DCIT(E),Circle-2, Kolkata, Kolkata V. M/s West Bengal Trade Promotion Org., Kolkata

ITA 156/KOL/2017

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 6038 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 5 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-07-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2011-2012
• Appeal Filed On: 31-01-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SAURABH KUMAR
• Assessee Lawyers: SAURABH BAGARIA
• Keywords: Capital asset; Business income; Charitable institution; Retrospective amendment; Benefit of exemption; Reassessment proceedings
• Section: 43B; 12A; 12AA; 147; 148; 11

Judgement Text

, C , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH: KOL KATA ( ) BEFORE . , /AND . . , ) [BEFORE SHRI J. SUDHAKAR REDDY, AM & SHRI A. T. VA RKEY, JM] I.T.A. NO. 156/KOL/2017 ASSESSMENT YEARS: 2011-12 DEPUTY COMMISSIONER OF INCOME-TAX(E), CIRCLE-2, KOLKATA. VS. M/S. WEST BENGAL TRADE PROMOTION ORG. (PAN: AAACW6096P) APPELLANT RESPONDENT DATE OF HEARING 28.06.2018 DATE OF PRONOUNCEMENT 05.07.2018 FOR THE APPELLANT SHRI SAURABH KUMAR, ADDL. CIT, SR . DR FOR THE RESPONDENT SHRI SAURABH BAGARIA, ADVOCATE ORDER PER SHRI A.T.VARKEY, JM THIS APPEAL PREFERRED BY THE REVENUE IS AGAINST THE ORDER OF THE LD. CIT(A)-25, KOLKATA DATED 22.11.2016 FOR ASSESSMENT YEAR 2011-1 2. 2. THE MAIN QUESTION THAT HAS BEEN RAISED BY THE RE VENUE IS AS TO WHETHER INSERTION OF 1 ST PROVISO TO SUB-SECTION (2) OF SECTION 12A OF THE IN COME-TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) WHICH WAS INSERTED BY FINANCE ACT, 2014 W.E.F. 01.10.2014 IS RETROSPECTIVE OR NOT, WHEN THE FACT REMAINS THAT THE ASSESSMENT O RDER WAS PASSED ON 28.03.2014. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE CO MPANY IS A CONSORTIUM OF THE CENTRAL GOVERNMENT [MINISTRY OF COMMERCE & INDUSTRY - THROU GH THE INDIAN TRADE PROMOTION ORGANISATION], THE STATE GOVERNMENT [THROUGH THE WE ST BENGAL INDUSTRIAL DEVELOPMENT CORPORATION, DEPARTMENT OF COMMERCE & INDUSTRIES], AND THE KOLKATA MUNICIPAL CORPORATION - THE OBJECTS BEING TO FOSTER THE PROMO TION OF TRADE AND 'COMMERCE. FOR IMPLEMENTATION PURPOSE - IT IS INCORPORATED AS A CO MPANY UNDER SECTION 25 OF THE COMPANIES ACT, 1956, I.E., THE OBJECTS OF THE COMPA NY ARE TO PROMOTE THE OBJECTS OF THE NATURE SPECIFIED IN THE SECTION 25 SUB-SECTION (1), CLAUSE (A) OF THE SAID ACT, AND THAT IT WILL 2 ITA NO.156/KOL/2017 WEST BENGAL TRADE PROMOTION ORG.., AY 2011-12 2 APPLY ITS PROFITS, IF ANY, OR OTHER INCOME IN PROMO TING ITS OBJECTS AND TO PROHIBIT THE PAYMENT OF ANY DIVIDEND TO ITS MEMBERS. IN THE ASSESSMENT, THE AO ASSESSED THE ASSESSEE AS A COMPANY UNDER CHAPTER IV OF THE ACT - I.E., AS A CO MPANY WITH PROFIT MOTIVE/BUSINESS INCOME. THOUGH NOT MENTIONED