL SENSE IN WHICH THE JUDGMENT COULD BE UNDERSTOOD. TH EREFORE, IN ORDER TO DISABUSE ANY APPREHENSION, WE MAKE IT CLEAR THAT TH E REGISTRATION OF THE APPLICATION UNDER SECTION 12AA OF THE INCOME TAX AC T IN THE CASE OF THE RESPONDENT SHALL TAKE EFFECT FROM 24.08.2003. THUS, IN VIEW OF THE JUDGMENT OF HON'BLE SUPREME COURT OF INDIA, WE FIND MERIT IN THE SUBMISSION OF LD. AR WITH RESPECT TO DE EMED REGISTRATION U/S. 12A WITH REFERENCE TO FIRST APPLICATION OF A SSESSEE DATED 31-05-2007. 10. THE SECOND LIMB OF ARGUMENT OF LD. AR IS WITH REGARD T O AMENDMENT MADE BY FINANCE (NO. 2) ACT, 2014 IN SECTION 12 A(2) OF THE ACT. WE OBSERVE THAT THE CO-ORDINATE BENCH OF THE TRIB UNAL IN THE CASE OF INCOME TAX OFFICER VS. M/S. SHRI VISHWAKALYAN JIVRAKSHA PRATISHTHAN (SUPRA) HAS CONSIDERED THE ISSUE OF RETROSPEC TIVE APPLICABILITY OF AMENDMENT INTRODUCED BY THE FINANCE (NO. 2) ACT, 2014, WHEREBY PROVISO TO SUB-SECTION (2) OF SECTION 12A WE RE INSERTED. THE RELEVANT EXTRACT OF THE ORDER OF CO-ORDINATE BENCH IS REPRODUCED HERE-IN-BELOW : 6. WE HAVE HEARD THE SUBMISSIONS MADE BY THE REPRE SENTATIVES OF RIVAL SIDES AND HAVE PERUSED THE ORDERS OF THE AUTH ORITIES BELOW. WE HAVE ALSO CONSIDERED THE DECISIONS ON WHICH THE LD. AR OF THE ASSESSEE HAS PLACED RELIANCE AND THE DOCUMENTS THAT WERE REF ERRED DURING THE COURSE OF MAKING SUBMISSIONS. 10 ITA NOS. 136 & 1060/PN/2015 7. IT IS AN UNDISPUTED FACT THAT AT THE TIME OF FIL ING OF RETURN OF INCOME AND PASSING OF ORDER U/S. 143(1) THE ASSESSEE WAS N OT REGISTERED U/S. 12A OF THE ACT. THE ASSESSEE MADE APPLICATION FOR REGISTRATION ON 16-01- 2013. THE ASSESSEE WAS GRANTED REGISTRATION BY THE COMMISSIONER OF INCOME TAX ON 25-03-2014 W.E.F. ASSESSMENT YEAR 201 4-15. THE NOTICE U/S. 148 WAS ISSUED TO THE ASSESSEE ON 22-03-2013. THE CONDITIONS FOR APPLICABILITY OF SECTION 11 AND 12 OF THE ACT ARE C ONTAINED IN SECTION 12A OF THE ACT. THE PROVISIONS OF SUB-SECTION (2) OF S ECTION 12A OF THE ACT WERE AMENDED BY THE FINANCE (NO. 2) ACT, 2014. PRO VISO TO SUB-SECTION (2) WERE INSERTED BY AMENDMENT WHICH READS AS UNDER : (2) WHERE AN APPLICATION HAS BEEN MADE ON OR AFTER THE 1ST DAY OF JUNE, 2007, THE PROVISIONS OF SECTIONS 11 AND 12 SHALL AP PLY IN RELATION TO THE INCOME OF SUCH TRUST OR INSTITUTION FROM THE ASSESS MENT YEAR IMMEDIATELY FOLLOWING THE FINANCIAL YEAR IN WHICH SUCH APPLICAT ION IS MADE. PROVIDED THAT WHERE REGISTRATION HAS BEEN GRANTED TO THE TR UST OR INSTITUTION UNDER SECTION 12AA, THEN, THE PROVISION S OF SECTIONS 11 AND 12 SHALL APPLY IN RESPECT OF ANY INCOME DERIVED FRO M PROPERTY HELD UNDER TRUST OF ANY ASSESSMENT YEAR PRECEDING THE AFORESAI D 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 SU CH PRECEDING ASSESSMENT YEAR: PROVIDED FURTHER THAT NO ACTION UNDER SECTION 147 SHALL BE TAKEN BY THE ASSESSING OFFICER IN CASE OF SUCH TRUST OR INST ITUTION FOR ANY ASSESSMENT YEAR PRECEDING THE AFORESAID ASSESSMENT YEAR ONLY FOR NON- REGISTRATION OF SUCH TRUST OR INSTITUTION FOR THE S AID 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. THE AFORESAID AMENDMENT WAS MADE W.E.F. 01-10-2014. 