Carmel haven, Pune V. Income-tax Officer,

ITA 1822/PUN/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 1070 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 10 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-08-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 08-06-2016
• Assessment Year: 2011-2012
• Appeal Filed On: 07-10-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K RASTOGI
• Assessee Lawyers: SITESH SHARMA
• Keywords: Capital asset; Gift; Charitable institution; Capital receipt; Revised return; Capital expenditure
• Section: 143(3); 12A; 12AA; 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A , PUNE , . . , BEFORE MS. SUSHMA CHOWLA, JM AND SHRI R.K. PANDA, AM . / ITA NO. 1 8 22 /PN/201 4 / ASSESSMENT YEAR : 20 11 - 12 CARMEL HAVEN, GHAT NO.1155, KOLWADI, TAL.HAVELI, PUNE 412210 . / APPELLANT PAN: A A BTC3131D VS. THE INCOME TAX OFFICER , WARD 1(1), PUNE . / RESPOND ENT / APPELLANT BY : S/SHRI SITESH SHARMA & GIRISH B. GUNDECHA GIRISH B. GUNDECHA / RESPONDENT BY : SHRI S.K. RASTOGI, CIT / DATE OF HEARING : 0 7 . 0 7 .201 6 / DATE OF PRONOUNCEMENT: 26 . 0 8 .201 6 / ORDER PER SUSHMA CHOWLA, J M : TH IS APPEAL FILED BY THE ASSESSEE IS AGAINST THE ORDER OF CIT (A) - I , PUNE , DATED 3 1 . 0 7 .20 1 4 RELATING TO ASSESSMENT YEAR 2011 - 12 AGAINST ORDER PASSED UNDER SECTION 143(3) OF THE INCOME - TAX ACT , 1961 (IN SHORT THE A CT) . 2 . THE AMENDED GROUNDS OF APPEAL FILED BY THE ASSESSEE READ AS UNDER : - 1. GROUND NO.1: WHETHER THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) - I, PUNE (THE LD.CIT) HAS ERRED ON FACTS AND IN LAW IN COMPUTING THE TOTAL INCOME OF THE APPELLANT AT TO TAL INCOME OF RS.5,28,86,710/ - AS AGAINST THE TOTAL INCOME OF RS. 28,56,705/ - CLAIMED ITA NO. 18 2 2 /PN/20 1 4 CARMEL HAVEL 2 BY THE APPELLANT IN ITS VOLUNTARILY REVISED RETURN OF INCOME FILED FOR ASSESSMENT YEAR 2011 - 12. 2. GROUND NO.2: WHETHER IN ABSENCE OF REGISTRATION UNDER SECTION 12A OF TH E ACT VOLUNTARY CORPUS DONATIONS RECEIVED WITH SPECIFIC DIRECTIONS FROM THE PARENT OF THE TRUST CAN BE BROUGHT TO TAX AND NOT TREATED AS CAPITAL RECEIPT. 3. GROUND NO.3 : WITHOUT PREJUDICE TO THE ABOVE, THE LD CIT OUGHT TO HAVE ADOPTED THE GENERAL PRINCIPL ES OF TAXATION AND ACCOUNTING IN DETERMINING THE INCOME FOR THE RELEVANT ASSESSMENT YEAR AFTER ALLOWING DEDUCTIONS FOR CORRESPONDING EXPENDITURE NECESSARY TO CARRY ON ACTIVITIES OF THE APPELLANT. 3. THE ISSUE ARISING IN THE PRESENT APPEAL FILED BY THE AS SESSEE IS AGAINST ASSESSABILITY OF VOLUNTARY CORPUS DONATIONS RECEIVED BY THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION. THE ASSESSEE IS AGGRIEVED BY THE ORDER OF CIT(A) IN COMPUTING THE TOTAL INCOME IN THE HANDS OF ASSESSEE AT RS.5,28,86,710/ - AS AGAI NST THE TOTAL INCOME OF RS. 28,56,705/ - DECLARED BY THE ASSESSEE IN THE REVISED RETURN OF INCOME. 4. BRIEFLY, IN THE FACTS OF THE CASE, THE ASSESSEE TRUST HAD FURNISHED ORIGINAL RETURN OF INCOME ON 27.09.2011 DECLARING TAXABLE INCOME AT NIL AFTER CLAIMING EXEMPTION UNDER SECTION S 11 AND 12 OF THE ACT FOR ITS ENTIRE INCOME. THE CASE OF THE ASSESSEE WAS PICKED UP FOR SCRUTINY. