Sri Ramkrishna Samity, Siliguri V. D.C.I.T.Cir - 2,Siliguri, Siliguri

ITA 1680/KOL/2012

• Counselvise Citation: 168023514 RSA 2012
• Duration Of Justice: 2 year(s) 10 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-10-2015
• Appeal Filed By: Assessee
• Bench Allotted: C
• Next Hearing Date: 07-09-2015
• Assessment Year: 2003-2004
• Appeal Filed On: 19-11-2012
• Court: TRIBUNAL
• Department Lawyers: DR A DHIR KR BAR CIT LD D
• Assessee Lawyers: ANANDA SEN LD
• Keywords: Capital asset; Charitable institution; Retrospective amendment; Capital receipt; Benefit of exemption; Reassessment proceedings
• Section: 147; 148; 12; 11; 43B; 143(3); 12A; 12AA

Judgement Text

ITA NOS. 1680-1685/KOL/12--C-AM SREE SREE RAMKRSIHNA SAMITY 1 IN THE INCME TAX APPELLATE TRIBUNAL, C BENCH, KO LKATA BEFORE : SHRI MAHAVIR SINGH,JUDICIAL MEMBER, AND SHRI M. BALAGANESH, ACCOUNTANT MEMBER ITA NO. 1680 / 2012 ASST YEAR 2003-04 ITA NO. 1681 / 2012 ASST YEAR 2004-05 ITA NO. 1682 / 2012 ASST YEAR 2005-06 ITA NO. 1683 / 2012 ASST YEAR 2006-07 ITA NO. 1684 / 2012 ASST YEAR 2007-08 ITA NO. 1685 / 2012 ASST YEAR 2008-09 SREE SREE RAMKRISHNA SAMITY VS. D.C.I.T, CIR-2 , SILIGURI PAN: AACAS 9103M (APPELLANT) (RESPON DENT) FOR THE APPELLANT/ASSESSEE: SHRI ANANDA SEN, ADVOCATE, LD.AR FOR THE RESPONDENT/DEPARTMENT: DR. A DHIR KR. BAR, CIT, LD.DR DATE OF HEARING: 07-09-2015 DATE OF PRONOUNCEMENT: 9-10-201 5 ORDER SHRI M.BALAGANESH, AM THE ORDER OF ASSESSMENT WAS FRAMED BY THE LEARNE D AO U/S 143(3) READ WITH SECTION 147 OF THE INCOME TAX ACT (HEREINAFTER REFE RRED TO AS THE ACT). THESE APPEALS OF THE ASSESSEE ARISE OUT OF THE ORDER OF THE LEARN ED CITA IN THE FOLLOWING MANNER:- APPEAL NO. 26/CIT(A)/SLG/10-11 DATED 25.7.2012 FOR ASST YEAR 2003-04 APPEAL NO. 27/CIT(A)/SLG/10-11 DATED 25.7.2012 FOR ASST YEAR 2004-05 APPEAL NO. 28/CIT(A)/SLG/10-11 DATED 25.7.2012 FOR ASST YEAR 2005-06 APPEAL NO. 29/CIT(A)/SLG/10-11 DATED 25.7.2012 FOR ASST YEAR 2006-07 APPEAL NO. 30/CIT(A)/SLG/10-11 DATED 25.7.2012 FOR ASST YEAR 2007-08 APPEAL NO. 31/CIT(A)/SLG/10-11 DATED 25.7.2012 FOR ASST YEAR 2008-09 ITA NOS. 1680-1685/KOL/12--C-AM SREE SREE RAMKRSIHNA SAMITY 2 2. AS THE ISSUES INVOLVED ARE IDENTICAL IN NATURE , THEY ARE DISPOSED OFF TOGETHER BY WAY OF A COMMON ORDER FOR THE SAKE OF CONVENIENCE. 3. THE BRIEF FACTS OF THESE APPEALS ARE THAT SHREE SHREE RAMAKRISHNA SAMITY IS A SOCIETY, REGISTERED UNDER THE WEST BENGAL SOCIETY R EGISTRATION ACT, 1961 ON 10.8.1986. THE PREDOMINANT OBJECT OF THE SOCIETY INCLUDES PROMOTION, DEVELOPMENT, PRESERVATION AND RENDERING OF SOCIAL AND CULTURAL S ERVICES IN THE MATTERS OF ADVANCEMENT OF TENETS AND PRECEPTS OF LORD SHREE SH REE RAM KRISHNA PARAMHANSA DEV IRRESPECTIVE OF CASTE AND CREED OF THE HUMANITY AT LARGE. THE OBJECTS FURTHER INCLUDE PROMOTION OF PHYSICAL AND MENTAL DEVELOPMEN T OF YOUTHS, TO MAKE THEM WORTHY CITIZEN FOR THE SERVICE OF THE MOTHER