West Bengal Trade Promotion Organisation Limited , Kolkata V. ITO (Exemption), Ward - 1(3), Kolkata , Kolkata

ITA 36/KOL/2018

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 8872 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 6 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-07-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 05-01-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RANU BISWAS; I JAMIR
• Keywords: Capital asset; Business income; Depreciation; Charitable institution; Retrospective amendment; Benefit of exemption; Condonation of delay; Reassessment proceedings; CHAPTER IV
• Section: 43B; 40(a)(ia); 12A; 12AA; 113; 72; 13; 22; 147; 148; 144; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C, BENC H KOLKATA BEFORE SHRI S.S.GODARA, JM &DR. A.L.SAINI, AM ./ITA NO.36/KOL/2018 ( / ASSESSMENT YEAR:2009-10) WEST BENGAL TRADE PROMOTION ORGANIZATION LTD. PROTITI, 23, ABANINDRANATH THAKUR SARANI, KOLKATA-700017 VS. ITO (EXEMPTION), WARD-1(3), KOLKATA ./ ./PAN/GIR NO.: AAACW 6096 P (APPELLANT) .. (RESPONDENT) APPELLANT BY : SHRI B. R. DUTTA, CA, SHRI SAURABH BAGARIA, ADVOCATE & SHRI RITESH GOEL, ADVOCATE RESPONDENT BY : SHRI I. JAMIR, CIT, SR. DR & SMT. RANU BISWAS, ADDL. CIT / DATE OF HEARING : 28/02/2020 /DATE OF PRONOUNCEMENT : 28/07/2020 / O R D E R PER DR. A.L. SAINI, AM: THE CAPTIONED APPEAL FILED BY THE ASSESSEE, PERT AINING TO ASSESSMENT YEAR 2009-10, IS DIRECTED AGAINST THE ORDER PASSED BY TH E COMMISSIONER OF INCOME TAX (APPEAL)-25, KOLKATA, IN APPEAL NO. 122/CIT(A)-25/K OL/2015-16, WHICH IN TURN ARISES OUT OF AN ASSESSMENT ORDER PASSED BY THE ASS ESSING OFFICER U/S 144 OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) DATED 31. 03.2015. 2. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE R EADS AS FOLLOWS: 1. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APP EALS) [HERE-IN-AFTER REFERRED TO AS CIT(A)] HAS ERRED IN LAW AND FACTS I N CONFIRMING THE REOPENING OF THE ASSESSMENT FOR THE ASSESSMENT YEAR 2009-10. WEST BENGAL TRADE PROMOTION ORGANISATION LTD. ITA NO. 36/KOL/2018 ASSESSMENT YEAR:2009-10 P PP PA AA AG GG GE EE E | || | 2 22 2 2. THAT THE LEARNED CIT (A) HAS ERRED IN HOLDING TH AT THE CLAIM OF THE ASSESSEE FOR EXEMPTION UNDER THE PROVISIONS OF SECT ION 11 OF THE ACT IS NOT TENABLE AND ALLOWABLE UNDER THE PROVISIONS OF THE A CT. 3. THAT THE LEARNED CIT (A) SHOULD HAVE PASSED A SP EAKING ORDER IN RELATION TO THE APPELLANT'S SUBMISSION THAT THE APPEAL FILED ON 23 APRIL 2015 AGAINST THE ORDER DATED 31 MARCH 2015 PASSED UNDER THE PROV ISIONS OF SECTION 144 OF THE ACT SHOULD BE MERGED WITH THE APPEAL NO. ITA NO.122/CIT(A)- 25/KOL./2015-16. 