M/s. U.P.Forest Corporation Ltd., Lucknow V. Income Tax Officer-1(4), Lucknow

ITA 140/LKW/2012

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 4610 (ITAT-LUCKNOW)
• Duration Of Justice: 3 year(s) 11 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-03-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 02-03-2016
• Assessment Year: 2002-2003
• Appeal Filed On: 21-03-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: R B SHUKLA
• Keywords: Charitable institution; Opportunity of being heard; Bonafide belief; Competent authority; Benefit of exemption
• Section: 234B; 37(1); 12A; 12AA; 12; 154; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH A , LUCKNOW BEFORE SHRI S UNIL KUMAR YADAV , JUDICIAL MEMBER AND SHRI S. V. MEHROTRA , ACCOUNTANT MEMBER ITA NO S . 140, 141, 142, 143 & 144/LKW/2012 ASSESSMENT YEAR S : 2002 - 03, 2003 - 04, 2004 - 05, 2007 - 08 & 2 008 - 09 U.P. FOREST CORPORATION LTD. 21/475, INDIRA NAGAR LUCKNOW V. INCOME TAX OFFICER 1(4) LUCKNOW PAN: AAACU8180C (APPELLANT) (RESPONDENT) ITA NO S . 41, 42, 43 & 44/LKW/2012 ASSESSMENT YEAR S : 2002 - 03, 2003 - 04, 2004 - 05 & 2008 - 09 INCOME TAX OFFICER 1(4) RANGE I LUCKNOW V. U.P. FOREST CORPORATION LTD. 21/475, INDIRA NAGAR LUCKNOW PAN: AAACU8180C (APPELLANT) (RESPONDENT) C.O. NO S .26, 27, 28 & 29/LKW/2012 [ARISING OUT OF ITA NOS.41, 42, 43 & 44/ LKW/2012] ASSESSMENT YEAR S : 2002 - 03, 2003 - 04, 2004 - 05 & 2008 - 09 U.P. FOREST CORPORATION LTD. 21/475, INDIRA NAGAR LUCKNOW V. INCOME TAX OFFICER 1(4) LUCKNOW PAN: AAACU8180C ( CROSS - OBJECTOR ) (RESPONDENT) ASSESSEE BY SHRI. R. B. SHUKLA, ADVOCATE DEPARTMENT BY SHRI. PRAVEEN KUMAR, CIT (D R) DATE OF HEARING: 16.05.2012 DATE OF PRONOUNCEMENT: 25.05.2012 : - 2 - : O R D E R PER BENCH : THESE CROSS - APPEALS ARE PREFERRED BY THE ASSESSEE AS WELL AS THE REVENUE AGAINST THE RESPECTIVE ORDER OF THE LD. CIT(A). THE ASSESSEE HAS ALSO FILED CROSS OBJECTIONS IN R EVENUES APPEALS. SINCE THESE APPEALS AND CROSS OBJECTIONS WERE HEARD TOGETHER, THEY ARE BEING DISPOSED OF THROUGH THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. WE, HOWEVER, ADJUDICATE THEM ONE AFTER THE OTHER. ITA NOS.140 TO 144/LKW/2012: BY THE ASSESSEE: 2 . THROUGH THESE APPEALS, THE ASSESSEE HAS ASSAILED THE ORDERS OF THE LD. CIT(A) ON VARIOUS COMMON GROUNDS. FOR THE SAKE OF REFERENCE, WE EXTRACT BELOW THE GROUNDS RAISED IN APPEAL NO.140/LKW/2012: - 1 . BECAUSE THE L D. COMMISSIONER OF INCOME - TAX (APPE ALS) - L HAS ERRED IN LAW AND ON FACTS IN DECLINING TO ADJUDICATE THE QUESTION OF JURISDICTION OF THE INCOME - TAX OFFICER IMPUGNED BEFORE HIM DESPITE A CLEAR DIRECTION OF THE HON'BLE HIGH COURT IN THE WRIT PETITION NO. 7538 OF 2011 DATED 3.8.2011 TO APPELLATE AUTHORITY 'TO DECIDE THE APPEAL ALONG WITH QUESTION OF JURISDICTION, EXPEDITIOUSLY, WITHIN A PERIOD OF THREE MONTHS FROM THE DATE OF A CERTIFIED COPY OF THIS ORDER IS PRODUCED BEFORE IT.' 2 . BECAUSE THE LD. COMMISSIONER OF INCOME - TAX (APPEALS) - L WAS BOUND TO DECIDE FIRST THE QUESTION OF JURISDICTION AS PER JUDICIAL MANDATE SINCE THE ORDER OF ASSESSMENT WAS PASSED BY THE INCOME - TAX OFFICER WITHOUT JURISDICTION (TERRITORIAL AND ALSO PECUNIARY) CONTRARY TO PROVISIONS OF SUB SECTION (2), (3) AND (4) : - 3 - : OF SECTION 12 4 OF THE INCOME - TAX ACT, WITH REFERENCE TO THE OBJECTION TAKEN BY THE APPELLANT IN THIS REGARD, THEREFORE, IT WAS A NULLITY. 3 . BECAUSE THE LD. COMMISSIONER OF INCOME - TAX (APPEALS) - L HAS ERRED IN LAW AND ON FACTS IN HOLDING THAT THE ORDER OF COMMISSIONER OF I NCOME - TAX - 1, LUCKNOW, DATED 18.4.2011 GRANTING REGISTRATION TO THE APPELLANT IN CONSEQUENCE TO THE ORDER OF THE INCOME - TAX APPELLATE TRIBUNAL DATED 16.1.2009 IN ITA NO. 512/L/07 WAS NOT BEFORE THE ASSESSING OFFICER ON THE DATE OF PASSING OF THE ORDER ON 31 .12.2010, THEREFORE, 'THE APPELLANT CORPORATION COULD NOT HAVE BEEN ALLOWED ANY EXEMPTION U/S 11.' 