LAND, CO-ORDINATION OF SOCIAL, CULTURAL AND RELIGIOUS ACTIVITIES OF ALLIED ORGANIZATIONS, ORGAN IZATION OF SEVADAL FOR RENDERING SERVICES TO THE SUFFERING HUMANITY, ACQUIRING, ESTA BLISHMENT, STARTING, AIDING, MAINTAINING AND MANAGEMENT OF SCHOOLS, COLLEGES, LI BRARIES, HOSPITALS FOR THE BENEFIT OF THE PUBLIC, HELPING NEEDY STUDENTS FOR PROSECUTION OF STUDIES, HELPING THE AGED, SICK AND HELPLESS AND INDIGENT PERSONS, CONSTRUCTION, MA INTENANCE, IMPROVEMENT, DEVELOPMENT, ALTERATION OF ANY BUILDING NECESSARY B Y THE GOVERNING BODY AND TO ENGAGE AND ASSIST SUCH OTHER PHILANTHROPIC ACTIVITI ES DEEMED APPROPRIATE BY THE GOVERNING BODY OF THE SOCIETY ETC. 3.1. THE ASSESSEE SOCIETY TOOK UP THE CONSTRUCTIO N OF AN OLD AGE HOME SINCE OCTOBER 2000 WITH ACTIVE FINANCIAL SUPPORT OF THE SILIGURI MUNICIPAL CORPORATION FOR WHICH CONTRIBUTIONS FROM THE PUBLIC WERE FORTHCOMING AND THE SAME WERE DULY ACCOUNTED FOR IN THE AUDITED ACCOUNTS RECORDING RECEIPTS AND EXPE NDITURES OF THE SOCIETY. THE SAID OLD AGE HOME WAS SUBSEQUENTLY INAUGURATED BY HIS EX CELLENCY THE GOVERNOR OF WEST BENGAL. 3.2. THE ASSESSEE SOCIETY WAS IN RECEIPT OF THE FO LLOWING DONATIONS FROM VARIOUS PARTIES FOR THE PURPOSE OF CONSTRUCTION OF OLD AGE HOME:- ITA NOS. 1680-1685/KOL/12--C-AM SREE SREE RAMKRSIHNA SAMITY 3 ASST YEAR DONATION RECD INVT IN OLD AGE H OME CONSTRUCTION 2003-04 9,38,000 14,26,692 2004-05 6,26,100 15,16,247 2005-06 3,18,000 13,66,481 2006-07 1,89,000 9,55,158 THE SAID DONATIONS WERE CREDITED SPECIFICALLY TO A BANK ACCOUNT OPENED EXCLUSIVELY FOR THE PURPOSE OF DEPOSIT OF THE RECEIPTS OF DONATION AND IN THE BALANCE SHEET, THE RECEIPT OF DONATION WAS CLEARLY ACCOUNTED FOR AS RECEIPT OF DONATION FOR THE SAID PURPOSE SHOWN SEPARATELY. THESE DONATIONS RECEIVED WERE UT ILIZED FOR CONSTRUCTION OF OLD AGE HOME NAMED SHESH BASANTA. THE LEARNED AO HELD THAT THE ASSESSEE SOCIETY IS NOT REGISTERED U/S 12AA OF THE ACT AND ACCORDINGLY NOT ELIGIBLE FOR EXEMPTION U/S 11 OF THE ACT . ACCORDINGLY, THE LEARNED AO BROUGHT TO TAX T HE RENTAL INCOME DERIVED BY THE ASSESSEE SOCIETY AS INCOME FROM HOUSE PROPERTY, INT EREST INCOME AND DONATIONS RECEIVED FROM VARIOUS DONORS UNDER THE HEAD INCOME FROM OTHER SOURCES. THIS ACTION WAS UPHELD BY THE LEARNED CITA FOR THE SAME REASON. AGGRIEVED, THE ASSESSEE IS IN APPEAL FOR THE ASST YEARS 2003-04 TO 2008-09 BEFOR E US. 4. THE LEARNED AR ARGUED THAT THE DONATIONS RECEI VED BY THE ASSESSEE HAVE BEEN DULY ACCEPTED AS GENUINE BY THE LEARNED AO IN THE R EMAND PROCEEDINGS. THE DONATIONS RECEIVED PER SE IS CAPITAL IN NATURE AS IT WAS RECEIVED FOR CONSTR UCTION OF AN OLD AGE HOME WHICH FACT IS ALSO ACCEPTED BY THE LEA RNED AO IN THE REMAND PROCEEDINGS. HENCE HE ARGUED THAT IN ANY CASE, A CAPITAL RECEIPT CANNOT BE BROUGHT TO TAX AS A REVENUE RECEIPT. HE ALSO ARGUED THAT THE FIRST PROVISO INSERTED IN SECTION 12A(2) BY THE FINNACE (NO.2) ACT, 2014 WITH EFFECT FROM 1.10.2014 CLEARLY PROVIDES FOR DEEMED REGISTRATION U/S 12AA OF THE ACT FOR THE EARLIER YEARS AND HENCE THE SAME HAS TO BE CONSTRUED AS RETROSPECTIVE IN OPERATION. HE FURTHER ARGUED THAT ON THE DATE OF GRANTING REGISTRATION U/S 12AA OF THE ACT ON 29.10. 