4. THAT THE CIT (A) HAS FAILED TO REALISE THAT THE APPELLANT HAS BEEN GRANTED REGISTRATION UNDER SECTION 12AA OF THE INCOME TAX A CT, 1961 ON 03.05.2013 WHEREAS THE NOTICE FOR REOPENING THE ASSESSMENT WAS ISSUED ON 27.03.2014 AND AS SUCH THE REOPENING IS BARRED BY LIMITATION A S PER THE AMENDED PROVISION OF SECTION 12A OF THE SAID ACT. 5. THAT, WITHOUT PREJUDICE TO GROUND NOS. 1, 2 AND 3, THE CIT (A) HAS ERRED IN LAW AND ON FACTS OF THE CASE IN NOT ALLOWING RS. 2,35,00,000/- BEING THE COMPENSATION PAID TO THE ENCROACHERS TO THE LAND OF WBTPO DURING THE YEAR ENDED 31 ST MARCH, 2009. 6. THAT THE CIT (A) HAS ERRED IN LAW AND ON FACTS O F THE CASE IN CONFIRMING THE DISALLOWANCE OF THE AMORTISATION OF THE LEASE R ENT PAID IN ADVANCE SPREADING OVER THE PERIOD OF FIVE YEARS. 7. THAT THE APPELLANT CRAVES LEAVE TO ADD, ALTER, A MEND, AMPLIFY OR MODIFY ANY OR ALL OF THE ABOVE GROUNDS OF APPEAL ON OR BEF ORE THE TIME OF HEARING OF APPEAL. 3. WHEN THIS APPEAL WAS CALLED OUT FOR HEARING, THE LD. COUNSEL FOR THE ASSESSEE INVITED OUR ATTENTION TO THE ORDER DATED 05.07.2018 , PASSED BY THE TRIBUNAL IN ASSESSEES OWNCASEIN I.T.A. NO. 156/KOL/2017, FOR A SSESSMENT YEAR 2011-12. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE PRE SENT ISSUE IS SQUARELY COVERED BY THE ABOVE SAID ORDER OF THE TRIBUNAL, A COPY OF WHI CH IS ALSO PLACED BEFORE THE BENCH. 4. THE LD. DR RELIED UPON THE ORDERS OF THE AUTHORI TIES BELOW. WEST BENGAL TRADE PROMOTION ORGANISATION LTD. ITA NO. 36/KOL/2018 ASSESSMENT YEAR:2009-10 P PP PA AA AG GG GE EE E | || | 3 33 3 5. WE SEE NO REASON TO TAKE ANY OTHER VIEW OF THE MATTER THEN THE VIEW SO TAKEN BY THE DIVISION BENCH OF THIS TRIBUNAL IN ASSESSEES O WN CASE VIDE ORDER DATED 05.07.2018. IN THIS ORDER, THE TRIBUNAL HAS INTER A LIA OBSERVED AS UNDER: 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE C OMPANY IS A CONSORTIUM OF THE CENTRAL GOVERNMENT [MINISTRY OF COMMERCE & INDUSTRY - THROUGH THE INDIAN TRADE PROMOTION ORGANISATION], THE STATE GOVERNMENT [THROUGH THE WEST BENGAL INDUSTRIAL DEVELOPMENT CORPORATION, DEPARTMENT OF C OMMERCE & INDUSTRIES], AND THE KOLKATA MUNICIPAL CORPORATION - THE OBJECTS BEING TO FOSTER THE PROMOTION OF TRADE AND 'COMMERCE. FOR IMPLEMENTATIO N PURPOSE - IT IS INCORPORATED AS A COMPANY UNDER SECTION 25 OF THE C OMPANIES ACT, 1956, I.E., THE OBJECTS OF THE COMPANY ARE TO PROMOTE THE OBJECTS O F THE NATURE SPECIFIED IN THE SECTION 25 SUB-SECTION (1), CLAUSE (A) OF THE SAID ACT, AND THAT IT WILL APPLY ITS PROFITS, IF ANY, OR OTHER INCOME IN PROMOTING ITS O BJECTS AND TO PROHIBIT THE PAYMENT OF ANY DIVIDEND TO ITS MEMBERS. IN THE ASSE SSMENT, THE AO ASSESSED THE ASSESSEE AS A COMPANY UNDER CHAPTER IV OF THE ACT - I.E., AS A COMPANY WITH PROFIT MOTIVE/BUSINESS INCOME. THOUGH NOT MENTIONED IN THE ASSESSMENT ORDER, IT IS OBVIOUS THAT THIS WAS BECAUSE OF ABSENCE OF REGISTR ATION U/S 12AA [FOR THIS AY 2011-12]. THUS, WHILE BEING ASSESSED VIS--VIS COMP UTATION UNDER CHAPTER IV, SOME DISALLOWANCES WERE MADE AND THEREAFTER THE AO ASSESSED THE TOTAL INCOME OF ASSESSEE AT RS.2,12,13,110/-. AGGRIEVED, THE ASSESS EE PREFERRED AN APPEAL BEFORE THE LD. CIT(A) WHO DELETED THE ADDITION. AGGRIEVED, REVENUE IS BEFORE US. 4. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUG H THE FACTS AND CIRCUMSTANCES OF THE CASE. WE NOTE THAT THE LD. CIT (A) HAS HELD THAT THE 1ST PROVISO TO SEC. 12A(2) IS RETROSPECTIVE IN OPERATIO N BY RELYING ON THE COORDINATE BENCH DECISION OF THIS TRIBUNAL IN SREESREERAMKRISH NA SAMITY VS. DCIT (2015) 44 ITR (TRIB) 678 (ITAT, KOL). SINCE THE LD. CIT(A) HAS RELIED ON THIS TRIBUNALS DECISION WE WOULD REPRODUCE THE OPERATIVE PORTION O F THE ORDER WHICH IS AS UNDER: 13. IT IS RELEVANT AT THIS JUNCTURE TO GET INTO TH E 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 REPRO DUCED BELOW FOR THE SAKE OF CONVENIENCE :- 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 APP LY IN RELATION 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 TO THE TRUST OR INSTITUTION UNDER SECTION 12AA, THEN, THE PROVISIONS OF SECTION S 11 AND 12 SHALL APPLY IN RESPECT OF ANY INCOME DERIVED FROM PROPERTY HELD UN DER TRUST OF ANY ASSESSMENT YEAR PRECEDING THE AFORESAID ASSESSMENT YEAR, FOR W HICH 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: WEST BENGAL TRADE PROMOTION ORGANISATION LTD. ITA NO. 36/KOL/2018 ASSESSMENT YEAR:2009-10 P PP PA AA AG GG GE EE E | || | 4 44 4 PROVIDED FURTHER THAT NO ACTION UNDER SECTION 147 S HALL BE TAKEN BY THE ASSESSING OFFICER IN CASE OF SUCH TRUST OR INSTITUTION FOR AN Y ASSESSMENT YEAR PRECEDING THE AFORESAID ASSESSMENT YEAR ONLY FOR NON-REGISTRATION OF SUCH TRUST OR INSTITUTION FOR THE SAID ASSESSMENT YEAR: PROVIDED ALSO THAT PROVISIONS CONTAINED IN THE FIR ST 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 TIM E UNDER SECTION 12AA. 14. ADMITTEDLY, THE REASSESSMENT PROCEEDINGS WERE P ENDING 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 REASSESSMENT PROCEEDINGS GOT COMMENCED PURSUANT TO ISSUANCE OF N OTICE U/S 148 ON 30.3.2010 AS STATED SUPRA. ADMITTEDLY, THE OBJECTS AND ACTIVI TIES OF THE TRUST HAD REMAINED THE SAME IN PRECEDING ASSESSMENT YEARS ALSO I.E ASS T YEARS 2003-04 TO 2008-09. THOUGH THIS FIRST PROVISO TO SECTION 12A(2) TALKS A BOUT 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 INCLUDES REASSESSMENT. HENCE EVEN REASSESSMENT PROCEEDINGS THAT WERE PENDING WOULD ALSO COME UNDER THE AMBIT OF THE FIRST PROVISO TO S ECTION 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 INSTITUTION. READING THIS PROVISO WITH THE FIRST PROVISO