IN THE ASSESSMENT ORDE R, IT IS OBVIOUS THAT THIS WAS BECAUSE OF ABSENCE OF REGISTRATION U/S 12AA [FOR THIS AY 20 11-12]. THUS, WHILE BEING ASSESSED VIS- -VIS COMPUTATION UNDER CHAPTER IV, SOME DISALLOWAN CES WERE MADE AND THEREAFTER THE AO ASSESSED THE TOTAL INCOME OF ASSESSEE AT RS.2,12,13 ,110/-. AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A) WHO DELETED THE ADD ITION. AGGRIEVED, REVENUE IS BEFORE US. 4. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. WE NOTE THAT THE LD. CIT(A) HAS HELD THAT THE 1 ST PROVISO TO SEC. 12A(2) IS RETROSPECTIVE IN OPERATION BY RELYING ON THE COORDI NATE BENCH DECISION OF THIS TRIBUNAL IN SREE SREE RAMKRISHNA SAMITY VS. DCIT (2015) 44 ITR (TRIB) 678 (ITAT, KOL). SINCE THE LD. CIT(A) HAS RELIED ON THIS TRIBUNALS DECISION W E WOULD REPRODUCE THE OPERATIVE PORTION OF THE ORDER WHICH IS AS UNDER: 13. IT IS RELEVANT AT THIS JUNCTURE TO GET INTO T HE AMENDMENT BROUGHT IN SECTION 12A BY FINANCE ACT 2014 WITH EFFECT FROM 1.10.2014 BY WAY OF INSER TION OF FIRST PROVISO TO SECTION 12A(2) OF THE ACT WHICH IS REPRODUCED BELOW FOR THE SAKE OF CONVE NIENCE :- 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 RELA TION 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 T O THE TRUST OR INSTITUTION UNDER SECTION 12AA, THEN, THE PROVISIONS OF SECTIONS 11 AND 12 SH ALL APPLY IN RESPECT OF ANY INCOME DERIVED FROM PROPERTY HELD UNDER TRUST OF ANY ASSESSMENT YE AR PRECEDING THE AFORESAID ASSESSMENT YEAR, FOR WHICH ASSESSMENT PROCEEDINGS ARE 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 S HALL BE TAKEN BY THE ASSESSING OFFICER IN CASE OF SUCH TRUST OR INSTITUTION FOR ANY ASSESSMEN T YEAR PRECEDING THE AFORESAID ASSESSMENT YEAR ONLY FOR NON-REGISTRATION OF SUCH TRUST OR INS TITUTION FOR THE SAID ASSESSMENT YEAR: PROVIDED ALSO THAT PROVISIONS CONTAINED IN THE FIRS T AND SECOND PROVISO SHALL NOT APPLY IN CASE OF ANY TRUST OR INSTITUTION WHICH WAS REFUSED REGIS TRATION OR THE REGISTRATION GRANTED TO IT WAS CANCELLED AT ANY TIME UNDER SECTION 12AA. 3 ITA NO.156/KOL/2017 WEST BENGAL TRADE PROMOTION ORG.., AY 2011-12 3 14. 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 REASSESSMEN T PROCEEDINGS GOT COMMENCED PURSUANT TO ISSUANCE OF NOTICE U/S 148 ON 30.3.2010 AS STATED S UPRA. ADMITTEDLY, THE OBJECTS AND ACTIVITIES OF THE TRUST HAD REMAINED THE SAME IN PRECEDING ASSESS MENT 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 DEFINIT ION OF THE TERM ASSESSMENT IN SECTION 2(8) OF THE ACT, WHEREIN IT IS DEFINED AS ASSESSMENT INCLU DES 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. 15. THE SECOND PROVISO TO SECTION 12A(2) ALSO PROVI DES THAT NO ACTION U/S 147 OF THE ACT SHALL BE TAKEN MERELY FOR NON-REGISTRATION OF TRUST OR INSTI TUTION. 