4 . BECAUSE THE LD. COMMISSIONER OF INCOME - TAX (APPEALS) - L HAS ERRED IN LAW AND ON FACTS IN FOLLOWING THE ORDERS OF HIS PREDECESSOR - COMMISSIONERS OF INCOME - TAX ( A) - 1 FOR A.Y. 2004 - 05 IN APPEAL NO. CIT (A)/LKO/06 - 07/498 DATED 18.08.2007 AND FOR A.Y. 2005 - 06 IN APPEAL NO. CIT (A) - 1/07 - 08/291 DATED 12.1.2009 WHICH HAVE BEEN REVERSED AND SET ASIDE BY THE HON'BLE INCOME - TAX APPELLATE TRIBUNAL BY ORDER DATED 6.3.2009 FO R A.Y. 2004 - 05 AND BY ORDER DATED 4.06.2009 FOR A.Y. 2005 - 06 WITH REGARD TO CLAIM OF EXEMPTION U/S 11 IN FAVOUR OF THE APPELLANT. 5 . BECAUSE THE LD. COMMISSIONER OF INCOME - TAX (APPEALS) - 1 HAS ERRED IN LAW AND ON FACTS IN HOLDING THAT IT IS THE DATE OF GRANTIN G OF REGISTRATION BY THE COMMISSIONER OF INCOME - TAX WHICH IS RELEVANT AND NOT THE ORDER OF THE TRIBUNAL, CONTRARY TO SECTION 12A (A) (I) OF THE INCOME - TAX ACT, 1961, WHICH : - 4 - : PROVIDES FOR GRANT OF REGISTRATION 'FROM THE DATE OF THE CREATION OF THE TRUST OR TH E ESTABLISHMENT OF THE INSTITUTION' IF DELAY IN FILING APPLICATION WAS CONDONED, OTHERWISE AS PER CLAUSE (II) OF SECTION 12A (A) 'FROM THE 1 ST DAY OF THE FINANCIAL YEAR IN WHICH THE APPLICATION IS MADE', IF THE DELAY IS NOT CONDONED. 6 . BECAUSE THE LD. COMMIS SIONER OF INCOME - TAX (APPEALS) - L HAS ERRED IN LAW AND ON FACTS IN HOLDING AS ABOVE CONTRARY TO THE ORDER OF THE HON'BLE TRIBUNAL DATED 16.1.2009 WHICH HAS CONDONED DELAY OF 12 YEARS AND 7 1 /2 MONTHS IN FILING OF APPLICATION U/S 12A ON 11.7.1988 (IT WAS DUE TO BE FILED ON 25.11.1975) AND, THEREFORE, CORPORATION HAS BEEN GRANTED REGISTRATION FROM THE DATE OF ITS ESTABLISHMENT ON 25.11.1974 AS PER SECTION 12A (A) (I) OF THE SAID ACT AND THE ORDER OF THE COMMISSIONER OF INCOME - TAX DATED 13.6.2007 HAS MERGED IN THE ORDER OF THE TRIBUNAL. 7 . BECAUSE THE LD. COMMISSIONER OF INCOME - TAX (APPEALS) - L HAS ERRED IN LAW AND ON FACTS IN HOLDING THAT THE ASSESSING OFFICER WAS JUSTIFIED IN DISALLOWING THE FOREST DEVELOPMENT EXPENSES, DETAILS OF WHICH WERE NOT PRODUCED BEFORE HI M AS ASSERTED BY THE A.O. WITHOUT APPRECIATING THE FACT THAT ALL SUCH DETAILS/EVIDENCES WERE SUBMITTED TWICE, ONCE AT THE TIME OF ORIGINAL ASSESSMENT IN 2005 AND THEN ON 25.11.2010 AT THE TIME OF HEARING DURING THE ASSESSMENT PROCEEDINGS IN QUESTION AND BO TH OF THEM ARE PART OF RECORD OF THE A.O. OF THE RELEVANT YEAR. 8 . BECAUSE THE LD. COMMISSIONER OF INCOME - TAX (APPEALS) - L HAS : - 5 - : ERRED IN LAW AND ON FACTS IN HOLDING THAT 'FURNISHING OF PHOTOCOPIES OF SO CALLED BILLS AND VOUCHERS BEFORE THIS APPELLATE AUTHORITY WITH THE ASSERTION THAT THESE WERE PLACED BEFORE THE AO DOES NOT ESTABLISH THE VERACITY OF SUCH ASSERTION ESPECIALLY WHEN THE A.O. HAS CATEGORICALLY STATED THAT THE EVIDENCE WAS NOT PRODUCED BEFORE HIM.' 9 . BECAUSE THE LD. COMMISSIONER OF INCOME - TAX (APPEALS) - L, HAVING PLENARY POWER CO - EXTENSIVE WITH THE ASSESSING OFFICER, HAS ERRED IN LAW AND ON FACTS IN NOT TAKING NOTE OF THE EVIDENCES BEFORE HIM IN RESPECT OF FOREST DEVELOPMENT EXPENSES WITHOUT APPRECIATING THE FACT THAT (I) THE A.O. HAD ASKED AGAIN THIRD T IME FOR SUCH DETAILS IN RESPECT OF FOUR YEARS IN A DAY'S TIME; (II) THE SAME A.O. ACCEPTED THOSE VERY DETAILS OF FOREST DEVELOPMENT EXPENSES FILED IN A.Y. 2008 - 09, THE ASSESSMENT OF WHICH WAS ALSO MADE ON THE SAME DAY ON 31.12.2010. 