2010 WITH EFFECT FROM 1.4.2010, ITA NOS. 1680-1685/KOL/12--C-AM SREE SREE RAMKRSIHNA SAMITY 4 ADMITTEDLY, THE REASSESSMENT PROCEEDINGS WERE PENDI NG BEFORE THE LEARNED AO AND ADMITTEDLY, THE ASSESSEE HAD CARRIED ON THE SAME CH ARITABLE OBJECTS IN THE EARLIER ASSESSMENT YEARS. 4.1. HE FURTHER ARGUED THAT THE ASSESSEE SOCIETY IN THE WORST CASE COULD HAVE BEEN BROUGHT TO TAX ONLY IN THE STATUS OF ASSOCIATION OF PERSONS (AOP) AS ADMITTEDLY THE ASSESSEE SOCIETY WAS FORMED WITH A VOLUNTARY ACT OF COMING TOGETHER OF PERSONS AS PER PARAGRAPH 5 OF MEMORANDUM OF ASSOCIATION DATED 9.8. 1986 TO PURSUE A COMMON OBJECT AS PER PARAGRAPH 43 OF MEMORANDUM OF ASSOCIA TION TO EARN INCOME FROM PROPERTY HELD UNDER TRUST. RELIANCE IN THIS REGARD IS PLACED ON THE DECISION OF THE HONBLE APEX COURT IN THE CASE OF CIT VS INDIRA BALKRISHNA REPORTED IN 39 ITR 546 (SC). HE FURTHER ARGUED THAT, EVEN ASSUMING WITHOUT CONCEDING, THAT ASSESSEE SOCIETY HAS TO BE TAXED AS AN AOP BY ASSESSEE NOT G IVEN EXEMPTION U/S 11 OF THE ACT, IT IS REQUIRED ON THE PART OF THE LEARNED AO TO CONSID ER THE INCOME OF THE SOCIETY IN ITS HANDS AS ON AOP AND DECIDE THE SURPLUS AS NON-TAXAB LE IN VIEW OF ITS NON REVENUE NATURE, IN AS MUCH AS THE DONATIONS WERE MEANT FOR UTILIZATION FOR CREATION OF AN ASSET WHICH IT WAS SO UTILIZED IN THE FACTS AND CIRCUMSTA NCES OF THE CASE. HE ALSO ARGUED THAT IT IS EVIDENT FROM THE FACE OF THE ASSESSMENT ORDER , THE LEARNED AO HAD MENTIONED THE STATUS OF THE ASSESSEE AS A TRUST / SOCIETY AND NOT AS AOP. THE LEARNED AR FURTHER RELIED ON THE WRITTEN SUBMISSIONS FILED BY HIM IN S UPPORT OF HIS VARIOUS CONTENTIONS. 5. IN RESPONSE TO THIS, THE LEARNED DR VEHEMENTLY SUPPORTED THE ORDERS OF THE LOWER AUTHORITIES AND PLEADED THAT THE REGISTRATION U/S 12AA OF THE ACT IS A PRE- CONDITION FOR CLAIMING EXEMPTION U/S 11 OF THE ACT. HE ALSO ARGUED THAT IN ORDER TO CLAIM EXEMPTION U/S 11(1)(D) OF THE ACT FOR DONATIO NS RECEIVED, THE REGISTRATION U/S 12AA OF THE ACT IS MANDATORY. HE ALSO ARGUED THAT D ONATIONS RECEIVED BY ASSESSEE FALLS UNDER THE DEFINITION OF INCOME U/S 2(24)(IIA) OF THE ACT AND ACCORDINGLY PRAYED FOR NON-INTERFERENCE IN THE ORDERS OF THE LOWER AUT HORITIES. ITA NOS. 1680-1685/KOL/12--C-AM SREE SREE RAMKRSIHNA SAMITY 5 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSE D THE MATERIALS AVAILABLE ON RECORD. WE FIND THAT THE FIRST TWO GROUNDS RAISED BY THE ASSESSEE IS ON JURISDICTION AND SANCTION FOR ISSUE OF NOTICE U/S 148 OF THE ACT AND NON SUPPLY OF REASONS RECORDED FOR REOPENING THE ASSESSMENT. ON SPECIFIC QUERY FROM T HE BENCH DURING THE COURSE OF HEARING, THE LEARNED AR STATED THAT THOSE GROUNDS A RE NOT PRESSED WHICH IS TAKEN AS A STATEMENT FROM THE BAR. ACCORDINGLY, THE GROUND N OS. 1 & 2 RAISED BY THE ASSESSEE ARE DISMISSED AS NOT PRESSED. 