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE WAS ASKED TO ESTABLISH ITS CLAIM OF EXEMPTION UNDER SECTIONS 11 AND 12 OF THE ACT. THE ASSESSING OFFICER NOTED THAT THE APPLICATION OF THE ASSESSEE FOR REGISTRATION UNDER SECTION 12A OF THE ACT WAS REJECTED BY THE CIT - I, PUNE VIDE ORDER UNDER SECTION 12AA(1)(B)(II) OF THE ACT, DATED 30.04.2013. THE ASSESSEE WAS THEREAFTER ASKE D TO SHOW CAUSE VIDE OFFICE LETTER DATED 17.10.2013 AS TO WHY THE EXEMPTION CLAIMED UNDER SECTIONS 11 AND 12 OF THE ACT SHOULD NOT BE DENIED, IN THE ABSENCE OF ANY REGISTRATION UNDER SECTION 12A OF THE ACT. THE ASSESSEE WAS ALSO SHOW CAUSED TO EXPLAIN AS TO WHY IT SHOULD NOT BE ASSESSED AS ASSOCIATION OF PERSONS (AOP). THE ASSESSEE ITA NO. 18 2 2 /PN/20 1 4 CARMEL HAVEL 3 MEA NWHILE FURNISHED REVISED RETURN DECLARING TOTAL INCOME OF RS. 28,56,705/ - AND PAID TAXES TO THE TUNE OF RS. 9,50,750/ - ON 13.06.2013 . T HE ASSESSING OFFICER WAS OF THE VIEW TH AT THE SAME WAS NOT PERMISSIBLE AS PER PROVISIONS OF THE ACT. THE ASSESSING OFFICER FURTHER NOTED THAT DURING THE YEAR THE ASSESSEE TRUST HAD RECEIVED CERTAIN DONATIONS AMOUNTING TO RS. 5,00,30,000/ - FROM THE PARENT BODY NAMELY CONGREGATION OF CARMELITE RE LIGIOUS TRUST TOWARDS THE CORPUS. THE SAID DONATIONS WERE CLAIMED AS EXEMPT UNDER SECTION 11(1)(D) OF THE ACT IN ITS RETURN OF INCOME. HOWEVER, THE ASSESSING OFFICER HELD THAT IN THE ABSENCE OF ANY REGISTRATION UNDER SECTION 12A OF THE ACT, NO EXEMPTION WAS AVAILABLE TO THE ASSESSEE UNDER SECTION 11(1)(D) OF THE ACT. THE ASSESSEE WAS ISSUED SHOW CAUSE NOTICE IN THIS REGARD AS TO WHY CORPUS DONATIONS SHOULD NOT BE CHARGED TO TAX IN THE ABSENCE OF REGISTRATION UNDER SECTION 12A OF THE ACT. THE ASSESSEE SU BMITTED A DETAILED REPLY AND REITERATED THAT THE DONATIONS BEING CORPUS DONATIONS WERE CAPITAL RECEIPTS AND WERE NOT CHARGEABLE TO TAX. THE ASSESSING OFFICER HOWEVER, OBSERVED THAT THE CORPUS DONATIONS BEING VOLUNTARY CONTRIBUTIONS RECEIVED BY ANY TRUST W ERE COVERED IN THE AMBIT OF THE TERM INCOME AS DEFINED UNDER SECTION 2(24) OF THE ACT. HE FURTHER OBSERVED THAT SUCH CORPUS DONATIONS WERE TO BE EXCLUDED FROM THE GROSS INCOME OF THE ASSESSEE IN PURSUANCE TO EXEMPTION AVAILABLE UNDER SECTION 11(1)(D) OF THE ACT. HOWEVER, WHERE THE STATUS OF ASSESSEE NEEDS TO BE COMPLETED AS AOP IN THE ABSENCE OF REGISTRATION UNDER SECTION 12A OF THE ACT, ACCORDINGLY, NO BENEFIT UNDER SECTIONS 11 AND 12 OF THE ACT WAS AVAILABLE TO THE ASSESSEE AND SUCH EXEMPTION UNDER SE CTION 11(1)(D) OF THE ACT IS LOST BY THE ASSESSEE. IN VIEW OF THE PROVISIONS OF SECTION 2(24) OF THE ACT, THE ASSESSING OFFICER BROUGHT THE CORPUS DONATIONS OF RS.5,00,30,000/ - TO TAX AND TREATED THE SAME AS INCOME OF THE ASSESSEE FOR THE YEAR UNDER CONSI DERATION. ITA NO. 18 2 2 /PN/20 1 4 CARMEL HAVEL 4 5. IN APPEAL, THE CONTENTION OF THE ASSESSEE WAS THAT IT WAS PUBLIC CHARITABLE TRUST REGISTERED UNDER THE RELEVANT PROVISIONS OF THE BOMBAY PUBLIC TRUST ACT, 1950 AND WAS ENGAGED IN PUBLIC CHARITABLE WORK, IN IMPARTING EDUCATION, HEALTHCARE ACTI VITIES, RELIEF TO THE POOR, ETC. THE ASSESSEE FURTHER POINTED OUT THAT DURING THE YEAR UNDER CONSIDERATION, IT HAD SET UP AN OLD