10 . BECAUSE THE LD. COMMISS IONER OF INCOME - TAX (APPEALS) - L HAS ERRED IN LAW AND ON FACTS IN HOLDING THAT CLAIM OF FOREST DEVELOPMENT EXPENSES U/S 37(1) OF THE ACT IS NOT ADMISSIBLE U/S 37(1) OF THE ACT CONTRARY TO ITS CLAIM TO BE CHARITABLE INSTITUTION WHEREAS, SEC. 37(1) APPLIES TO INCOME UNDER THE HEAD PROFITS AND GAINS OF BUSINESS OR PROFESSION UNDER WHICH HEAD THE A.O. HIMSELF HAD COMPUTED THE INCOME. THAT APART THE LD. CIT(A) DID NOT APPRECIATE THAT SUCH AN EXPENDITURE IS ALSO ADMISSIBLE U/S 36(1)(XII) OF THE ACT. 11 . BECAUSE THE LD . COMMISSIONER OF INCOME - TAX (APPEALS) - L HAS ERRED IN LAW AND ON FACTS IN HOLDING THAT INTEREST INCOME OF RS.16,22,84,528/ - DERIVED FROM INVESTMENTS OF RESERVE AND : - 6 - : SURPLUS IN FDRS TO THE EXTENT OF 54% OF SUCH INCOME DIVERTED AT SOURCE TO UTTARANCHAL FOREST DEVELOPMENT CORPORATION COULD NOT BE EXCLUDED IN CONSEQUENCE TO THE ORDER OF THE TRIBUNAL BY ITS ORDER DATED 6.3.2009 IN ITA NO. 785/L/05 IN THE CASE OF THE APPELLANT SINCE HIS PREDECESSOR HAVE TAKEN A CONTRARY VIEW IN ASSESSMENT YEARS 2004 - 05 AND 2005 - 06 EVEN THOUGH REVERSED BY THE TRIBUNAL. 12 . BECAUSE THE LD. COMMISSIONER OF INCOME - TAX (APPEALS) - L HAS ERRED IN LAW AND ON FACTS IN DECLINING TO DELETE INTEREST U/S 220 (2) JUST ON THE GROUND THAT 'THE AO IS SEEN TO HAVE RECTIFIED THE CALCULATION VIDE HIS ORDER DATED 15.4.2011 PASSED U/S 154 OF THE ACT' WHEREAS THE APPELLANT WAS NOT LIABLE TO LEVY OF SUCH INTEREST IN THE FRESH ASSESSMENT PASSED IN CONSEQUENCE TO THE SET ASIDE ASSESSMENT. 13 . THE APPELLANT MOST HUMBLY PRAYS THE HON'BLE TRIBUNAL TO ALLOW THE APPEAL AS PER GROUNDS STATED ABOVE AND SET ASIDE THE ORDER THE LD. COMMISSIONER OF INCOME - TAX (A) - 1 SINCE BEING CONTRARY TO THE PROVISIONS OF INCOME - TAX ACT AND THE PRINCIPLE OF JUDICIAL DISCIPLINE. 3 . THE FACTS IN ALL THESE APPEALS ARE COMMON EXCEPT DIFFERENCE IN QUAN TUM. WE, THEREFORE, TAKE THE APPEAL IN ITA NO. 140 /LKW/2012 AS A LEAD CASE AND DISCUSS ITS FACTS AS UNDER. 4 . THE FACTS IN BRIEF AS CULLED OUT FROM THE RECORDS ARE THAT THE ASSESSEE - CORPORATION WAS SET UP ON 15.11.1974 AS A LOCAL AUTHORITY AND A BODY CORPO RATE BY THE UP FOREST CORPORATION ACT , 1974 AS PART OF FOREST POLICY TO GET RID OF PRIVATE AGENCIES INDULGING IN FORESTRY AND TO PROVIDE FOR THE ESTABLISHMENT OF A CORPORATION FOR BETTER PRESERVATION, SUPERVISION AND DEVELOPMENT OF FORESTS AND BETTER EXPLO ITATION OF FOREST PRODUCE WITHIN THE : - 7 - : S TATE AND FOR MATTERS CONNECTED THEREWITH. THE ASSESSEE - CORPORATION WAS HELD TO BE ELIGIBLE FOR EXEMPTION U/S 10(20) OF THE INCOME - TAX ACT, 1961 (HEREINAFTER CALLED IN SHORT THE ACT) AND ALSO U/S 11 OF THE ACT BY HON 'BLE HIGH C OURT VIDE THEIR JUDGEMENT DATED 19.05.1988. IN THE CIVIL APPEAL AGAINST THIS JUDGEMENT , HON'BLE SUPREME COURT REVERSED IT ON THE CLAIM OF EXEMPTION AS A LOCAL AUTHORITY U/S 10(20) OF THE ACT, WHEREAS ON THE ISSUE OF ALTERNATIVE CLAIM FOR EXEMPTI ON U/S 11 OF THE ACT, HON'BLE SUPREME C OURT BY THEIR JUDGEMENT DATED 02.03.1998 RESTORED THE MATTER TO THE ASSESSING OFFICER TO EXAMINE THE ISSUE OF EXEMPTION U/S 11 OF THE ACT WITH REFERENCE TO (I) WHETHER THE INCOME OF THE ASSESSEE - CORPORATION WAS DERIVE D FROM PROPERTY HELD IN TRUST, AND (II) WHETHER THE ASSESSEE - CORPORATION WAS ELIGIBLE TO THE BENEFIT OF REGISTRATION U/S 12A OF THE ACT. IN THE MEANTIME , THE ASSESSEE - CORPORATION HAD FILED AN APPLICATION FOR GRANT OF REGISTRATION WHICH WAS PENDING BEFORE THE LD. COMMISSIONER OF INCOME - TAX SINCE JULY 1988. THIS APPLICATION WAS DECIDED BY THE LD. COMMISSIONER OF INCOME - TAX - I, LUCKNOW VIDE HIS ORDER DATED 13.06.2007 WHEREBY THE ASSESSEE 'S APPLICATION FOR REGISTRATION U/S 12A WAS REJECTED AND THE GRANT OF REGI STRATION, AS SOUGHT, WAS REFUSED. AGGRIEVED BY THE ORDER , THE ASSESSEE - CORPORATION PREFERRED AN APPEAL BEFORE THE TRIBUNAL AND THE TRIBUNAL VIDE ITS ORDER DATED 16.01.2009 IN ITA NO. 512/LUC/2007 ALLOWED THE APPEAL IN AS MUCH THE ASSESSEE WAS HELD ELIGIBLE FOR REGISTRATION. THEREAFTER THE DEPARTMENT PREFERRED AN APPEAL BEFORE THE HON'BLE HIGH C OURT. THIS APPEAL WAS DECIDED BY HON'BLE HIGH COURT VIDE ORDER DATED 12.05.2010 (IN ITA NO. 70 OF 2009). FINALLY IN ORDER TO GIVE EFFECT TO THE ITAT'S ORDER DATED 16. 