TO SECTION 12A( 2) AND APPLYING THE RULE OF HARMONIOUS CONSTRUCTION, IT COULD SAFELY BE CONCLUD ED THAT THE LEGISLATURE IN ITS WISDOM HAD ONLY BROUGHT THIS PROVISO TO PREVENT GEN UINE HARDSHIP THAT COULD BE CAUSED ON THE ASSESSEE DUE TO 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 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 TRU STS FOR EARLIER ASSESSMENT YEARS ALSO WHO HAD NOT APPLIED FOR REGISTRATION U/S 12AA OF THE ACT AT ALL. 17. WE HOLD THAT THE REGISTRATION OF TRUST UNDER S ECTION 12A OF THE ACT ONCE DONE IS A FAIT ACCOMPLI AND THE AO CANNOT THEREAFTER MAK E FURTHER PROBE INTO THE OBJECTS OF THE TRUST. RELIANCE IN THIS REGARD IS PL ACED ON THE DECISION OF THE HONBLE APEX COURT RENDERED IN THE CASE OF ACIT VS SURAT CITY GYMKHANA REPORTED IN (2008) 300 ITR 214 (SC). DRAWING ANALOG Y FROM THIS JUDGEMENT, THE LOGICAL INFERENCE COULD BE THAT AS LONG AS THE OBJE CTS WERE CHARITABLE IN NATURE IN THE EARLIER YEARS AND IN THE YEAR IN WHICH REGISTRA TION U/S 12AA WAS GRANTED, THE EXISTENCE OF TRUST FOR CHARITABLE PURPOSES IN THE E ARLIER YEARS CANNOT BE DOUBTED WITH. EVEN OTHERWISE, NO ADVERSE FINDINGS WERE GIVE N BY THE REVENUE WITH REGARD TO THE EXISTENCE OF THE ASSESSEE SOCIETY FOR CHARIT ABLE PURPOSES IN THE ASSESSMENT YEARS UNDER APPEAL. WEST BENGAL TRADE PROMOTION ORGANISATION LTD. ITA NO. 36/KOL/2018 ASSESSMENT YEAR:2009-10 P PP PA AA AG GG GE EE E | || | 5 55 5 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 REPR ODUCED HEREINBELOW FOR THE SAKE 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 TO ABSENCE OF REGISTRATION, TAX LIABILITY IS FASTENED EVEN THO UGH THEY MAY OTHERWISE BE ELIGIBLE FOR EXEMPTION AND FULFILL OTHER SUBSTANTIVE CONDITI ONS. HOWEVER, THE POWER OF CONDONATION OF DELAY IN SEEKING REGISTRATION WAS NO T AVAILABLE. 19. THIS CLEARLY GOES TO PROVE THAT THE FIRST PROVI SO TO 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 OBJECTS IN THE EARLIER YEARS AND SUBSTANTIVE CONDITIONS STIPULATED IN SECTION 11 TO 13 HAVE BEEN DULY FULFILLED BY THE SAID TRUST. THE BENEFIT OF RE TROSPECTIVE APPLICATION ALONE COULD BE THE INTENTION OF THE LEGISLATURE AND THIS POINT IS FURTHER STRENGTHENED BY THE EXPLANATORY NOTES TO FINANCE (NO. 2) ACT, 2014 ISSU ED BY THE CENTRAL BOARD OF DIRECT TAXES VIDE ITS CIRCULAR NO. 01 / 2015 DATED 21.1.2015. 20. APPARENTLY THE STATUTE PROVIDES THAT REGISTRATI ON ONCE GRANTED IN SUBSEQUENT YEAR, THE BENEFIT OF THE SAME HAS TO BE APPLIED IN THE EARLIER ASSESSMENT YEARS FOR WHICH ASSESSMENT PROCEEDINGS ARE PENDING BEFORE THE LEARNED AO, UNLESS THE REGISTRATION GRANTED EARLIER IS CANCELLED OR REFUSE D FOR SPECIFIC REASONS. THE STATUTE ALSO GOES ON TO PROVIDE THAT NO ACTION U/S 147 COULD BE TAKEN BY THE AO MERELY FOR NON-REGISTRATION OF TRUST FOR EARLIER YE ARS. 