AGE HOME FOR SENIOR CITIZENS AND WAS PROVIDING BOARDING, LODGING, HEALTHCARE AND RECREATION. THE ASSESSEE POINTED OUT THAT IT HAD RECEIVED THE CORPUS DONATIONS FROM ITS PARENT BODY TOTALING RS. 5,00,30,000/ - WHICH IN TURN, HAVE BEEN UTILIZED TOWARDS PURCHASE OF LAND AT GA T NO.1155, KESHNAN TH EUR ROAD, KOLWADI, HAVELI, PUNE. THE PLEA OF THE ASSESSEE WAS THAT THE SAID CORPUS DONAT ION WAS A PERMANENT FUND KEPT FOR SPECIFIC EXPENDITURE NEEDED FOR ADMINISTRATION AND SURVIVAL OF THE ORGANIZATION AND WAS NOT UTILIZED FOR ATTAINING OF OBJECTS OF THE TRUST BUT TOWARDS CREATION OF CAPITAL ASSET OR PROPERTY OF THE TRUST. THE ASSESSEE FURTH ER POINTED OUT THAT THE LEGISLATIVE INTENT WAS FOR EXEMPTING RECEIPT S OF CORPUS CONTRIBUTION WITH SPECIFIC DIRECTIONS FROM THE DEFINITION OF INCOME UNDER SECTION 2(24) R.W.S. 11 OF THE ACT . VARIOUS CONTENTIONS WERE RAISED BY THE ASSESSEE BEFORE THE CIT(A) . THE CIT(A) WAS OF THE VIEW THAT THE DEFINITION OF INCOME UNDER SECTION 2(24) OF THE ACT INCLUDES VOLUNTARY CONTRIBUTIONS RECEIVED BY A TRUST CREATED WHOLLY OR PARTLY FOR CHARITABLE OR RELIGIOUS PURPOSES OR BY AN INSTITUTION ESTABLISHED WHOLLY OR PARTLY FOR SUCH PURPOSES. HE FURTHER POINTED OUT THAT THE EARLIER SUB - CLAUSE S EXCLUDED FROM THE DEFINITION OF INCOME, VOLUNTARY CONTRIBUTIONS MADE TO A CHARITABLE TRUST WITH A SPECIFIC DIRECTION THAT THEY SHALL FORM PART OF THE CORPUS OF THE TRUST. HOWEVER, T HE DIRECT TAX LAWS (AMENDMENT) ACT, 1987 DELETED THE WORDS WITH A SPECIFIC DIRECTION THAT THEY SHALL FORM PART OF THE CORPUS OF THE TRUST. IT WAS FURTHER OBSERVED BY THE CIT(A) THAT AFTER THE AMENDMENT OF VOLUNTARY CONTRIBUTION, WHETHER OF A NORMAL NATU RE OR MADE WITH A SPECIFIC DIRECTION THAT THEY SHALL FORM ITA NO. 18 2 2 /PN/20 1 4 CARMEL HAVEL 5 PART OF CORPUS OF THE TRUST, WHICH INCLUDED IN THE DEFINITION OF INCOME. THE CIT(A) ALSO NOTED THAT SECTION 11(1)(D) OF THE ACT, WHICH GRANTS EXEMPTION, SUBJECT TO REGISTRATION OF TRUST UNDER SEC TION 12A OF THE ACT AND OTHER CONDITIONS, IN CASE OF VOLUNTARY CONTRIBUTION WITH A SPECIFIC DIRECTION THAT THEY SHALL FORM PART OF THE CORPUS OF TRUST ALSO USES THE EXPRESSION INCOME IN THE FORM OF VOLUNTARY CONTRIBUTION. THE CIT(A) FURTHER HELD THAT CL AUSE (IIA) OF SECTION 2(24) OF THE ACT THUS, PREVENTS THE TRUST FROM CLAIMING EXEMPTION UNDER GENERAL LAW ON THE GROUND THAT SUCH CONTRIBUTION STANDS ON THE SAME FOOTING AS GIFT, CAPITAL RECEIPTS, ETC. AND THEREFORE, WERE NOT TAXABLE. THE CIT(A) FURTHER O BSERVED THAT ONCE ALL VOLUNTARY CONTRIBUTIONS WERE INCOME OF THE ASSESSEE, THEN THE NEXT QUESTION THAT WOULD ARISE WOULD BE WHEN SUCH INCOME CAN BE EXEMPTED OR EXCLUDED FROM THE TOTAL INCOME OF THE TRUST. IN THIS REGARD, REFERENCE WAS MADE TO THE PROVISIO NS OF SECTION 11 WITH SPECIAL REFERENCE TO SECTION 11(1)(D) OF THE ACT AND IT WAS POINTED OUT THAT SINCE THE ASSESSEE TRUST IS NOT REGISTERED UNDER SECTION 12A OF THE ACT, WHICH WAS A CONDITION PRECEDENT FOR AVAILING THE BENEFIT UNDER SECTIONS 11 AND 12 OF THE ACT, THE ASSESSEE IS NOT ENTITLED TO THE SAID CLAIM. THE CIT(A) VIDE PARA 5.6.7 THUS HELD THAT AS ON DATE OF RECEIPT OF CONTRIBUTIONS, REGISTRATION