01.2009 IN ITA NO. 512/LUC/2007, REGISTRATION U/S 12AA OF THE ACT HAS BEEN GRANTED TO THE ASSESSEE - CORPORATION BY THE LD. COMMISSIONER OF INCOME - TAX , LUCKNOW VIDE HIS ORDER DATED 18.04.2011 PASSED U/S 12AA(1)(B)(I) READ WITH SECTION 254 OF THE ACT. THIS RE GISTRATION HAS BEEN GRANTED SUBJECT TO THE DECISION IN SLP PENDING BEFORE HON'BLE SUPREME : - 8 - : COURT. THIS SLP HAS SINCE BEEN DECIDED BY HON'BLE SUPREME C OURT VIDE ORDER DATED 12.5.20 11 WHEREIN THE SLP FILED BY THE REVENUE HAS BEEN DISMISSED. 5 . THE ASSESSMENT FOR ASSESSMENT YEAR 2002 - 03 WAS FIRST COMPLETED ON 21.3.2005 DETERMINING THE TOTAL INCOME AT ` 31,15,27,310. THE ASSESSEE CONTESTED THIS ORDER BEFORE THE LD. CIT(A) WHO ALLOWED PARTIAL RELIEF TO THE ASSESSEE. FURTHER APPEAL WAS PREFERRED BY THE ASSESSEE B EFORE THE TRIBUNAL ON THE GROUND, INTER - ALIA, THAT THE LD. CIT(A) HAD NOT ALLOWED THE ASSESSEES CLAIM FOR EXEMPTION UNDER SECTION 11 OF THE ACT. THE TRIBUNAL VIDE ITS ORDER DATED 6.3.2009 SET ASIDE THE ASSESSMENT AND RESTORED THE MATTER TO THE ASSESSING OFFICER FOR BEING DECIDED AFRESH. 6 . CONSEQUENTLY , THE ASSESSING OFFICER SOUGHT TO EXAMINE THE EXPENSES CLAIMED BY THE ASSESSEE AT ` 3,30,84,961 IN ORDER TO ASCERTAIN AS TO WHETHER OR NOT THESE EXPENSES WERE INCURRED FOR CHARITABLE PURPOSES SO AS TO BE TREAT ED AS APPLICATION OF INCOME WITHIN THE PROVISIONS OF SECTION 11 OF THE ACT. THE ASSESSING OFFICER ALSO SOUGHT TO EXAMINE ASSESSEES CLAIM OF ` 21,55,73,429 PERTAINING TO APPROPRIATION OF FUNDS FOR CHARITABLE OBJECTS AND ASKED THE ASSESSEE TO PRODUCE EVIDEN CE IN SUPPORT OF THE CLAIM. THE ASSESSING OFFICER NOT ONLY DISALLOWED THE CLAIM OF EXPENSES BUT ALSO DENIED ASSESSEES CLAIM OF EXEMPTION UNDER SECTION 11 OF THE ACT. IN THE COMPUTATION SO MADE, THE ASSESSING OFFICER ALSO DISALLOWED THE CLAIM OF DEPRECIA TION AMOUNTING TO ` 82,72,462. 7 . THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A), BUT DID NOT FIND FAVOUR WITH HIM. WHILE DISALLOWING THE CLAIM OF THE ASSESSEE, THE LD. CIT(A) HAS OBSERVED THAT THE CONTENTION OF THE ASSESSEE THAT IT SHOULD HAVE BEEN A LLOWED EXEMPTION UNDER SECTION 11 OF THE ACT IN VIEW OF GRANT OF REGISTRATION UNDER SECTION 12A A OF THE ACT BY THE TRIBUNAL VIDE ITS ORDER DATED 16.1.2009 IS MISCONCEIVED AND MISLEADING. THE ORDER OF THE TRIBUNAL : - 9 - : CANNOT BE TAKEN AS AN ORDER GRANTING REGIS TRATION UNDER SECTION 12AA OF THE ACT , INASMUCH AS AS PER THE PROVISIONS OF THE ACT, IT HAS TO BE ISSUED BY THE LD. COMMISSIONER OF INCOME - TAX. THE REQUISITE STATUTORY ORDER GRANTING REGISTRATION UNDER SECTION 12AA OF THE ACT AND THEREBY CONFERRING ENTITL EMENT OF EXEMPTION UNDER SECTION 11 OF THE ACT HAS BEEN PASSED ONLY ON 18.3.2011 MUCH AFTER COMPLETION OF THE ASSESSMENT BY THE ASSESSING OFFICER. SINCE NO ORDER GRANTING REGISTRATION UNDER SECTION 12AA OF THE ACT HAS BEEN PASSED BY THE TIME OF COMPLETION OF ASSESSMENT, THE ASSESSEE - CORPORATION COULD NOT HAVE BEEN ALLOWED ANY EXEMPTION UNDER SECTION 11 OF THE ACT. ACCORDINGLY, FOLLOWING THE DECISION OF HIS PREDECESSOR ON THE ISSUE, THE LD. CIT(A) UPHELD THE ACTION OF THE ASSESSING OFFICER IN DISALLOWING A SSESSEES CLAIM UNDER SECTION 11 OF THE ACT. 8 . NOW THE ASSESSEE IS BEFORE US WITH THE SUBMISSION THAT THE TRIBUNAL HAS ALLOWED REGISTRATION UNDER SECTION 12AA OF THE ACT TO THE ASSESSEE - CORPORATION VIDE ITS ORDER DATED 16.1.2009. AT THE TIME OF COMPLETING T HE ASSESSMENT, THIS ORDER WAS IN FORCE AND THE ASSESSING OFFICER WAS REQUIRED TO ALLOW EXEMPTION UNDER SECTION 11 OF THE ACT. THE COPY OF THE ORDER OF THE TRIBUNAL DATED 16.1.2009 IS PLACED ON RECORD AT PAGES 174 TO 203 OF THE COMPILATION OF THE ASSESSEE. THE ORDER OF THE TRIBUNAL ALLOWING REGISTRATION UNDER SECTION 12AA OF THE ACT WAS CHALLENGED BY THE REVENUE BEFORE HON'BLE HIGH COURT AND THE APEX COURT BUT COULD NOT SUCCEED. THEREFORE, THE ORDER OF THE TRIBUNAL