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 ON LY BROUGHT THIS PROVISO TO PREVENT GENUINE HARDSHIP THAT COULD BE CAUSED ON THE ASSESSEE DUE T O 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. 16. 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 CO MMISSIONER U/S 12AA OF THE ACT. THIS ALSO GOES TO PROVE THAT THE FIRST AND SECOND PROVISO SHA LL BE MADE APPLICABLE FOR THE TRUSTS FOR EARLIER ASSESSMENT YEARS ALSO WHO HAD NOT APPLIED FOR REGIS TRATION U/S 12AA OF THE ACT AT ALL. 17. WE HOLD THAT THE REGISTRATION OF TRUST UNDER SE CTION 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 2 14 (SC). DRAWING ANALOGY FROM THIS JUDGEMENT, THE LOGICAL INFERENCE COULD BE THAT AS L ONG AS THE OBJECTS WERE CHARITABLE IN NATURE IN THE EARLIER YEARS AND IN THE YEAR IN WHICH REGIS TRATION 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 REG ARD TO THE EXISTENCE OF THE ASSESSEE SOCIETY FOR CHARITABLE PURPOSES IN THE ASSESSMENT YEARS UND ER APPEAL. 18. 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 S AKE OF CONVENIENCE (PAGE 38) :- PARA 8 APPLICABILITY OF THE REGISTRATION GRANTED TO A TRUST OR INSTITUTION TO EARLIER YEARS PARA 8.2 NON-APPLICATION OF REGISTRATION FOR THE PE RIOD PRIOR TO THE YEAR OF REGISTRATION CAUSED GENUINE HARDSHIP TO CHARITABLE ORGANIZATIONS. DUE T O 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 DE LAY IN SEEKING REGISTRATION WAS NOT AVAILABLE. 19. THIS CLEARLY GOES TO PROVE THAT THE FIRST PROV ISO TO SECTION 12A(2) WAS BROUGHT IN THE STATUTE ONLY AS A RETROSPECTIVE EFFECT WITH A VIEW NOT TO A FFECT GENUINE CHARITABLE TRUSTS AND SOCIETIES CARRYING ON GENUINE CHARITABLE OBJECTS IN THE EARLI ER YEARS AND SUBSTANTIVE CONDITIONS STIPULATED IN SECTION 11 TO 13 HAVE BEEN DULY FULFILLED BY THE SAID TRUST. THE BENEFIT OF RETROSPECTIVE 4 ITA NO.156/KOL/2017 WEST BENGAL TRADE PROMOTION ORG.., AY 2011-12 4 APPLICATION ALONE COULD BE THE INTENTION OF THE LEG ISLATURE AND THIS POINT IS FURTHER STRENGTHENED BY THE EXPLANATORY NOTES TO FINANCE (NO. 2) ACT, 20 14 ISSUED BY THE CENTRAL BOARD OF DIRECT TAXES VIDE ITS CIRCULAR NO. 01 / 2015 DATED 21.1.20 15. 20. APPARENTLY THE STATUTE PROVIDES THAT REGISTRATI ON ONCE GRANTED IN SUBSEQUENT YEAR, THE BENEFIT OF THE SAME HAS TO BE APPLIED IN THE EARLIE R ASSESSMENT YEARS FOR WHICH ASSESSMENT PROCEEDINGS ARE PENDING BEFORE THE LEARNED AO, UNLE SS THE REGISTRATION GRANTED EARLIER IS CANCELLED OR REFUSED FOR SPECIFIC REASONS. THE STAT UTE ALSO GOES ON TO PROVIDE THAT NO ACTION U/S 147 COULD BE TAKEN BY THE AO MERELY FOR NON-REGISTR ATION OF TRUST FOR EARLIER YEARS. 21. 