UNDER SECTION 12A OF THE ACT WAS NOT AVAILABLE TO THE TRUST, WHICH WAS ONE OF THE ESSENTIAL REQUIREMEN T TO AVAIL THE BENEFITS UNDER SECTIONS 11 AND 12 OF THE ACT, THEREFORE, NO QUESTION OF REASONABLE OR LIBERAL CONSTRUCTION OF EXEMPTION PROVISIONS AROSE IN THE PRESENT CASE. IN VIEW THEREOF, THE ORDER OF ASSESSING OFFICER IN INCLUDING THE VOLUNTARY DONATIO NS TO TAX WAS UPHELD BY THE CIT(A). THE ALTERNATE PLEA OF THE ASSESSEE THAT WHILE TAXING CORPUS DONATION, CORRESPONDING EXPENDITURE SHOULD HAVE BEEN ALLOWED, WAS ALSO REJECTED SINCE THE ASSESSEE HAD UTILIZED THE SAID DONATIONS FOR PURCHASE OF LAND AT RS.3 .23 CRORES, WHICH WAS CAPITAL EXPENDITURE , AS PER CIT(A) . THE REMAINING DONATIONS WERE AVAILABLE IN CASH AT BANK AS ON ITA NO. 18 2 2 /PN/20 1 4 CARMEL HAVEL 6 31.03.2011, THEREFORE, THE ALTERNATE PLEA RAISED BY THE ASSESSEE WAS REJECTED BY THE CIT(A). 6. THE ASSESSEE IS IN APPEAL AGAINST THE O RDER OF CIT(A) BEFORE US. 7. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE AFTER TAKING US THROUGH THE FACTUAL ASPECTS OF THE CASE POINTED OUT THAT PROVISO UNDER SECTION 12A(2) OF THE ACT HAS BEEN INSERTED W.E.F. 01.10.2014 AND IN VIEW OF THE SAI D PROVISO, THE ASSESSEE IS ENTITLED TO CLAIM EXEMPTION UNDER SECTIONS 11 AND 12 OF THE ACT. HE FURTHER POINTED OUT THAT THE FIRST APPLICATION FOR REGISTRATION UNDER SECTION 12A OF THE ACT WAS MADE ON 30.10.2012, WHICH WAS REJECTED BY THE COMMISSIONER WITH AN OPTION TO MAKE A FRESH APPLICATION FOR REGISTRATION UNDER SECTION 12A OF THE ACT. THE SECOND APPLICATION WAS MOVED ON 12.11.2013. HE FURTHER POINTED OUT THAT REGISTRATION TO THE ASSESSEE TRUST HAS BEEN GRANTED BY THE TRIBUNAL IN RESPECT OF APPLICATIO N DATED 12.11.2013 WHICH RELATE S BACK TO THE DATE OF FILING OF THE APPLICATION. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT THE ASSESSMENT PROCEEDINGS WERE COMPLETED VIDE ORDER PASSED UNDER SECTION 143(3) OF THE ACT DATED 16.12 .2013 AND SINCE THE ASSESSMENT PROCEEDINGS WERE PENDING ON THE DATE WHEN SECOND APPLICATION FOR REGISTRATION, WHICH WAS MOVED UNDER SECTION 12A OF THE ACT, THE ASSESSEE IS ENTITLED TO THE BENEFIT PROVIDED AS PER PROVISO UNDER SECTION 12A(2) OF THE ACT. HE FURTHER REFERRED TO THE EXPLANATORY NOTES INTRODUCING THE SAID PROVISO. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE STRESSED THAT THERE WAS NO CHANGE IN AIMS AND OBJECTS OF THE ASSESSEE TRUST AND IT HAD RECEIVED CORPUS DONATION FROM ITS PARENT BODY TO THE TUNE OF RS.5,00,30,000/ - . THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE REFERRED TO THE ORDER OF ASSESSING OFFICER AND POINTED OUT THAT THE ASSESSEE HAD ONLY CLAIMED CORPUS ITA NO. 18 2 2 /PN/20 1 4 CARMEL HAVEL 7 DONATION AS EXEMPT AND THE BALANCE INCOME WAS OFFERED TO TAX BY WAY OF REVISED RETURN OF INCOME, WHICH HAS BEEN REFERRED TO BY THE ASSESSING OFFICER. HE FURTHER STATED THAT THE CORPUS WAS USED FOR PURCHASE OF LAND. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE PLACED RELIANCE ON THE FOLLOWING DECISIONS: - A) SREE SREE RAMKRISHNA SAMITY VS. DCIT IN ITA NOS.1680 TO 1685/KOL/2012, RELATING TO ASSESSMENT YEARS 2003 - 04 TO 2008 - 09, ORDER DATED 09.10.2015; B) SHREE BHANUSHALI MITRA MANDAL TRUST VS. ITO IN ITA NO.2515/AHD/2015, RELATING TO ASSESSMENT YEAR 2011 - 12 , ORDER DATED 22.02.2016 8. THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE ON THE OTHER HAND, POINTED OUT THAT THE PROVISO IS TO BE APPLIED PROSPECTIVELY. HE FURTHER REFERRED TO THE ORDER OF CIT(A) FROM PARA 5.6.1 ONWARDS AND POINTED OUT THAT SI NCE THE ASSESSEE TRUST WAS NOT REGISTERED IN THE YEAR UNDER CONSIDERATION, THEN NO DEDUCTION UNDER SECTIONS 11 AND 12 OF THE ACT IS TO BE ALLOWED. THEN NO DEDUCTION UNDER SECTIONS 11 AND 12 OF THE ACT IS TO BE ALLOWED. RELIANCE WAS PLACED ON THE RATIO LAID DOWN BY COCHIN BENCH OF TRIBUNAL IN AL - MADEENA CHARITABLE TRUST VS. AC IT (2001) 76 ITD 214 (COCHIN) . 9. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE IN REJOINDER POINTED OUT THAT THE CIT(A) VIDE PARA 5.6.7 HAS MADE ENTIRE DISCUSSION ON NON - REGISTRATION OF ASSESSEE TRUST WHICH HAS NOW BEEN GRANTED BY THE TRIBUNAL V IDE ITS ORDER DATED 27.04.2016. HE FURTHER REFERRED TO THE RELIANCE PLACED UPON BY THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE ON COCHIN BENCH OF TRIBUNAL IN AL - MADEENA CHARITABLE TRUST VS. ACIT (SUPRA) AND POINTED OUT THAT IN THE FACTS OF THE SAID CASE, THE CORPUS DONATIONS WERE DIVERTED TO THE SISTER CONCERN AND HENCE, THE DENIAL OF EXEMPTION. HE STRESSED THAT THE FACTS OF THE SAID CASE WERE COMPLETELY DIFFERENT AND NOT APPLICABLE. WITH REGARD TO FACTS OF AL - MADEENA CHARITABLE TRUST VS. ACI T (SUPRA), IT WAS ALSO POINTED OUT THAT THE ITA NO. 18 2 2 /PN/20 1 4 CARMEL HAVEL 8 ASSESSEE WAS RUNNING NEWSPAPER WHICH WAS NOT INCIDENTAL TO THE ACTIVITIES OF TRUST AND HENCE, DENIAL OF EXEMPTION UNDER SECTION 11 OF THE ACT. 10. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ASSESSEE IS A TRUST WHICH WAS SET UP VIDE TRUST DEED DATED 20.10.2010. THE ASSESSEE TRUST W AS REGISTERED UNDER THE BOMBAY PUBLIC TRUST ACT, 1950 VIDE CERTIFICATE OF REGISTRATION DATED 01.04.2011. THE COPY OF REGISTRATION CERTIFICATE IS PLACED AT PAGE 42 OF THE PAPER BOOK. THE COPY OF TRUST DEED IS PLACED AT PAGES 26 TO 41 OF THE PAPER BOOK. THE OBJECTS OF THE TRUST WERE IN THE FIELD OF EDUCATION, HEALTH AND RELIEF OF THE POOR. HOWEVER, ADMITTEDLY, THE ASSESSEE IS RUNNING AN OLD AGE HOME FOR SENIOR CITI ZENS AND WAS PROVIDING BOARDING, LODGING, HEALTHCARE AND RECREATION . THE ASSESSEE MOVED AN APPLICATION IN FORM 10A ON 05.10.2012 FOR REGISTRATION UNDER SECTION 12A OF THE ACT. THE COMMISSIONER - I, PUNE VIDE ORDER DATED 30.04.2013 REJECTED THE SAID APPLICA TION MOVED BY THE ASSESSEE VIDE ORDER UNDER SECTION 12AA(1)(B)(II) OF THE ACT DATED 30.04.2013. HOWEVER, THE COMMISSIONER OBSERVED THAT THE SAID ORDER SHALL NOT PRECLUDE THE ASSESSEE FROM MAKING A FRESH APPLICATION FOR REGISTRATION UNDER SECTION 12A OF TH E ACT. THE ASSESSEE THEREAFTER, MOVED ANOTHER APPLICATION IN FORM 10A ON 12.11.2013 FOR GRANT OF REGISTRATION UNDER SECTION 12A OF THE ACT. THE CIT(A) VIDE PARA 2 NOTES THAT CERTAIN INFORMATION WAS CALLED FOR FROM THE ASSESSEE REGARDING CHARITABLE ACTIVI TIES CARRIED ON BY THE ASSESSEE AND HE ADMITS THAT THE NATURE OF EXPENDITURE INCURRED WAS ON OLD AGE HOME