ATTAINED FINALITY. THE COPIES OF THE OR DERS OF HON'BLE HIGH COURT AND THE APEX COURT ARE ALSO PLACED ON RECORD. THOUGH THE LD. COMMISSIONER OF INCOME - TAX WAS REQUIRED TO GRANT REGISTRATION UNDER SECTION 12AA OF THE ACT PURSUANT TO THE ORDER OF THE TRIBUNAL, BUT HE DID NOT DO THE SAME. HE, HOW EVER, GRANTED REGISTRATION UNDER SECTION 12AA OF THE ACT TO THE ASSESSEE VIDE HIS ORDER DATED 18.3.2011 AFTER TWO YEARS FROM THE DATE OF THE ORDER OF THE TRIBUNAL. THE DELAY IN GRANTING REGISTRATION UNDER SECTION 12AA OF THE ACT CAUSED : - 10 - : INJUSTICE TO THE AS SESSEE , AS ACCORDING TO THE ASSESSING OFFICER , THE BENEFIT OF REGISTRATION UNDER SECTION 12AA OF THE ACT CAN ONLY BE ALLOWED TO THE ASSESSEE IF REGISTRATION CERTIFICATE GRANTING REGISTRATION UNDER SECTION 12AA OF THE ACT IS AVAILABLE AT THE TIME OF COMPLET ION OF ASSESSMENT. FOR THE LAPSES OF THE REVENUE, THE ASSESSEE SHOULD NOT SUFFER AND BE ALLOWED EXEMPTION UNDER SECTION 11 OF THE ACT . 9 . THE LD. D.R., ON THE CONTRARY, HAS SUBMITTED THAT THE STATUTORY AUTHORITY FOR GRANTING REGISTRATION UNDER SECTION 12AA O F THE ACT IS ONLY LD. COMMISSIONER OF INCOME - TAX AND NOT THE TRIBUNAL. THE TRIBUNAL CAN ONLY PASS AN ORDER ADJUDICATING THE ISSUE WHETHER THE ASSESSEE IS ENTITLED FOR REGISTRATION UNDER SECTION 12AA OF THE ACT OR NOT. THE BENEFIT OF REGISTRATION UNDER SE CTION 12AA OF THE ACT CAN ONLY BE ALLOWED IF THE REGISTRATION CERTIFICATE IS AVAILABLE WITH THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS. IN THE INSTANCE CASE WHEN THE ASSESSMENT WAS FRAMED, REGISTRATION CERTIFICATE GRANTING REGISTRAT ION UNDER SECTION 12AA OF THE ACT TO THE ASSESSEE WAS NOT FILED BEFORE THE ASSESSING OFFICER, THEREFORE, HE HAS RIGHTLY DISALLOWED THE CLAIM OF THE ASSESSEE. MOREOVER, FOR ALLOWING CLAIM OF EXEMPTION UNDER SECTION 11 OF THE ACT, THE ASSESSING OFFICER IS R EQUIRED TO EXAMINE THE APPLICATION OF FUND OF THE TRUST/SOCIETY AS PER PROVISIONS OF SECTION 13 OF THE ACT. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER HAS ASKED THE ASSESSEE TO FURNISH BILLS AND VOUCHERS WITH RESPECT TO THE EXPENSE S INCURRED BY IT IN ORDER TO ASCERTAIN THE NATURE OF APPLICATION OF FUND, BUT THE ASSESSEE DID NOT FILE EVIDENCE AND THE ASSESSING OFFICER HAS RIGHTLY CONCLUDED THAT THE FUNDS OF THE ASSESSEE - SOCIETY WAS NOT APPLIED FOR CHARITABLE PURPOSES WHILE DENYING BE NEFIT OF EXEMPTION UNDER SECTION 11 OF THE ACT. 10 . HAVING GIVEN A THOUGHTFUL CONSIDERATION TO THE RIVAL SUBMISSIONS AND FROM A CAREFUL PERUSAL OF THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIAL AVAILABLE ON RECORD, WE FIND THAT VIDE ORDER DATED 16.1.2009 THE : - 11 - : TRIBUNAL HAS ALLOWED REGISTRATION UNDER SECTION 12AA OF THE ACT TO THE ASSESSEE . THOUGH THE ORDER OF THE TRIBUNAL WAS CHALLENGED BEFORE HON'BLE HIGH COURT AND THE APEX COURT, BUT THE REVENUE DID NOT SUCCEED AND THE ORDER OF THE TRIBUNAL ATTAINED FINA LITY. MOREOVER, THE OPERATION OF THE ORDER OF THE TRIBUNAL WAS NEVER STAYED AT ANY POINT OF TIME. THEREFORE, THE ORDER OF THE TRIBUNAL WAS IN FORCE AFTER ITS PRONOUNCEMENT ON 16.1.2009. UNDISPUTEDLY THE TRIBUNAL IS NOT A COMPETENT AUTHORITY TO GRANT REG ISTRATION UNDER SECTION 12AA OF THE ACT. THE TRIBUNAL BEING QUASI JUDICIAL BODY ONLY TO ADJUDICATE THE ISSUE OF ENTITLEMENT OF REGISTRATION UNDER SECTION 12AA OF THE ACT. ONCE THE TRIBUNAL HOLD THAT THE ASSESSEE IS ENTITLED FOR REGISTRATION UNDER SECTION 12AA OF THE ACT, THE STATUTORY AUTHORITIES ARE REQUIRED TO ISSUE NECESSARY ORDERS GRANTING REGISTRATION UNDER SECTION 12AA OF THE ACT. THOUGH THE TRIBUNAL HAS PASSED AN ORDER ON 16.1.2009 , BUT THE LD. COMMISSIONER OF INCOME - TAX HAS PASSED THE ORDER GRANT ING REGISTRATION UNDER SECTION 12AA OF THE ACT ONLY ON 18.4.2011 AFTER A LAPSE OF MORE THAN TWO YEARS. THOUGHT THE ORDER OF THE TRIBUNAL WAS IN FORCE WHEN THE SET ASIDE