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 TH E 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 COMM ONLY UNDERSTOOD DOES NOT INCLUDE ANY DONATION SPECIFICALLY MEANT FOR UTILIZATION FOR ACQ UIRING, CONSTRUCTING A CAPITAL ASSET, AS IS THE CASE HERE. FURTHER SECTION 2(24) HAD UNDERGONE AMEN DMENT 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 ITR (ST.) 173, WHEREIN PARAGRAPHS 24 AND 25 CLEARLY DEFINE THE SCO PE OF THE AMENDMENT WHEREIN IN PARAGRAPH 25(I) , THE CONCLUDING SENTENCE IS AS UNDER:- CONTRIBUTIONS RECEIVED WITH A SPECIFIC DIRECTION T HAT THEY WILL FORM PART OF THE CORPUS OF THE TRUST OR DISTRIBUTION WILL, HOWEVER, NOT BE REGARDE D AS INCOME. 22. THUS THE RELEVANT CLAUSE DEFINING INCOME IN SEC TION 2(24)(IIA) AS INTRODUCED WITH EFFECT FROM 1.4.1973 WAS CLEARLY NOT INTENDED TO COVER CONTRIBU TIONS / 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 I NCOME 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 TAXATIO N TO RECEIPTS WHICH ARE LIABLE TO TAXATION BUT FOR THE PROVISION GRANTING EXEMPTION. 23. WE HOLD THAT IT IS AN ESTABLISHED POSITION IN L AW THAT A PROVISO WHICH IS INSERTED TO REMEDY UNINTENDED CONSEQUENCES AND TO MAKE THE PROVISION W ORKABLE, 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 A S RETROSPECTIVE IN OPERATION, SO THAT A REASONABLE INTERPRETATION CAN BE GIVEN TO THE SECTI ON 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 SEC TION 12A PROVIDED FOR REGISTRATION U/S 12AA AS A PRE-CONDITION FOR APPLICABILITY OF SECTIO N 12A. RELIANCE IN THIS REGARD IS PLACED ON THE FOLLOWING DECISIONS :- ALLIED MOTORS P LTD VS CIT REPORTED IN (1997) 224 I TR 677 (SC) JUDGEMENT BY THREE JUDGES OF THE SUPREME COURT (PAGE 686). THE DEPARTMENTAL UNDERSTANDING ALSO APPEARS TO BE T HAT SECTION 43B, THE PROVISO AND EXPLANATION 2 HAVE TO BE READ TOGETHER AS EXPRESSIN G THE TRUE INTENTION OF SECTION 43B. 5 ITA NO.156/KOL/2017 WEST BENGAL TRADE PROMOTION ORG.., AY 2011-12 5 EXPLANATION 2 HAS BEEN EXPRESSLY MADE RETROSPECTIVE . THE FIRST PROVISO, HOWEVER, CANNOT BE ISOLATED FROM EXPLANATION 2 AND THE MAIN BODY OF SE CTION 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 T HIS PROVISO THE AMBIT OF SECTION 43B BECOME UNDULY WIDE BRINGING WITHIN ITS SCOPE THOSE PAYMENT S, WHICH WERE NOT INTENDED TO BE PROHIBITED FROM THE CATEGORY OF PERMISSIBLE DEDUCTIONS. IN THE CASE OF GOODYEAR INDIA LTD VS STATE OF HARY ANA (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 MA NIFEST OBJECT AND PURPOSE OF THE ACT. AS OBSERVED BY G.P.SINGH IN HIS PRINCIPLES OF STATU TORY INTERPRETATION, 4TH EDN., PAGE 291, IT IS WELL SETTLED THAT IF A STATUTE IS CURATIVE OR ME RELY 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 RETR OSPECTIVE. 