AND CHAP EL EXPENDITURE. HOWEVER, QUERIES WERE RAISED BY THE COMMISSIONER AS TO HOW THESE WERE CHARITABLE ACTIVITIES. THE ASSESSEE EXPLAINED THE NATU RE OF ACTIVITIES AND ALSO ITS OBJECTS. THE COMMISSIONER VIDE PARA 3.1 OBSERVED THAT THERE WAS NO DISPUTE TO THE FACT THAT THE OBJECTS FOR WHICH THE TRUST HAD BEEN CREATED WERE CHARITABLE IN NATURE. HOWEVER, SINCE THE ITA NO. 18 2 2 /PN/20 1 4 CARMEL HAVEL 9 ASSESSEE HAD COME BEFORE THE COMMISSI ONER AFTER COMMENCEMENT OF ACTIVITIES, THEREFORE, HE WAS OF THE VIEW THAT THE REGISTERING OF TRUST CANNOT ONLY BE JUDGED ON THE BASIS OF OBJECTS MENTIONED IN THE TRUST BUT HAD TO BE JUDGED ON THE BASIS OF GENUINETY OF ACTIVITIES VIS - - VIS OBJECTS FOR WHICH IT WAS CREATED. VIDE PARA 3.2 REGARDING ACTIVITIES OF ASSESSEE TRUST, THE CIT(A) NOTED THAT THE ASSESSEE WAS RUNNING AN OLD AGE HOME. HOWEVER, REGISTRATION UNDER SECTION 12A OF THE ACT WAS DENIED TO THE ASSESSEE BECAUSE THE ASSESSEE HAD NOT APPLIED FOR REGISTRATION IN TIME AND SECONDLY, ITS EARLIER REGISTRATION UNDER SECTION 12A OF THE ACT WAS REJECTED AND ALSO THAT THE ASSESSEE HAD RECEIVED SUBSTANTIAL CORPUS AMOUNTS. THE ASSESSEE WAS IN APPEAL BEFORE THE TRIBUNAL, WHICH IN ITA NO.1482/PN/2014 , VIDE OR DER DATED 27.04.2016 HELD THAT THE ASSESSEE WAS ENTITLED TO THE CLAIM OF REGISTRATION UNDER SECTION 12A OF THE ACT. IN VIEW OF GRANT OF REGISTRATION UNDER SECTION 12A OF THE ACT TO THE ASSESSEE, WHICH WAS PURSUANT TO THE APPLICATION MOVED BY THE ASSESSEE ON 12.11.2013, THE QUESTION WHICH ARISES BEFORE US IS WHETHER THE ASSESSEE IS ENTITLED TO THE CLAIM OF DEDUCTION UNDER SECTIONS 11 AND 12 OF THE ACT FOR THE CAPTIONED ASSESSMENT YEAR I.E. 2011 - 12. 11. DURING THE YEAR UNDER APPEAL, THE ASSESSEE HAD RECEIVE D CORPUS DONATIONS TO THE TUNE OF RS.5,00,30,000/ - FROM ITS PARENT BODY FOR THE PURPOSE OF CONSTRUCTION OF OLD AGE HOME. THE ASSESSEE CLAIMED THAT SINCE THE CORPUS DONATIONS RECEIVED BY IT WAS FOR A SPECIFIC PURPOSE, THEN EVEN DESPITE THE REGISTRATION BEI NG NOT GRANTED UNDER SECTION 12AA OF THE ACT, THE SAID CORPUS DONATIONS WERE NOT TAXABLE IN ITS HANDS. BOTH BEFORE THE ASSESSING OFFICER AND CIT(A), SIMILAR PLEA WAS RAISED AND THE SAID PLEA OF THE ASSESSEE WAS REJECTED IN THE ABSENCE OF ANY REGISTRATION BEING GRANTED UNDER SECTION 12A OF THE ACT. WE HAVE ALREADY REFERRED TO THE OBSERVATIONS OF BOTH THE ASSESSING OFFICER AND ITA NO. 18 2 2 /PN/20 1 4 CARMEL HAVEL 10 CIT(A) IN THE PARAS HEREINABOVE. HOWEVER, NOW BEFORE US, SINCE THE ASSESSEE HAS RECEIVED REGISTRATION UNDER SECTION 12A OF THE ACT PURSUANT TO THE ORDER PASSED BY THE TRIBUNAL IN ASSESSEES OWN CASE ON 27.04.2016 , WHICH ADMITTEDLY RELATES BACK TO THE DATE OF FILING THE APPLICATION UNDER SECTION 12A OF THE ACT I.E. 12.11.2013 , THE QUESTION IS WHETHER THE CORPUS DONATIONS RECEIVED BY TH E ASSESSEE IN THE YEAR UNDER APPEAL ARE NOT TO BE TAXED IN THE HANDS OF ASSESSEE AS THE SAME ARE EXEMPT UNDER SECTIONS 11 AND 12 OF THE ACT. IN THIS REGARD, THE ASSESSEE HAS PLACED RELIANCE ON THE PROVISO INSERTED UNDER SECTION 12A(2) OF THE ACT W.E.F. 01 .10.2014. THE PROVISO READS AS UNDER: - 'PROVIDED THAT WHERE REGISTRATION HAS BEEN