ASSESSMENT WAS FRAMED CONSEQUENT TO THE ORDER OF THE TRIBUNAL DATED 6.3.2009, BUT THE ASSESSING OFFICER COULD NOT TAKE COGNIZANCE OF THE GRANT OF REGISTRATION UNDER SECTION 12AA OF THE ACT IN THE ABSENCE OF A PROPER REGISTRATION CERTIFICATE ISSUED BY THE LD. COMMISSIONER OF INCOME - TAX. THE DELAY IN ISSUING CERTIFICATE GRANTING REGISTRATION UNDER SECTION 12AA OF THE ACT IS ON THE PART OF THE LD. COMMISSIONER OF INCOME - TAX, FOR WHICH ASSESSEE SHOULD NOT SUFFER. WE HAVE CAREFULLY EXAMINED THE ASSESSMENT ORDER AND WE FIND THAT THE ASSESSING OFFICER DID NOT RAISE MUCH DISPUTE WITH REGARD TO THE REGISTRATION GRANTED UNDER SECTION 12AA OF THE ACT . H E RATHER ASKED THE ASSESSEE TO FILE EVIDENCE WITH REGARD TO THE APPLICATION OF INCOME OF THE ASSESSEE. WHEN THE MATTER TRAVELLED TO THE LD. CIT(A), THE LD. CIT(A) TOOK A STRONG NOTE WHILE CONFIRMING T HE ASSESSMENT ORDER THAT IN THE ABSENCE OF REGISTRATION CERTIFICATE GRANTING REGISTRATION : - 12 - : UNDER SECTION 12AA OF THE ACT, THE ASSESSING OFFICER HAS RIGHTLY DENIED EXEMPTION UNDER SECTION 11 OF THE ACT. 11 . NO DOUBT, THE ASSESSING OFFICER CANNOT GRANT BENEFIT OF REGISTRATION UNDER SECTION 12AA OF THE ACT IN THE ABSENCE OF PROPER CERTIFICATE ISSUED BY THE LD. COMMISSIONER OF INCOME - TAX IN THIS REGARD, BUT WE CANNOT IGNORE THE FACTUAL ASPECT THAT AT THE TIME OF COMPLETION OF ASSESSMENT, THE TRIBUNAL HAS HELD THAT T HE ASSESSEE IS ENTITLED FOR REGISTRATION UNDER SECTION 12AA OF THE ACT AND THE LD. COMMISSIONER OF INCOME - TAX WAS REQUIRED TO PASS CONSEQUENTIAL ORDER BY ISSUING CERTIFICATE GRANTING REGISTRATION UNDER SECTION 12AA OF THE ACT. BUT, THE LD. COMMISSIONER OF INCOME - TAX ISSUED REGISTRATION AFTER TWO YEARS. THEREFORE, FOR THE LAPSE OF THE REVENUE, THE ASSESSEE SHOULD NOT SUFFER. WE ARE, THEREFORE, OF THE VIEW THAT IN THE INTEREST OF JUSTICE, THE ENTIRE ISSUE IS TO BE RE - EXAMINED BY THE ASSESSING OFFICER AFTER TAKING A NOTE THAT REGISTRATION UNDER SECTION 12AA OF THE ACT HAS ALREADY BEEN GRANTED TO THE ASSESSEE. 12 . ANOTHER DISPUTE WAS ALSO RAISED BEFORE US WHETHER THE REGISTRATION WAS GRANTED W.E.F. INCORPORATION OF THE ASSESSEE - CORPORATION OR FROM THE DATE OF F ILING OF THE APPLICATION FOR REGISTRATION UNDER SECTION 12AA OF THE ACT. FROM THE TRIBUNALS ORDER, IT IS NOT CLEAR FROM WHICH DATE REGISTRATION IS ALLOWED TO THE ASSESSEE THOUGH THE TRIBUNAL HAS CONDONED THE DELAY IN FILING OF THE APPLICATION. IN ANY CA SE, THESE DATES ARE NOT RELEVANT TO THE PRESENT CONTROVERSY OF THE CASE AS THE ASSESSMENT YEARS INVOLVED ARE 2002 - 03 ONWARDS AND THE APPLICATION FOR REGISTRATION UNDER SECTION 12AA OF THE ACT WAS FILED BEFORE 11.7.1988 AS BORNE OUT FROM THE ORDER OF THE LD . COMMISSIONER OF INCOME - TAX GRANTING REGISTRATION UNDER SECTION 12AA OF THE ACT. THE LD. D.R. HAS ALSO CONTENDED THAT REGISTRATION UNDER SECTION 12AA OF THE ACT IS TO BE GRANTED ONLY W.E.F. 18.3.2011, THE DATE OF THE ORDER OF THE LD. COMMISSIONER OF INCO ME - TAX. THIS ARGUMENT OF THE LD. D.R. IS DEVOID OF MERIT BECAUSE REGISTRATION IS ALWAYS GRANTED EITHER FROM THE : - 13 - : DATE OF INCORPORATION OF THE ASSESSEE - TRUST/SOCIETY OR FROM THE DATE OF APPLICATION. THEREFORE, WE DO NOT ENTER INTO THIS CONTROVERSY. IN ANY CASE, DURING THE RELEVANT PREVIOUS YEAR S , THE ASSESSEE - SOCIETY IS ENTITLED FOR BENEFIT OF REGISTRATION UNDER SECTION 12AA OF THE ACT THOUGH PROPER CERTIFICATE WAS GRANTED BY THE LD. COMMISSIONER OF INCOME - TAX ON 18.4.2011. WE ACCORDINGLY SET ASIDE THE OR DER OF THE LD. CIT(A) AND RESTORE THE MATTER TO THE FILE OF THE ASSESSING OFFICER WITH A DIRECTION TO FRAME A N ASSESSMENT DE NOVO IN THE LIGHT OF REGISTRATION GRANTED UNDER SECTION 12AA OF THE ACT. FOR ALLOWING BENEFIT OF EXEMPTION UNDER SECTION 11 OF THE ACT, THE ASSESSING OFFICER MAY MAKE NECESSARY ENQUIRY AS PER PROVISIONS OF THE ACT. 13 . THE