6.1. WE FIND THAT THE ASSESSEE TRUST WAS IN RECEIP T OF DONATIONS FROM VARIOUS PHILANTHROPISTS INCLUDING SILIGURI MUNICIPAL CORPOR ATION AND THESE DONATIONS WERE ADMITTEDLY UTILIZED BY THE ASSESSEE TRUST TOWARDS C ONSTRUCTION OF OLD AGE HOME UNDER THE NAME AND STYLE OF SHESH BASANTA. ON THESE F ACTS, THERE IS ABSOLUTELY NO DISPUTE. ALL THE DONORS HAD FILED CONFIRMATIONS BEFORE THE L EARNED AO AND THE GENUINITY OF THESE DONATIONS ARE PROVED BEYOND DOUBT BY THE ASSE SSEE. THE LEARNED AO HAS ACCEPTED THE SAME IN THE REMAND PROCEEDINGS. 6.2. WE FIND THAT THE OBJECTS OF THE ASSESSEE SOC IETY ARE CHARITABLE IN NATURE WITHIN THE MEANING OF SECTION 2(15) OF THE ACT ON WHICH FA CT THERE IS ABSOLUTELY NO DISPUTE. IT IS PERTINENT TO NOTE THAT THE REGISTRATION U/S 1 2AA OF THE ACT WAS GRANTED TO THE ASSESSEE ON 29.10.2010 WITH EFFECT FROM 1.4.2010. ADMITTEDLY, THE NOTICE U/S 148 OF THE ACT WAS ISSUED BY THE DCIT, CIRCLE 2 SILIGURI F OR THE ASST YEARS 2003-04 TO 2008- 09 ON 30.3.2010. EVEN FOR THE EARLIER YEARS , THE ASSESSEE SOCIETY WAS CARRYING ON THE SAME CHARITABLE OBJECTS AS PER THE TRUST DEED ON WH ICH FACT ALSO THERE IS ABSOLUTELY NO DISPUTE. THE RECEIPTS WERE BROUGHT TO TAX ONLY ON THE PRETEXT THAT THE ASSESSEE SOCIETY IS NOT HAVING REGISTRATION U/S 12AA OF THE ACT IN THE ASST YEARS 2003-04 TO 2008-09. ITA NOS. 1680-1685/KOL/12--C-AM SREE SREE RAMKRSIHNA SAMITY 6 6.3. 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 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 AFTE R THE 1 ST DAY OF JUNE 2007, THE PROVISIONS OF SECTION 11 AND 12 SHAL L APPLY IN RELATION TO THE INCOME OF SUCH TRUST OR INSTITUTION FROM THE ASSESSMENT YEAR IMMEDIATELY FOLLOWING THE FINANCIAL YEAR IN WHICH S UCH APPLICATION IS MADE: PROVIDED THAT WHERE REGISTRATION HAS BEEN GRANTED T O THE TRUST OR INSTITUTION UNDER SECTION 12AA, THEN, THE PROVISION S 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 A RE PENDING BEFORE THE ASSESSING OFFICER AS ON DATE OF SUCH REG ISTRATION 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 B Y 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 T HE SAID ASSESSMENT YEAR: PROVIDED ALSO THAT PROVISIONS CONTAINED IN THE FIRST AND SECOND PROVISO SHALL NOT APPLY IN CASE OF ANY TRUST OR INS TITUTION WHICH WAS REFUSED REGISTRATION OR THE REGISTRATION GRANTED TO IT WAS CANCELLED AT ANY TIME UNDER SECTION 12AA. 6.4. ADMITTEDLY, THE REASSESSMENT PROCEEDINGS WER E PENDING BEFORE THE LEARNED AO FOR THE ASST YEARS 2003-04 TO 2008-09 AS ON THE DAT E 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 200 8-09. THOUGH THIS FIRST PROVISO TO ITA NOS. 1680-1685/KOL/12--C-AM SREE SREE RAMKRSIHNA SAMITY 7 SECTION 12A(2) TALKS ABOUT PENDENCY OF ASSESSMENT P ROCEEDINGS, IT IS RELEVANT