8. THE COCHIN BENCH OF THE TRIBUNAL IN THE CASE OF SNDP YOGAM VS. ASSISTANT DIRECTOR OF INCOME TAX (EXEMPTION) (SUPRA ) WHILE DEALING WITH THE ISSUE RELATING TO RETROSPECTIVE APPLICABILITY O F NEWLY INSERTED PROVISO TO SECTION 12A(2) HAS HELD THAT THE AMENDMENT IS RE TROSPECTIVE IN NATURE. THE RELEVANT EXTRACT OF THE FINDINGS OF TRIBUNAL AR E AS UNDER : 7.1 .THE FIRST PROVISO TO SECTION 12A(2) WAS B ROUGHT 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 11 ITA NOS. 136 & 1060/PN/2015 THE EARLIER YEARS AND SUBSTANTIVE CONDITIONS STIPUL ATED 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 LEG ISLATURE AND THIS POINT IS FURTHER STRENGTHENED BY THE EXPLANATORY NOTES TO FI NANCE (NO.2) ACT, 2014 ISSUED BY THE CENTRAL BOARD OF DIRECT TAXES VI DE ITS CIRCULAR NO. 01/2015 DATED 21.1.2015. APPARENTLY THE STATUTE PRO VIDES THAT REGISTRATION ONCE GRANTED IN SUBSEQUENT YEAR, THE B ENEFIT OF THE SAME HAS TO BE APPLIED IN THE EARLIER ASSESSMENT YEARS FOR W HICH ASSESSMENT PROCEEDINGS ARE PENDING BEFORE THE LD. A.O., UNLESS THE REGISTRATION GRANTED EARLIER IS CANCELLED OR REFUSED FOR SPECIFI C REASONS. THE STATUTE ALSO GOES ON TO PROVIDE THAT NO ACTION U/S147 COULD BE TAKEN BY THE AO MERELY FOR NON-REGISTRATION OF TRUST FOR EARLIER YE ARS. 7.2 WHEN SECTION 12A OF THE ACT WAS AMENDED BY INTR ODUCING NEW PROVISOS TO SUB-SECTION (2) OF S. 12A BY FINANCE AC T, 2014 WITH EFFECT FROM 01.10.2014, THE ASSESSMENT ORDERS PASSED BY TH E ASSESSING OFFICER IN RESPECT OF THE PRESENT ASSESSEE WERE PENDING IN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY. DURING SUCH PENDENCY, THE ASSE SSEE 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 O F THE ORIGINAL PROCEEDINGS AND THAT THE POWER OF THE COMMISSIONER OF INCOME-TAX WAS CO-TERMINUS WITH THAT OF THE ASSESSING OFFICER [ADI T (EXEMPTION) IN THE PRESENT CASE] WERE TWO WELL ESTABLISHED PRINCIPLES OF LAW. IN VIEW OF THE ABOVE AND GOING BY THE PRINCIPLE OF PURPOSIVE INTER PRETATION OF STATUES, AN ASSESSMENT PROCEEDING WHICH IS PENDING IN APPEAL BEFORE THE APPELLATE AUTHORITY SHOULD BE DEEMED TO BE ASSESSM ENT PROCEEDINGS PENDING BEFORE THE ASSESSING OFFICER WITHIN THE ME ANING OF THAT TERM AS ENVISAGED UNDER THE PROVISO. IT FOLLOWS THERE-FROM THAT THE ASSESSEE WHICH OBTAINED REGISTRATION U/S 12AA OF THE ACT DUR ING THE PENDENCY OF APPEAL WAS ENTITLED FOR EXEMPTION CLAIMED U/S 11OF THE ACT. 7.3. THE EXPLANATORY MEMORANDUM TO FINANCE (NO.2) B