ORDER OF THE LD. CIT(A) WITH REGARD TO OTHER ISSUES ON MERIT ARE ALSO SET ASIDE AS THE ASSESSING OFFICER IS DIRECTED TO FRAME ASSESSMENT DE NOVO. THE ASSESSING OFFI CER MAY EXAMINE THE CLAIM OF THE ASSESSEE ON MERIT ALSO. 14 . SO FAR AS THE ISSUE OF CHARGING OF INTEREST UNDER SECTION 220 (2) OF THE ACT IS CONCERNED, IT SHALL ALSO BE RE - EXAMINED BY THE ASSESSING OFFICER IN THE LIGHT OF THE EXPLANATION OF THE ASSESSEE IN SUP PORT OF HIS DEFENSE THAT HE WAS UNDER A BONAFIDE BELIEF THAT HIS ENTIRE INCOME IS EXEMPTED UNDER SECTION 11 OF THE ACT. ACCORDINGLY THE ORDER OF THE LD. CIT(A) ON THIS ISSUE IS SET ASIDE AND THE MATTER IS RESTORED TO THE ASSESSING OFFICER FOR FRESH ADJUDI CATION. 15 . SINCE THE FACTS IN OTHER APPEALS ( ITA NO S . 141, 142, 143 & 144/LKW/2012) ARE ALMOST IDENTICAL EXCEPT QUANTUM, FOLLOWING THE AFORESAID OBSERVATION, WE SET ASIDE THE ORDER OF THE LD. CIT(A) AND RESTORE THE MATTER TO THE FILE OF THE ASSESSING OFFICER W ITH A DIRECTION TO FRAME THE ASSESSMENTS DE NOVO AFTER AFFORDING AN OPPORTUNITY OF BEING HEARD TO THE ASSESSEE AND TO DEC IDE ALL THE ISSUES RAISED IN THE S E APPEALS ON MERIT. : - 14 - : ITA NOS.41, 42, 43 & 44/LKW/2012: BY THE REVENUE: 16 . THESE APPEALS ARE PREFERRED BY T HE REVENUE AGAINST RESPECTIVE ORDER OF THE LD. CIT(A) PERTAINING TO ASSESSMENT YEARS 2002 - 03, 2003 - 04, 2004 - 05 & 2008 - 09 ON A COMMON GROUND THAT THE INTEREST UNDER SECTION 234B OF THE ACT WOULD BE CHARGED ON THE BASIS OF THE RETURNED INCOME WITHOUT LOOKING TO THE FACT THAT EXPLANATION 1 TO SECTION 234B OF THE ACT HAS BEEN AMENDED BY THE FINANCE ACT, 2006 W.E.F. 1.4.2007 AND SINCE THIS AMENDMENT IS OF CLARIFICATORY IN NATURE, IT SHOULD BE APPLIED RETROSPECTIVELY. 17 . THE LD. D.R. HAS INVITED OUR ATTENTION TO THE AMENDMENT IN EXPLANATION 1 TO SECTION 234B OF THE ACT WITH THE SUBMISSION THAT THROUGH THIS AMENDMENT, THE WORD OR USED IN EXPLANATION HAS BEEN REPLACED BY THE WORD AND MEANING THEREBY WHE RE A REGULAR ASSESSMENT IS MADE , THE TAX ON THE TOTAL INCOME DE TERMINED UNDER SUCH REGULAR ASSESSMENT AS REDUCED BY CERTAIN AMOUNT MENTIONED IN CLAUSE 1 TO 5 SHALL BE ASSESSED TAX. THIS AMENDMENT IS OF CLARIFICATORY IN NATURE, THEREFORE, IT SHOULD BE APPLIED TO ALL THE PENDING ASSESSMENTS. THE LD. CIT(A) , WHILE F OLLOWING THE ORDER OF THE TRIBUNAL, HAS NOT APPLIED HIS MIND TO THIS FACT. THEREFORE, HIS ORDER DESERVES TO BE SET ASIDE. 18 . THE LD. COUNSEL FOR THE ASSESSEE, ON THE OTHER HAND, HAS SUBMITTED THAT THE LD. CIT(A) HAS FOLLOWED THE TRIBUNALS ORDER IN ASSESSEE S OWN CASE IN WHICH THE TRIBUNAL HAS HELD THAT INTEREST UNDER SECTION 234B OF THE ACT IS TO BE CALCULATED WITH REFERENCE TO THE TAX AS PER INCOME ACCEPTED UNDER SECTION 143(1) OF THE ACT. THE AMENDMENT IN EXPLANATION 1 TO SECTION 234B OF THE ACT WAS BROUG HT TO STATUTE BY THE FINANCE ACT, 2006 W.E.F. 1.4.2007 . SINCE THE LEGISLATURE HAS GIVEN A SPECIFIC DATE FOR APPLICABILITY OF THE AMENDED EXPLANATION W.E.F. 1.4.2007, IT WOULD ONLY HAVE A PROSPECTIVE EFFECT AND THAT IS FROM ASSESSMENT YEAR 2008 - 09 AND NOT PRIOR TO THAT. : - 15 - : 19 . HAVING GIVEN A THOUGHTFUL CONSIDERATION TO THE RIVAL SUBMISSIONS AND FROM A CAREFUL PERUSAL OF THE ORDERS OF THE LOWER AUTHORITIES AND THE ORDER OF THE TRIBUNAL IN THE ASSESSEES OWN CASE, WE FIND THAT IN ASSESSEES OWN CASE FOR ASSESSMENT Y EARS 1997 - 98, 1999 - 2000, 2001 - 02, 2002 - 03 AND 2003 - 04, THE TRIBUNAL HAS CATEGORICALLY HELD THAT INTEREST UNDER SECTION 234B OF THE ACT IS TO BE CALCULATED WITH REFERENCE TO THE TAX AS PER INCOME ACCEPTED UNDER SECTION 143(1) OF THE ACT AND THE LD. CIT(A) H AS FOLLOWED THE ORDER OF THE TRIBUNAL WHILE ADJUDICATING THE IMPUGNED ISSUE. ADMITTEDLY THE AMENDMENT IN EXPLANATION WAS BROUGHT ON STATUTE BY THE FINANCE ACT, 2006 W.E.F. 2008 - 09, THEREFORE, THIS EXPLANATION WOULD NOT APPLY TO THE ASSESSMENT YEAR PRIOR T O ASSESSMENT YEAR 2008 - 09 AS THE AMENDMENT AFFECT S THE INTEREST OF THE ASSESSEE. WE, THEREFORE, DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD. CIT(A) PERTAINING TO ASSESSMENT YEAR 2002 - 03 TO 2004 - 05. 