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 HONBLE CALCUTTA HIGH COURT IN THE CONTEXT OF RETRO SPECTIVE APPLICABILITY OF AMENDMENT TO SECTION 40(A)(IA) OF THE ACT HELD AS BELOW:- THE SUPREME COURT IN THE CASE OF ALLIED MOTORS P L TD AND ALSO IN THE CASE OF ALOM EXTRUSIONS LTD HAS ALREADY DECIDED THAT THE AFORESAID PROVISIO N 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 SECTI ON AS WELL. CIT VS VATIKA TOWNSHIP P LTD REPORTED IN (2014) 367 ITR 466 (SC) FIVE JUDGES DECISION OF THE SUPREME COURT (PAGE 487): 33.WE WOULD ALSO LIKE TO POINT OUT, FOR THE SAKE O F COMPLETENESS, THAT WHERE A BENEFIT IS CONFERRED BY A LEGISLATION, THE RULE AGAINST A RETR OSPECTIVE CONSTRUCTION IS DIFFERENT. IF A LEGISLATION CONFERS A BENEFIT ON SOME PERSONS BUT W ITHOUT INFLICTING A CORRESPONDING DETRIMENT ON SOME OTHER PERSON OR ON THE PUBLIC GENERALLY, AN D WHERE TO CONFER SUCH BENEFIT APPEARS TO HAVE BEEN THE LEGISLATORS OBJECT, THEN THE PRESUMPT ION WOULD BE THAT SUCH A LEGISLATION, GIVING IT A PURPOSIVE CONSTRUCTION, WOULD WARRANT IT TO BE GI VEN A RETROSPECTIVE EFFECT. THIS EXACTLY IS THE JUSTIFICATION TO TREAT PROCEDURAL PROVISIONS AS RET ROSPECTIVE. IN GOVERNMENT OF INDIA VS INDIAN TOBACCO ASSOCIATION REPORTED IN (2005) 7 SCC 396, T HE 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 FAIRN ESS, TO HOLD THAT A STATUTE WAS RETROSPECTIVE IN NATURE, WAS APPLIED IN THE CASE OF VIJAY VS STAT E OF MAHARASHTRA REPORTED IN (2006) 6 SCC 289. IT WAS HELD THAT WHERE A LAW IS ENACTED FOR TH E BENEFIT OF COMMUNITY AS A WHOLE, EVEN IN THE ABSENCE OF A PROVISION THE STATUTE MAY BE HELD TO B E RETROSPECTIVE IN NATURE. HOWEVER, WE ARE CONFRONTED WITH ANY SUCH SITUATION HERE. 34. IN SUCH CASES, RETROSPECTIVITY IS ATTACHED TO B ENEFIT THE PERSONS IN CONTRADISTINCTION TO THE PROVISION IMPOSING SOME BURDEN OR LIABILITY WHERE T HE PRESUMPTION ATTACHES TOWARDS PROSPECTIVITY. IN THE INSTANT CASE, THE PROVISO ADD ED TO SECTION 113 OF THE ACT IS NOT BENEFICIAL TO THE ASSESSEE. ON THE CONTRARY, IT IS A PROVISION WH ICH 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 OPE RATION IS A FUNDAMENTAL RULE OF LAW THAT NO 6 ITA NO.156/KOL/2017 WEST BENGAL TRADE PROMOTION ORG.., AY 2011-12 6 STATUTE SHALL BE CONSTRUED TO HAVE A RETROSPECTIVE OPERATION UNLESS SUCH A CONSTRUCTION APPEARS VERY CLEARLY IN THE TERMS OF THE ACT OR ARISES BY N ECESSARY 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 (S C) 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 EF FECT OF TRANSFER OF ASSETS SO FAR AS COMPUTATION OF INCOME OF THE ASSESSEE IS CONCERNED, THEN BEARIN G THAT PURPOSE IN MIND, WE SHOULD FIND OUT THE INTENTION FROM THE LANGUAGE USED BY THE LEGISLA TURE AND IF STRICT LITERAL CONSTRUCTION LEADS TO AN ABSURD RESULT, I.E., RESULT NOT INTENDED TO BE S UBSERVED BY THE OBJECT OF THE LEGISLATION FOUND IN THE MANNER INDICATED BEFORE, THEN ANOTHER CONSTRUCT ION IS POSSIBLE APART FROM STRICT LITERAL CONSTRUCTION THEN THAT CONSTRUCTION SHOULD BE PREFE RRED TO THE STRICT LITERAL CONSTRUCTION. 