GRANTED TO THE TRUST OR INSTITUTION UNDER SECTION 12AA , THEN, THE PROVISIONS OF SECTIONS 11 AND 12 SHALL APPLY IN RESPECT OF ANY INCOME DERIVED FROM PROPERTY HELD UNDER TRUST OF ANY ASSESSMENT YEAR PRECEDING THE AFORESAID ASSESSMENT YEAR, FOR WHICH ASSESSMENT PROCEEDING S ARE PENDING BEFORE THE ASSESSING OFFICER AS ON THE DATE OF SUCH REGISTRATION AND THE OBJECTS AND ACTIVITIES OF SUCH TRUST OR INSTITUTION REMAIN THE SAME FOR SUCH PRECEDING ASSESSMENT YEAR: PROVIDED FURTHER THAT NO ACTION UNDER SECTION 147 SHALL BE TAKEN BY THE ASSESSING OFFICER IN CASE OF SUCH TRUST OR INSTITUTION FOR ANY ASSESSMENT YEAR ASSESSING OFFICER IN CASE OF SUCH TRUST OR INSTITUTION FOR ANY ASSESSMENT YEAR PRECEDING THE AFORESAID ASSESSMENT YEAR ONLY FOR NON - REGISTRATION OF SUCH TRUST OR INSTITUTION FOR THE SAID ASSESSME NT 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 .' 12. THE SAID PROVISO PROVIDES THAT WHERE REGISTRATION HAS BEEN GRANTED TO THE TRUST OR INSTITUTION UNDER SECTION 12A OF THE ACT, THEN IN RESPECT OF ANY INCOME DERIVED FROM PROPERTY HELD UNDER ANY TRUST OF ANY ASS ESSMENT YEAR PRECEDING THE AFORESAID ASSESSMENT YEAR, WOULD BE EXEMPT BY APPLYING THE PROVISIONS OF SECTIONS 11 AND 12 OF THE ACT, WHERE ASSESSMENT PROCEEDINGS WERE PENDING BEFORE THE ASSESSING OFFICER AS ON DATE OF SUCH REGISTRATION AND THE OBJECTS AND AC TIVITIES OF SUCH TRUST OR INSTITUTION REMAINS THE SAME FOR SUCH PRECEDING ASSESSMENT YEAR. WHILE INTRODUCING THE PROVISO UNDER SECTION 12A(2) OF THE ACT BY FINANCE (NO.2) ACT, 2014, THE EXPLANATORY NOTES VERY CLEARLY PROVIDED THAT INSERTION BY WAY OF PROV ISO HAS BEEN MADE IN ORDER TO ITA NO. 18 2 2 /PN/20 1 4 CARMEL HAVEL 11 REMOVE HARDSHIP IN GENUINE CASES AND TO PROVIDE RELIEF TO SUCH TRUSTS, WHEREIN REGISTRATION UNDER SECTION 12A OF THE ACT WAS STILL PENDING AND THE ISSUE AROSE AS TO THE ASSESSABILITY OF DONATIONS AND / OR CORPUS DONATIONS RECE IVED BY SUCH TRUSTS. UNDER THE PROVISO, IF AN APPLICATION HAS BEEN MOVED FOR REGISTRATION AND WHERE THE SAME HAS NOT BEEN REFUSED TO THE ASSESSEE, THEN AND MEANWHILE THE ASSESSMENT PROCEEDINGS WERE PENDING, THEN SUBJECT TO THE CONDITION THAT THE ASSESSEE GETS REGISTRATION UNDER SECTION 12A OF THE ACT, THEN THE INCOME ARISING TO THE ASSESSEE FOR THE CAPTIONED ASSESSMENT YEAR FOR WHICH ASSESSMENT PROCEEDINGS WERE PENDING WOULD MAKE IT ELIGIBLE TO CLAIM EXEMPTION UNDER SECTIONS 11 AND 12 OF THE ACT. MERELY B ECAUSE, THE COMMISSIONER HAS PASSED AN ORDER UNDER SECTION 12AA(1)(D) OF THE ACT REJECTING THE APPLICATION MOVED FOR REGISTRATION WHICH IN TURN, HAS BEEN ALLOWED BY THE TRIBUNAL OR THE HIGHER FORUM, IT CANNOT BE SAID THAT AS ON DATE OF ASSESSMENT PROCEEDIN GS , WHEN THE COMMISSIONER HAD ALREADY DENIED REGISTRATION, IT CANNOT BE SAID THAT THE APPLICATION FOR REGISTRATION HAS BEEN REFUSED UNDER SECTION 12A OF THE ACT, SINCE THE ASSESSEE WAS STILL TO SEEK THE REMEDY BY WAY OF AN APPEAL BEFORE THE TRIBUNAL OR HIG HER FORUMS. 13. THE YEAR UNDER APPEAL IS ASSESSMENT YEAR 2011 - 12, WHEREIN THE ORDER OF ASSESSMENT UNDER SECTION 143(3) OF THE ACT WAS PASSED ON 16.12.2013 I.E. AFTER THE DATE OF FILING THE APPLICATION FOR REGISTRATION UNDER SECTION 12A OF THE ACT ON 12. 