ILL, 2014 WHICH SOUGHT TO AMEND SECTION 12A EXPLAINS THE OBJECTS AN D REASONS FOR MAKING SUCH AMENDMENTS. THE EXPLANATION MAKES IT CL EAR THAT IT WAS IN ORDER TO PROVIDE RELIEF TO SUCH TRUSTS IN RESPECT O F WHICH, DUE TO ABSENCE OF REGISTRATION U/S 12AA TAX LIABILITY GOT ATTACHED THOUGH OTHERWISE THEY WERE ELIGIBLE FOR EXEMPTION BY FULFILLING OTHER SUB STANTIVE CONDITIONS THAT THE AMENDMENT WAS BROUGHT IN. THAT BEING SO, DENYIN G SUCH BENEFIT TO A TRUST LIKE THE ASSESSEE WHO HAD OBTAINED REGISTRATI ON U/S 12AA DURING THE PENDENCY OF THE APPEALS FILED AGAINST THE ORDER S OF THE ASSESSING AUTHORITY, BY NARROWLY INTERPRETING THE TERM, PEND ING BEFORE THE ASSESSING OFFICER SO AS TO EXCLUDE ITS PENDENCY BE FORE 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. SECT IONS 12A AND 12AA 12 ITA NOS. 136 & 1060/PN/2015 DETAIL THE PROCEDURAL REQUIREMENTS FOR MAKING AN AP PLICATION 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 IMMUNIT Y 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 OU R VIEW, LIBERAL INTERPRETATION WILL GIVE EFFECT TO THE INTENTION OF THE AMENDMENT, THEREBY REMOVING THE HARDSHIP IN GENUINE CASES LIKE THE PRE SENT ASSESSEE UNDER CONSIDERATION. 9. THE KOLKATA BENCH OF THE TRIBUNAL IN THE CASE OF SREE SREE RAMKRISHNA SAMITY VS. DEPUTY COMMISSIONER OF INCOME TAX (SUPRA) WHILE DEALING WITH THE ISSUE WHERE THE BENEFITS OF EXEMPTION U/S. 11 AND 12 WERE DENIED TO THE ASSESSEE ONLY FOR THE REASON THAT THE ASSESSEE IS NOT REGISTERED U/S. 12A OF THE ACT HELD THAT THE LE GISLATURE HAS BROUGHT PROVISO TO SECTION 12A(2) TO PREVENT GENUINE HARDSH IP THAT IS CAUSED TO THE ASSESSEE DUE TO NON-REGISTRATION U/S 12AA AND A CCORDINGLY, THE AMENDMENT TO SECTION 12A(2) HAS TO BE CONSTRUED AS RETROSPECTIVE IN OPERATION. 10. THE COMMISSIONER OF INCOME TAX (APPEALS) HAS AC CEPTED THE CONTENTIONS OF THE ASSESSEE BY PLACING RELIANCE ON THE DECISION OF HON'BLE SUPREME COURT OF INDIA IN THE CASE OF COMMISSIONER OF INCOME TAX VS. PROGRAMME FOR COMMUNITY ORGANISATION REPORTED AS 24 8 ITR 1 (SC). THE COMMISSIONER OF INCOME TAX (APPEALS) HELD : 11. THIS LEAVES THE MATTER OF COMPUTATION OF INCOM E WHICH HAS BEEN COMPLICATED BY APPLYING THE PROVISIONS U/S. 57 OF I NCOME-TAX ACT. VOLUNTARY CONTRIBUTIONS OR DONATIONS BY THEIR INHER ENT NATURE DO NOT FALL THE CATEGORY OF 'INCOME' UNLIKE OTHER INCOME. THESE CON TRIBUTIONS HAVE BEEN DEEMED AS INCOME BY VIRTUE OF SEC. 12(1) OF INCOME- TAX ACT. VOLUNTARY CONTRIBUTIONS RECEIVED TOWARDS CORP US OF THE TRUST ARE EXCLUDED U/S. 11(1)(A) FROM THE SCOPE OF INCOME U/S . 