20 . IN ASSESSMENT YEAR 2008 - 09, THE LD. CIT(A) HAS NOT E XAMINED THE IMPUGNED ISSUE IN THE LIGHT OF THE AMENDMENT BROUGHT IN EXPLANATION 1 TO SECTION 234B OF THE ACT THOUGH IT WAS APPLICABLE IN THAT YEAR. HE HAS SIMPLY RELIED UPON THE ORDER OF THE TRIBUNAL WHICH PERTAINS TO ASSESSMENT YEAR UPTO 2003 - 04 BEFORE T HE AMENDMENT IN EXPLANATION 1 TO SECTION 234B OF THE ACT. SINCE THE LD. CIT(A) HAS NOT APPLIED HIS MIND TO THE AMENDED PROVISIONS OF EXPLANATION 1 TO SECTION 234B OF THE ACT, WE SET ASIDE HIS ORDER AND RESTORE THE MATTER TO HIS FILE TO ADJUDICATE THE ISSU E AFRESH IN THE LIGHT OF THIS AMENDMENT IN EXPLANATION 1 TO SECTION 234B OF THE ACT. ACCORDINGLY, ALL THE APPEALS OF THE REVENUE ARE DISPOSED OF. C.O. NO S .26, 27 & 28/LKW/2012 : BY THE ASSESSEE: 21 . CROSS OBJ ECTIONS FILED BY THE ASSESSEE F O R THE ASSESSMENT YE AR S 2002 - 03 TO 2004 - 05 ARE IN SUPPORT OF THE ORDERS OF THE LD. CIT(A) WHO HAS DELETED THE INTEREST CHARGED UNDER SECTION 234B OF THE ACT. : - 16 - : 22 . SINCE WE HAVE CONFIRMED THE ORDER OF THE LD. CIT(A) ON THIS ISSUE WHILE DE CIDING THE APPEALS OF THE REVENUE HEREINABOV E, THIS GROUND DOES NOT SURVIVE. 23 . THROUGH THESE CROSS OBJECTIONS, THE ASSESSEE HAS ALSO RE - AGITATED THE GROUNDS RAISED IN ITS APPEALS WITH REGARD TO THE CLAIM OF EXEMPTION UNDER SECTION 11 OF THE ACT. THIS ISSUE HAS ALREADY BEEN ADJUDICATED BY US IN ASSE SSEES APPEAL AND THE MATTER IS RESTORED BACK TO THE FILE OF THE ASSESSING OFFICER WITH A DIRECTION TO EXAMINE THE CLAIM OF EXEMPTION UNDER SECTION 11 OF THE ACT RAISED BY THE ASSESSEE IN THE LIGHT OF THE FACT THAT REGISTRATION UNDER SECTION 12AA OF THE AC T IS GRANTED TO THE ASSESSEE. THEREFORE, THIS GROUND DOES NOT SURVIVE. ACCORDINGLY, CROSS OBJECTIONS OF THE ASSESSEE FOR ASSESSMENT YEAR 2002 - 03 TO 2004 - 05 ARE DISMISSED AS IN F RUCTUOUS. 24 . THROUGH CROSS OBJECTION NO.29/LKW/2012, THE ASSESSEE HAS RAISED TWO GROUNDS ONE IS WITH REGARD TO THE CLAIM OF EXEMPTION UNDER SECTION 11 OF THE ACT AND THE OTHER IS WITH REGARD TO THE DELETION OF INTEREST CHARGED UNDER SECTION 234B OF THE ACT. 25 . WITH REGARD TO THE CLAIM OF EXEMPTION UNDER SECTION 11 OF THE ACT, THE MATTER HAS ALREADY BEEN SENT BACK TO THE FILE OF THE ASSESSING OFFICER FOR RE - ADJUDICATION OF THE ISSUE IN THE LIGHT OF THE FACT THAT REGISTRATION UNDER SECTION 12AA OF THE ACT IS GRANTED TO THE ASSESSEE. 26 . WITH REGARD TO OTHER GROUND OF DELETION OF INTEREST CHARG ED UNDER SECTION 234B OF THE ACT, WHILE DECIDING THE APPEAL OF THE REVENUE HEREINABOVE WE HAVE ALREADY SET ASIDE THE MATTER TO THE LD. CIT(A) WITH A DIRECTION TO RE - EXAMINE THE CLAIM OF CHARGING OF INTEREST UNDER SECTION 234B OF THE ACT IN THE LIGHT OF THE AMENDMENT BROUGHT IN EXPLANATION 1 TO SECTION 234B OF THE ACT. THEREFORE, THIS GROUND HA S ALSO BECOME INFRUCTUOUS. : - 17 - : 27 . ACCORDINGLY CROSS OBJECTIONS OF THE ASSESSEE ARE INFRUCTUOUS AND WE DISMISS THE SAME. 28 . IN THE RESULT, THE APPEALS OF THE ASSESSEE IN ITA NO S . 140, 141, 142, 143 & 144/LKW/2012 ARE ALLOWED FOR STATISTICAL PURPOSES, THE APPEALS OF THE REVENUE IN ITA NO S . 41, 42 & 43 /LKW/2012 ARE DISMISSED AND ITA NO. 44/LKW/2012 IS PARTLY ALLOWED FOR STATISTICAL PURPOSES AND THE CROSS OBJECTIONS OF THE ASSESSEE IN C.O. NO S .26, 27, 28 & 29/LKW/2012 ARE DISMISSED AS INFRUCTUOUS. ORDER PRONOUNCED IN THE OPEN COURT ON 2 5.5. 2 012. S D/ - S D/ - [ S. V. MEHROTRA ] [ S UNIL KUMAR Y ADAV ] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 25.5.2012 JJ: 18 - 2205 COPY FORWARDED TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT(A) 4 . CIT 5 . DR ASSISTANT REGISTRAR