TO GET INTO THE DEFINITION OF THE TERM ASSESSMENT IN SEC TION 2(8) OF THE ACT, WHEREIN IT IS DEFINED AS ASSESSMENT INCLUDES REASSESSMENT. H ENCE 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 PR OVIDES THAT NO ACTION U/S 147 OF THE ACT SHALL BE TAKEN MERELY FOR NON-REGISTRATION OF T RUST OR INSTITUTION. READING THIS PROVISO WITH THE FIRST PROVISO TO SECTION 12A(2) AN D 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 TH AT COULD BE CAUSED ON THE ASSESSEE DUE TO NON-REGISTRATION U/S 12AA OF THE ACT AND ACC ORDINGLY IN OUR OPINION, THE PROVISOS TO SECTION 12A(2) OF THE ACT IS TO BE CONS TRUED AS RETROSPECTIVE IN OPERATION. 6.6. THE THIRD PROVISO TO SECTION 12A(2) OF THE AC T 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 EA RLIER 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 ASSESSME NT 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 IN TO THE OBJECTS OF THE TRUST. RELIANCE IN THIS REGARD IS PLACED ON THE DE CISION OF THE HONBLE 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 TH E EARLIER YEARS AND IN THE YEAR IN WHICH REGISTRATION U/S 12AA WAS GRANTED, THE EXISTE NCE OF TRUST FOR CHARITABLE PURPOSES IN THE EARLIER YEARS CANNOT BE DOUBTED WITH. EVEN OTHERWISE, NO ADVERSE FINDINGS WERE ITA NOS. 1680-1685/KOL/12--C-AM SREE SREE RAMKRSIHNA SAMITY 8 GIVEN BY THE REVENUE WITH REGARD TO THE EXISTENCE O F THE ASSESSEE SOCIETY FOR CHARITABLE PURPOSES IN THE ASSESSMENT YEARS UNDER APPEAL. 6.8. IT WILL BE RELEVANT TO GET INTO THE EXPLANATO RY NOTES TO THE PROVISIONS OF THE FINANCE (NO. 2), 2014 AS GIVEN IN CBDT CIRCULAR N O. 01 / 2015 DATED 21.1.2015 IN REFERENCE F.NO. 142 / 13 /2014-TPL WHICH IS REPROD UCED 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 PRIO R TO THE YEAR OF REGISTRATION CAUSED GENUINE HARDSHIP TO CHARITABLE ORGANIZATIONS. DUE TO ABSENCE OF REGISTRATION, TAX LIABILITY IS FASTEN ED EVEN THOUGH THEY MAY OTHERWISE BE ELIGIBLE FOR EXEMPTION AND FULFILL OTH ER SUBSTANTIVE CONDITIONS. HOWEVER, THE POWER OF CONDONATION OF D ELAY IN SEEKING REGISTRATION WAS NOT AVAILABLE. THIS CLEARLY GOES TO PROVE THAT THE FIRST PROVISO T O 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 OBJECT S 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 EXPLANATO RY NOTES TO FINANCE (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 PROVIDES THAT REGISTRATION O NCE 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 LEARN ED AO, UNLESS THE REGISTRATION GRANTED EARLIER IS CANCELLED OR REFUSED FOR SPECIFI C REASONS. THE STATUTE ALSO GOES ON TO ITA NOS. 1680-1685/KOL/12--C-AM SREE SREE RAMKRSIHNA SAMITY 9 PROVIDE THAT NO ACTION U/S 147 COULD BE TAKEN BY TH E AO MERELY FOR NON-REGISTRATION OF TRUST FOR EARLIER YEARS. 