11(1) OF INCOME- TAX ACT. THEREFORE, EVEN IF EXEMPTION IS NOT ALLOWABLE IN VIEW OF NON REGISTRATION U/S. 12AA OF INCOME-TAX ACT, THE INCOM E OF THE TRUST IS REQUIRED TO BE COMPUTED NOT IN ACCORDANCE WITH THE PROVISIONS OF ACT BUT IN ACCORDANCE WITH THE PROVISIONS OF ACT BUT IN ACCORDANCE WITH THE NORMAL RULE OF ACCOUNTANCY, IN A COMMERCIAL SEN SE WITHOUT REFERENCE TO THE HEAD OF INCOME SPECIFIED IN SEE. 14. THIS IS A MATTER OF SETTLED LAW. THE HON'BLE SUPREME COURT IN CIT VS. P ROGRAMME FOR COMMUNITY ORGANIZATION, 248 ITR 1 (SC) HAD APPROVED KERALA HIGH COURTS DECISION IN THE SAME CASE IN 228 ITR 620 (KER) AS TO THE MANNER OF COMPUTATION STATING THAT INCOME HAS TO BE COMPUTED ON COMMERCIAL BASIS AND NOT HEADWISE OR STATUTORY BASI S WHEREIN 13 ITA NOS. 136 & 1060/PN/2015 EXPENDITURE WOULD BE CHARGE ON THE INCOME, WHILE TH E NET INCOME ALONG WITH DONATIONS OTHER THAN CORPUS DONATIONS WI LL FORM ELIGIBLE BASE OUT OF WHICH THE APPELLANT IS EXPECTED TO APPL Y 75% (NOW 85%). THEREFORE, IN MY OPINION, THE MANNER OF COMPUTATION OF INCOME WILL BE THE SAME THOUGH THE APPELLANT WILL NOT BE ENTITLED TO EXEMPTION U/S. 11 & 12 OF THE INCOME-TAX ACT BEING NOT REGISTERED U/S. 12AA OF INCOME-TAX ACT AND THE QUESTION OF TAXABILITY OF DO NATION U/S. 57 AND DEDUCTION U/S. 57(III) OF INCOME-TAX ACT DOES NOT ARISE. ACCORDINGLY, THE ASSESSING OFFICER IS DIRECTED TO DELETE THE ADD ITION OF `40,92,237/-. 11. THE LD. DR HAS NOT BEEN ABLE TO CONTROVERT THE WELL REASONED FINDINGS OF THE COMMISSIONER OF INCOME TAX (APPEALS ). THUS, IN VIEW OF THE FACTS OF THE CASE AND THE DECI SIONS OF TRIBUNAL HOLDING THE AMENDMENT TO PROVISIONS OF SUB-SECTION (2) TO SECTION 12A TO BE RETROSPECTIVE IN NATURE, COUPLED WITH THE FACT T HAT THE ASSESSEE WAS SUBSEQUENTLY GRANTED REGISTRATION U/S. 12AA OF THE ACT, WE ARE OF THE CONSIDERED VIEW THAT THE COMMISSIONER OF INCOME TAX (APPEALS) HAS RIGHTLY DELETED THE ADDITION MADE BY THE ASSESSING OFFICER. ACCORDINGLY, THE APPEAL OF THE REVENUE IS DISMISSED BEING DEVOID OF ANY MERIT. 11. IN THE PRESENT CASE WE FIND THAT THE ASSESSMENT O RDERS IN THE IMPUGNED ASSESSMENT YEARS WERE PASSED AFTER THE GRANT OF REGISTRATION U/S. 12A ON 30-06-2011. THE ASSESSMENT PROCEEDINGS WE RE PENDING BEFORE THE ASSESSING OFFICER ON THE DATE OF GRANT OF REGIST RATION U/S. 12A TO THE ASSESSEE. FURTHER, THE OBJECTS AND ACTIVIT IES OF THE ASSESSEE TRUST ARE SAME PRIOR TO GRANT OF REGISTRATION AND THERE AFTER. THE LD. DR HAS NOT BEEN ABLE TO CONTROVERT THE FINDINGS OF THE CO-O RDINATE BENCH. IN THE LIGHT OF THE FACTS OF THE CASE, WE ARE OF THE VIEW THAT THE ASSESSEE IS ELIGIBLE TO CLAIM THE BENEFIT OF EXEMPTION U/S. 11 OF THE ACT IN THE IMPUGNED ASSESSMENT YEARS. 