24. WE ALSO HOLD THAT THOUGH EQUITY AND TAXATION AR E OFTEN STRANGERS , ATTEMPTS SHOULD BE MADE THAT THESE DO NOT REMAIN ALWAYS SO AND IF A CONSTRU CTION RESULTS IN EQUITY RATHER THAN IN INJUSTICE, THEN SUCH CONSTRUCTION SHOULD BE PREFERR ED TO THE LITERAL CONSTRUCTION. IT IS ONLY ELEMENTARY THAT A STATUTORY PROVISION IS TO BE INTE RPRETED UT RES MAGIS VALEAT QUAM PEREAT, I.E TO MAKE IT WORKABLE RATHER THAN REDUNDANT. APPLYING TH IS LEGAL MAXIM, IT WOULD BE JUST AND FAIR TO HOLD THAT THE AMENDMENT IN SECTION 12A IS BROUGHT I N THE STATUTE TO CONFER BENEFIT OF EXEMPTION U/S 11 OF THE ACT ON THE GENUINE TRUSTS WHICH HAD N OT 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(EXEMPTI ONS). 25. WE HOLD THAT THE ARGUMENTS OF THE LEARNED AR TH AT, 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 ASSESS EE 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 TA KE THE CHARACTER OF CORPUS DONATIONS AS THEY ARE MEANT FOR SPECIFIC PURPOSES AND ACCORDINGL Y 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, GEN UINITY OF THE DONORS AND ITS UTILIZATION IN THE REMAND PROCEEDINGS. HENCE IN ANY CASE, A RECEIPT WH ICH IS BY BIRTH, CAPITAL IN NATURE, CANNOT CHANGE ITS CHARACTER MERELY FOR WANT OF REGISTRATIO N 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 CREDI TED 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 SOCIETY CANNOT BE BROUGHT TO TAX IN THE ASSESSMENT. 26. WE HOLD THAT SINCE THE ONLY REASON FOR DENIAL O F EXEMPTION U/S 11 WAS ABSENCE OF REGISTRATION U/S 12AA (WHICH WAS GRANTED TO ASSESSE E 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 AVAILABL E AND FOR ALL THE YEARS, THE BENEFIT OF EXEMPTION SHOULD BE AVAILABLE ON THE DATE OF REGIST RATION AS ALL THE ASSESSMENTS WERE PENDING AS SHOWN ABOVE. IN THIS CONNECTION, IT REQUIRES MEN TION SPECIFICALLY THAT ALL THE RECEIPTS OF THE DONATION WERE PROVED ON ENQUIRY TO HAVE BEEN RECEIV ED FROM THE CLAIMED DONORS AND UTILIZED FOR THE SPECIFIC PURPOSE (CONSTRUCTION OF OLD AGE H OME) FOR WHICH THEY WERE RECEIVED. 7 ITA NO.156/KOL/2017 WEST BENGAL TRADE PROMOTION ORG.., AY 2011-12 7 27. IN CONCLUSION, WE HOLD THAT THE INSERTION OF TH E PROVISO TO SECTION 12A(2) OF THE ACT HAS TO BE CONSTRUED AS RETROSPECTIVE IN OPERATION. 5. WE NOTE THAT THE ASSESSEE BEFORE US HAS GOT REGI STRATION FROM LD. CIT(E) U/S. 12AA OF THE ACT VIDE ORDER DATED 03.05.2013 W.E.F. 01.04 .2012. THE QUESTION OF RETROSPECTIVE OPERATION OF 1 ST PROVISO TO SUB-SECTION (2) OF SECTION 12A OF THE A CT HAS BEEN ANSWERED AS RETROSPECTIVE IN OPERATION BY THE LD. CIT(A) AFTER TAKING NOTE OF THE ORDER OF COORDINATE BENCHS DECISION OF THIS TRIBUNAL IN SREE SREE RAMK RISHNA SAMITY (SUPRA) WHEREIN THE TRIBUNAL HAD HELD AT PARA 27 THAT THE INSERTION OF THE PROVISO TO SEC. 12A(2) OF THE ACT HAS TO BE CONSTRUED