6.9. WITH REGARD TO THE ARGUMENTS OF THE LEARNED D R 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 DEFINI TION. AN INCLUSIVE DEFINITION EXTENDS THE SPECIFIC MEANING GIVEN IN THE STATED ITEMS BY T HE 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 S PECIFICALLY 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 CLAU SE (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 TH E SCOPE 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, HOWEV ER, 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 CON TRIBUTIONS / DONATIONS RECEIVED WITH A SPECIFIC DIRECTION THAT THEY WILL FORM PART OF THE CORPUS OF THE TRUST FOR UTILIZATION IN ACQUISITION / CONSTRUCTION OF A CAPI TAL ASSET. THUS WHAT IS NOT INCOME AS PER THE DEFINITION OF THE WORD INCOME IN THE ACT CA NNOT 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 A N 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 RECEI PTS WHICH ARE LIABLE TO TAXATION BUT FOR THE PROVISION GRANTING EXEMPTION. ITA NOS. 1680-1685/KOL/12--C-AM SREE SREE RAMKRSIHNA SAMITY 10 6.10. WE HOLD THAT IT IS AN ESTABLISHED POSITION I N LAW THAT A PROVISO WHICH IS INSERTED TO REMEDY UNINTENDED CONSEQUENCES AND TO MAKE THE P ROVISION WORKABLE, A PROVISO WHICH SUPPLIES AN OBVIOUS OMISSION IN THE SECTION A ND IS REQUIRED TO BE READ INTO THE SECTION TO GIVE THE SECTION A REASONABLE INTERPRETA TION, REQUIRES TO BE TREATED AS RETROSPECTIVE IN OPERATION, SO THAT A REASONABLE IN TERPRETATION CAN BE GIVEN TO THE SECTION AS A WHOLE AND ACCORDINGLY THE SAID INSERTI ON OF FIRST PROVISO TO SECTION 12A(2) OF THE ACT WITH EFFECT FROM 1.10.2014 SHOULD BE REA D AS RETROSPECTIVE IN OPERATION WITH EFFECT FROM THE DATE WHEN THE CONDITION OF ELIGIBIL ITY FOR EXEMPTION UNDER SECTION 11 & 12 AS MENTIONED IN SECTION 12A PROVIDED FOR REGISTR ATION 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 I TR 677 (SC) JUDGEMENT BY THREE JUDGES OF THE SUPREME COURT THE DEPARTMENTAL UNDERSTANDING ALSO APPEARS TO BE T HAT SECTION 43B, THE PROVISO AND EXPLANATION 2 HAVE TO BE READ TOGETHER AS EXPRESSING THE TRUE INTENTION OF SECTION 43B. EXPLANATION 2 HAS BEEN E XPRESSLY MADE RETROSPECTIVE. THE FIRST PROVISO, HOWEVER, CANNOT BE ISOLATED FROM EXPLANATION 2 AND THE MAIN BODY OF SECTION 43B. WITHOUT THE FIRST PROVISO, EX PLANATION 2 WOULD NOT OBVIATE THE HARDSHIP OR THE UNINTENDED CONSEQUENCES OF SECT ION 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 PERM ISSIBLE DEDUCTIONS. IN THE CASE OF GOODYEAR INDIA LTD VS STATE OF HARYA NA (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. AS OBSERVED BY G.P.SINGH IN HIS PRINCIPLES OF STATU TORY INTERPRETATION, 4 TH EDN., PAGE 291, IT IS WELL SETTLED THAT IF A STATUTE IS CURATIVE OR MERELY DECLARATORY OF THE PREVIOUS LAW, RETROSPECTIVE OPERATION IS GENERA LLY INTENDED. IN FACT THE AMENDMENT WOULD NOT SERVE ITS OBJECT IN SUCH A SITU ATION, UNLESS IT IS CONSTRUED ITA NOS. 1680-1685/KOL/12--C-AM SREE SREE RAMKRSIHNA SAMITY 11 AS RETROSPECTIVE. THE VIEW, THEREFORE, TAKEN BY TH E 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 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 