12. ANOTHER OBJECTION RAISED BY THE COMMISSIONER OF INCO ME TAX (APPEALS) AND ASSESSING OFFICER FOR DENYING THE BENEFIT OF EXEM PTION IN 14 ITA NOS. 136 & 1060/PN/2015 ASSESSMENT YEAR 2010-11 IS THAT THE ASSESSEE HAS NOT FILED AUDIT REPORT ALONG WITH RETURN BEFORE THE DUE DATE AS ENVISA GED U/S. 139(1) OF THE ACT. ONE OF THE CONDITIONS LAID DOWN U/S. 12A FOR C LAIMING BENEFIT OF SECTIONS 11 AND 12 OF THE ACT IS, ACCOUNTS OF THE TRUST SHOULD BE AUDITED. THE RELEVANT EXTRACT OF SECTION 12A(1)(B) READS AS UNDER : 12A. [(1)] THE PROVISIONS OF SECTION 11 AND SECTION 12 S HALL NOT APPLY IN RELATION TO THE INCOME OF ANY TRUST OR INSTITUTION UNLESS THE FOLLOWING CONDITIONS ARE FULFILLED, NAMELY: (A) XXXXXXXXXX (B) WHERE THE TOTAL INCOME OF THE TRUST OR INSTITUT ION AS COMPUTED UNDER THIS ACT WITHOUT GIVING EFFECT TO 4[THE PROVI SIONS OF SECTION 11 AND SECTION 12 EXCEEDS THE MAXIMUM AMOUNT WHICH IS NOT CHARGEABLE TO INCOME-TAX IN ANY PREVIOUS YEAR], THE ACCOUNTS OF THE TRUST OR INSTITUTION FOR THAT YEAR HAVE BEEN AU DITED BY AN ACCOUNTANT AS DEFINED IN THE EXPLANATION BELOW SUB- SECTION (2) OF SECTION 288 AND THE PERSON IN RECEIPT OF THE INCOME FURNISHES ALONG WITH THE RETURN OF INCOME FOR THE RELEVANT AS SESSMENT YEAR THE REPORT OF SUCH AUDIT IN THE PRESCRIBED FORM5 DU LY SIGNED AND VERIFIED BY SUCH ACCOUNTANT AND SETTING FORTH SUCH PARTICULARS AS MAY BE PRESCRIBED.] A BARE PERUSAL OF THE AFORESAID PROVISIONS SHOW THAT THE SECTION 12A(1) DOES NOT BAR THE GRANT OF EXEMPTION IF AUDIT REPOR T IS FILED ALONG WITH RETURN OF INCOME WITHIN THE EXTENDED TIME LIMIT PROVIDE D U/S. 139(4) OF THE ACT. IN THE PRESENT CASE THE ACCOUNTS FOR FINANCIAL YEAR 2009-10 WERE AUDITED ON 20-12-2010. THE DUE DATE FOR FILING RETURN U/S. 139(1) WAS 30-09-2010. THE ASSESSEE FILED RETURN OF IN COME ALONG WITH AUDIT REPORT ON 11-01-2011. THUS, THE ASSESSEE FILED RETURN OF INCOME WITH AUDIT REPORT WITHIN THE EXTENDED TIME PROVIDED UNDER THE ACT. THEREFORE, THE OBJECTION RAISED BY THE AUTHORITIES B ELOW ON THIS ACCOUNT IS UNSUSTAINABLE. 15 ITA NOS. 136 & 1060/PN/2015 13. THUS, IN VIEW OF THE FACTS OF THE CASE AND VARIOUS DEC ISIONS DISCUSSED ABOVE WE FIND MERIT IN THE APPEALS OF THE ASSESS EE. ACCORDINGLY, THE IMPUGNED ORDERS ARE SET ASIDE. WE DEE M IT APPROPRIATE TO REMIT THE FILES BACK TO THE ASSESSING OFFICER TO GRANT THE BENEFIT OF EXEMPTION U/S. 11 AND 12 TO THE ASSESSEE IF OTH ER CONDITIONS FOR CLAIMING EXEMPTION U/S. 11 AND 12 OF THE ACT ARE SATISFIED. 14. IN THE RESULT, THE APPEALS OF THE ASSESSEE ARE ALLOWE D FOR STATISTICAL PURPOSE. ORDER PRONOUNCED ON FRIDAY, THE 23 RD DAY OF SEPTEMBER, 2016. SD/- SD/- ( . . / R.K. PANDA) ( ! ' / VIKAS AWASTHY) #' / ACCOUNTANT MEMBER $ % #' / JUDICIAL MEMBER / PUNE; &# / DATED : 23 RD SEPTEMBER, 2016 RK *+,%-.#/#)- / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. ' () / THE CIT(A)-III, PUNE 4. ' / THE CIT-III, PUNE 5. !*+ %%,- , ,- , . ./0 , / DR, ITAT, B BENCH, PUNE. 6. + 1 23 / GUARD FILE. // ! % // TRUE COPY// #4 / BY ORDER, %5 ,0 / PRIVATE SECRETARY, ,- , / ITAT, PUNE