RETROSPECTIVE IN OPERATION . WE ALSO NOTE THAT THE ASSESSEE HAS ALSO BEEN ACCORDED APPROVAL U/S. 10(23)(C)(IV) BY ORDER OF LD . CCIT-3, KOLKATA DATED 09.01.2014. IT IS WELL SETTLED THAT THE LD. CIT(A) HAS CO-TERMINUS POWER AS ENJOYED BY THE AO WHILE DECIDING THE APPEAL AGAINST AN ASSESSMENT ORDER. TH EREFORE, EVEN THOUGH THE ASSESSMENT ORDER HAS BEEN PASSED ON 28.03.2014, FOR THE ENDS O F JUSTICE AND FAIR PLAY AND TAKING INTO CONSIDERATION THE FACT THAT THE ASSESSEE IS BASICAL LY A CONSORTIUM OF STATE GOVT., CENTRAL GOVT AND MUNICIPAL CORPORATION WHICH WAS INCORPORAT ED AS A COMPANY U/S. 25 OF THE COMPANIES ACT, 1956 WITH THE PURPOSE TO PROMOTE THE OBJECTIVES OF THE NATURE SPECIFIED IN SECTION 25(1), CLAUSE (A) OF THE STATE ACT AND IT I S PERTINENT TO NOTE THAT THAT IT WILL APPLY ITS PROFIT IF ANY OR OTHER INCOME IN PROMOTING ITS OBJE CTS AND IT PROHIBITS THE PAYMENT OF ANY DIVIDEND TO ITS MEMBERS. THUS, THE LD. CIT(A) HAS RIGHTLY NOTED THAT THE ASSESSEES ACTIVITIES ARE FOR CHARITABLE PURPOSES. THEREFORE, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD. CIT(A) IN THIS REGARD AND WE DISMISS THE AP PEAL OF THE REVENUE. THUS WE FIND THAT THE LD. CIT(A) HAS RIGHTLY HELD THAT THE BENEFIT OF GRANT OF REGISTRATION U/S. 12AA OF THE ACT ALSO NEED TO BE EXTENDED TO AY 2011-12 AND, THEREF ORE, WE CONFIRM THE ORDER OF LD. CIT(A) ON THIS ISSUE. 6. GROUND NOS. 2 AND 3 ARE REGARDING THE DELETION O F ADDITION OF RS. 4 LACS IN RESPECT OF DISALLOWANCE OF EXPENDITURE MADE ON ACCOUNT OF AMOR TIZED LEASE RENT PAYMENT AND DISALLOWANCE MADE OF RS.19,40,000/- ON ACCOUNT OF D EPRECIATION ON LEASEHOLD LAND. SINCE 8 ITA NO.156/KOL/2017 WEST BENGAL TRADE PROMOTION ORG.., AY 2011-12 8 WE UPHELD THE DIRECTION OF THE LD. CIT(A) TO EXTENT THE BENEFIT OF GRANT OF REGISTRATION U/S 12AA OF THE ACT TO THIS AY 2011-12 AND, THEREFORE, THE ASSESSEE IS ELIGIBLE TO CLAIM EXEMPTION OF ITS INCOME U/S. 11 OF THE ACT. THE EX PENDITURE INCURRED BY THE ASSESSEE WOULD BE TREATED AS APPLICATION OF INCOME FOR CHARITABLE OBJECTS, AS THE INCURRENCE OF EXPENDITURE FOR CHARITABLE OBJECTS HAS NOT BEEN DISPUTED BY THE REVENUE. THEREFORE, WE DO NOT FIND ANY MERIT IN THESE GROUNDS OF APPEAL AND SO STAND DISMI SSED. 7. IN THE RESULT, APPEAL OF REVENUE IS DISMISSED. ORDER IS PRONOUNCED IN THE OPEN COURT ON 5 TH JULY, 2018. SD/- SD/- (J. SUDHAKAR REDDY) (ABY. T. VARKEY) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 5TH JULY, 2018 JD(SR.P.S.) COPY OF THE ORDER FORWARDED TO: 1. APPELLANT DCIT (E), CIRCLE-2, KOLKATA. 2 RESPONDENT M/S. WEST BENGAL TRADE PROMOTION ORG . 23, ABANINDRANATH THAKUR SARANI, KOLKATA-700 017. 3. THE CIT(A)-25, KOLKATA - (SENT THROUGH E-MAIL) 4. 5. CIT , KOLKATA DR, ITAT, KOLKATA. (SENT THROUGH E-MAIL) / TRUE COPY, BY ORDER, SR. PVT. SECRETARY