L TD AND ALSO IN THE CASE OF ALOM EXTRUSIONS LTD HAS ALREADY DECIDED THA T THE AFORESAID PROVISION HAS RETROSPECTIVE APPLICATION. AGAIN, IN THE CASE REPORTED IN 82 ITR 570, THE SUPREME COURT HELD THAT THE PROVISI ON, WHICH HAS INSERTED THE REMEDY TO MAKE THE PROVISION WORKABLE, REQUIRES TO BE TREATED WITH RETROSPECTIVE OPERATION SO THAT REASON ABLE 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 C OMPLETENESS, THAT WHERE A BENEFIT IS CONFERRED BY A LEGISLATION, THE RULE AGAINST A RETROSPECTIVE CONSTRUCTION IS DIFFERENT. IF A LEGI SLATION CONFERS A BENEFIT ON SOME PERSONS BUT WITHOUT INFLICTING A CORRESPOND ING DETRIMENT ON SOME OTHER PERSON OR ON THE PUBLIC GENERALLY, AND W HERE TO CONFER SUCH BENEFIT APPEARS TO HAVE BEEN THE LEGISLATORS OBJECT , THEN THE PRESUMPTION WOULD BE THAT SUCH A LEGISLATION, GIVING IT A PURPO SIVE CONSTRUCTION, WOULD WARRANT IT TO BE GIVEN A RETROSPECTIVE EFFECT . THIS EXACTLY IS THE JUSTIFICATION TO TREAT PROCEDURAL PROVISIONS AS RET ROSPECTIVE. IN GOVERNMENT OF INDIA VS INDIAN TOBACCO ASSOCIATION R EPORTED IN (2005) 7 SCC 396, THE DOCTRINE OF FAIRNESS WAS HELD TO BE RE LEVANT FACTOR TO CONSTRUE A STATUTE CONFERRING A BENEFIT, IN THE CON TEXT OF IT TO BE GIVEN A RETROSPECTIVE OPERATION. THE SAME DOCTRINE OF FAIR NESS, 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 S ITUATION HERE. IN SUCH CASES, RETROSPECTIVITY IS ATTACHED TO BENEF IT THE PERSONS IN CONTRADISTINCTION TO THE PROVISION IMPOSING SOME BU RDEN OR LIABILITY WHERE THE PRESUMPTION ATTACHES TOWARDS PROSPECTIVIT Y. IN THE INSTANT CASE, THE PROVISO ADDED TO SECTION 113 OF THE ACT I S NOT BENEFICIAL TO THE ITA NOS. 1680-1685/KOL/12--C-AM SREE SREE RAMKRSIHNA SAMITY 12 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 OP ERATION. THUS, THE RULE AGAINST RETROSPECTIVE OPERATION IS A FUNDAMENT AL RULE OF LAW THAT NO STATUTE SHALL BE CONSTRUED TO HAVE A RETROSPECTIVE OPERATION UNLESS SUCH A CONSTRUCTION APPEARS VERY CLEARLY IN THE TERMS OF T HE ACT OR ARISES BY NECESSARY AND DISTINCT IMPLICATION. DOGMATICALLY F RAMED, THE RULE IS NO MORE THAN A PRESUMPTION, AND THUS COULD BE DISPLACE D 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 LEG ISLATURE 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 POSS IBLE 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 TAXATIO N ARE OFTEN STRANGERS , ATTEMPTS SHOULD BE MADE THAT THESE DO NOT REMAIN ALWAYS SO A ND IF A CONSTRUCTION RESULTS IN EQUITY RATHER THAN IN INJUSTICE, THEN SUCH CONSTRUC TION SHOULD BE PREFERRED TO THE LITERAL CONSTRUCTION. IT IS ONLY ELEMENTARY THAT A STATUT ORY 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 EXEMPTI ON 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 SOCI ETY COULD ONLY BE TAXED IN THE STATUS ITA NOS. 1680-1685/KOL/12--C-AM SREE SREE RAMKRSIHNA SAMITY 13 OF AN AOP DOES NOT REQUIRE ANY ADJUDICATION AS WE H OLD 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 CONSTRUC TION 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 DISPU TE. 