11.2013 . T HEREFORE, ON THE DATE WHEN THE APPLICATION FOR REGISTRATION WAS MOVED UNDER SECTION 12A OF THE ACT, THE ASSESSMENT PROCEEDINGS RELATING TO INSTANT ASSESSMENT YEAR WERE PENDING. A DMITTEDLY, THE OBJECTS AND ACTIVITIES OF TRUST REMAINS THE SAME I. E. RUNNING OF AN OLD AGE HOME AND THERE IS NO CHANGE IN THAT. THE QUESTION WHICH ARISES IS WHETHER THE ASSESSEE SINCE HAS BEEN GRANTED REGISTRATION UNDER SECTION 12A OF THE ACT IN LIEU OF APPLICATION ITA NO. 18 2 2 /PN/20 1 4 CARMEL HAVEL 12 MOVED ON 12.11.2013, ON WHICH DATE THE ASSESSMENT PROCE EDINGS WERE PENDING, THEN WHETHER THE ASSESSEE IS ENTITLED TO THE CLAIM OF EXEMPTION UNDER SECTIONS 11 AND 12 OF THE ACT. THE ANSWER TO THE SAME IS YES, IN VIEW OF PROVISO INSERTED UNDER SECTION 12A(2) OF THE ACT. THE PROVISO VERY CLEARLY PROVIDES THAT I N CASE THE ASSESSMENT PROCEEDINGS WERE PENDING AND THE ASSESSEE HAS BEEN GRANTED REGISTRATION UNDER SECTION 12A OF THE ACT, THEN THE PROVISIONS OF SECTIONS 11 AND 12 OF THE ACT WOULD APPLY TO SUCH INCOME DERIVED FROM ANY PROPERTY UNDER THE TRUST, OF ANY AS SESSMENT YEAR, FOR WHICH THE ASSESSMENT PROCEEDINGS WERE PENDING. APPLYING THE SAID RATIO TO THE FACTS OF THE PRESENT CASE, WE HOLD THAT THE ASSESSEE IS ENTITLED TO THE AFORESAID CLAIM. 14. WE FIND SUPPORT FROM THE RATIO S LAID DOWN BY KOLKATA BENCH OF TRIBUNAL IN SREE SREE RAMKRISHNA SAMITY VS. DCIT (SUPRA) AND AHMEDABAD BENCH OF TRIBUNAL IN SHREE BHANUSHALI MITRA MANDAL TRUST VS. ITO (SUPRA) . 15. THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE ON THE OTHER HAND, HAS PLACED RELIANCE ON THE RA TIO LAID DOWN BY COCHIN BENCH OF TRIBUNAL IN AL - MADEENA CHARITABLE TRUST VS. ACIT (SUPRA), WHEREIN THE SAID TRUST WAS ENGAGED IN THE BUSINESS OF PRINTING NEWSPAPER AND IT WAS HELD THAT IT HAD NOT CARRIED OUT ANY CHARITABLE ACTIVITIES AND HENCE, IT WAS HELD TO BE NOT ENTITLED TO THE BENEFIT OF SECTION 11 OF THE ACT IN RESPECT OF INCOME AS WELL AS ITS VOLUNTARY CONTRIBUTIONS RECEIVED TOWARDS CORPUS. HOWEVER, IN THE FACTS OF THE PRESENT CASE, THE ASSESSEE HAS RECEIVED THE CORPUS DONATIONS AND HAS UTILIZED THE AMOUNT FOR PURCHASE OF LAND TO THE EXTENT OF RS. 3.23 CRORES WHICH HAS BEEN REFERRED TO BY THE CIT(A) AND IN THE TOTALITY OF THE ABOVE SAID FACTS AND CIRCUMSTANCES OF THE CASE, WE FIND NO MERIT IN THE ORDERS PASSED BY THE AUTHORITIES BELOW AND REVERSING TH E SAME, WE HOLD THAT THE ASSESSEE IS ENTITLED ITA NO. 18 2 2 /PN/20 1 4 CARMEL HAVEL 13 TO THE CLAIM OF DEDUCTION UNDER SECTIONS 11 AND 12 OF THE ACT. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE THUS, ALLOWED. 1 6 . IN THE RESULT, THE APPEAL OF ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON THIS 26 TH DAY OF AUGUST , 201 6 . SD/ - SD/ - ( R.K. PANDA ) (SUSHMA CHOWLA) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE ; DATED : 26 TH AUGUST , 201 6 . GCVSR / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT ; 2. / THE RESPONDENT; ( ) 3. ( ) / THE C I T (A) - I , PUNE ; 4. / THE C I T - I, PUNE R ; 5. , , / DR A , ITAT, PUNE; 6. / GUARD FILE . / BY ORDER , // TRUE COPY // / SR. PRIVATE SECRETARY , / ITAT, PUNE