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 REGI STRATION OF SOCIETY U/S 12AA OF THE ACT. IT IS NOT THE CASE OF THE REVENUE THAT THE DO NATIONS RECEIVED ARE MEANT FOR GENERAL FUNCTIONING OF THE CHARITABLE OBJECTS OF THE SOCIET Y, IN WHICH EVENT, THE DONATIONS RECEIVED THEREON WOULD TAKE THE CHARACTER OF REVEN UE RECEIPTS REQUIRING TO BE CREDITED IN THE INCOME AND EXPENDITURE ACCOUNT FOR UTILIZATI ON TOWARDS CHARITABLE OBJECTS THEREON. HENCE WE HOLD THAT IN ANY CASE, THE DONAT IONS RECEIVED BY THE ASSESSEE SOCIETY CANNOT BE BROUGHT TO TAX IN THE ASSESSMENT. 6.13. WE HOLD THAT SINCE THE ONLY REASON FOR DENI AL OF EXEMPTION U/S 11 WAS ABSENCE OF REGISTRATION U/S 12AA (WHICH WAS GRANTED TO ASSE SSEE SOCIETY ON 29.10.2010 WITH EFFECT FROM 1.4.2010) FOR THE RELEVANT ASSESSMENT Y EARS AND ON NO OTHER GROUND, THE BENEFIT OF CHANGE IN LAW AS ABOVE BY FINANCE ACT 20 14 SHOULD BE AVAILABLE AND FOR ALL THE YEARS, THE BENEFIT OF EXEMPTION SHOULD BE AVAI LABLE ON THE DATE OF REGISTRATION AS ALL THE ASSESSMENTS WERE PENDING AS SHOWN ABOVE. I N THIS CONNECTION, IT REQUIRES MENTION SPECIFICALLY THAT ALL THE RECEIPTS OF THE D ONATION WERE PROVED ON ENQUIRY TO HAVE BEEN RECEIVED FROM THE CLAIMED DONORS AND UTIL IZED FOR THE SPECIFIC PURPOSE (CONSTRUCTION OF OLD AGE HOME) FOR WHICH THEY WERE RECEIVED. ITA NOS. 1680-1685/KOL/12--C-AM SREE SREE RAMKRSIHNA SAMITY 14 IN CONCLUSION, WE HOLD THAT THE INSERTION OF THE PR OVISO TO SECTION 12A(2) OF THE ACT HAS TO BE CONSTRUED AS RETROSPECTIVE IN OPERATION. RESPECTFULLY FOLLOWING THE VARIOUS JUDICIAL PRECEDE NTS RELIED UPON AND IN THE FACTS AND CIRCUMSTANCES OF THE CASE, WE ALLOW THE GROUND NOS. 3 TO 8 RAISED BY THE ASSESSEE. 6.14. IN VIEW OF THE FINDING GIVEN BY US HEREINABO VE WITH REGARD TO THE STATUS OF THE ASSESSEE SOCIETY AND ITS ELIGIBILITY TO CLAIM EXEMP TION U/S 11 OF THE ACT, THE ADJUDICATION OF GROUND NO. 9 BECOMES INFRUCTUOUS. THE EXPENDITURE INCURRED BY THE ASSESSEE SOCIETY WOULD ANYWAY BE TREATED AS APPLIC ATION OF INCOME FOR CHARITABLE OBJECTS AS THE INCURRENCE OF EXPENDITURE FOR CHARIT ABLE OBJECTS HAS NOT BEEN DISPUTED BY THE REVENUE IN ANY OF THE ASSESSMENT YEARS UNDER AP PEAL. HENCE THE GROUND NO. 9 OF THE ASSESSEE IS DISMISSED AS INFRUCTUOUS. 7. IN THE RESULT, THE APPEALS OF THE ASSESSEE ARE P ARTLY ALLOWED. THIS ORDER IS PRONOUNCED IN OPEN COURT ON 9/10/201 5 FIT FOR PUBLICATION SD/- SD/- MS MBG COPY OF THE ORDER FORWARDED TO: 1. . THE APPELLANT/ASSESSEE: SREE SREE RAMKRSIHANA SAMI TY . 2 THE RESPONDENT- DEPUTY COMMISSIONER OF INCOME TAX , CIR-2, SILIGURI 3 4. . / THE CIT, / THE CIT(A) 5 . DR, KOLKATA BENCH 6 . GUARD FILE . **PRADIP SPS TRUE COPY, BY ORDER, ASSTT REGISTRAR SD/- ( MAHAVIR SINGH, JUDICIAL MEMBER ) SD/- (M. BALAGANESH, ACCOUNTANT MEMBER) DATE 9/10/2015