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 THE ACT, WE WOULD LIKE TO STATE THAT INCOME DEFINITION IS AN INCLUSIV E DEFINITION. AN INCLUSIVE DEFINITION EXTENDS THE SPECIFIC MEANING GIVEN IN TH E STATED ITEMS BY THE GENERAL MEANING AS COMMONLY UNDERSTOOD BY THE SAID EXPRESSI ON WHICH IS DEFINED IN A STATUTE. THE WORD INCOME AS IS COMMONLY 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) H AD UNDERGONE AMENDMENT BY WAY OF INSERTION OF CLAUSE (IIA) BY FINANCE ACT, 19 72 WITH EFFECT FROM 1.4.1973. IN THIS CONNECTION, IT WILL BE RELEVANT TO GET INTO TH E MEMORANDUM EXPLAINING THE PROVISIONS IN FINANCE ACT 1972 REPORTED IN 83 ITR ( ST.) 173, WHEREIN PARAGRAPHS 24 AND 25 CLEARLY DEFINE THE SCOPE OF THE AMENDMENT WHEREIN IN PARAGRAPH 25(I) , THE CONCLUDING SENTENCE IS AS UNDER:- CONTRIBUTION S RECEIVED WITH A SPECIFIC DIRECTION THAT THEY WILL FORM PART OF THE CORPUS OF THE TRUST OR DISTRIBUTION WILL, HOWEVER, NOT BE REGARDED 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 CONTRIBUTIONS / DONATIONS RECEIVED WITH A SPECIFIC DIRECTION THAT T HEY WILL FORM PART OF THE CORPUS OF THE TRUST FOR UTILIZATION IN ACQUISITION / CONST RUCTION OF A CAPITAL ASSET. THUS WHAT IS NOT INCOME AS PER THE DEFINITION OF THE WOR D INCOME IN THE ACT CANNOT BE WEST BENGAL TRADE PROMOTION ORGANISATION LTD. ITA NO. 36/KOL/2018 ASSESSMENT YEAR:2009-10 P PP PA AA AG GG GE EE E | || | 6 66 6 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 W HERE 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 TAXATION TO RECEIPTS WHICH ARE LIABLE TO TAXATION BUT FOR THE P ROVISION 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 M AKE THE PROVISION WORKABLE, A PROVISO WHICH SUPPLIES AN OBVIOUS OMISSION IN THE SECTION AND IS REQUIRED TO BE READ INTO THE SECTION TO GIVE THE SECTION A REASONA BLE INTERPRETATION, REQUIRES TO BE TREATED AS RETROSPECTIVE IN OPERATION, SO THAT A RE ASONABLE INTERPRETATION CAN BE GIVEN TO THE SECTION 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 DAT E WHEN THE CONDITION OF ELIGIBILITY FOR EXEMPTION UNDER SECTION 11 & 12 AS MENTIONED IN SECTION 12A PROVIDED FOR REGISTRATION U/S 12AA AS A PRE-CONDITI ON FOR APPLICABILITY OF SECTION 12A. RELIANCE IN THIS REGARD IS PLACED ON THE FOLLO WING DECISIONS :- ALLIED MOTORS P LTD VS CIT REPORTED IN (1997) 224 ITR 677 (SC) JUDGEMENT BY THREE JUDGES OF THE SUPREME COURT (PAGE 686). THE DEPARTMENTAL UNDE RSTANDING ALSO APPEARS TO BE THAT SECTION 43B, THE PROVISO AND EXPLANATION 2 HAVE TO BE READ TOGETHER AS EXPRESSING THE TRUE INTENTION OF SECTION 43B. EXPLANATION 2 HAS BEEN EXPRESSLY MADE RETROSPECTIVE . THE FIRST PROVISO, HOWEVER, CANNOT BE ISOLATED FROM EXPLANATION 2 AND THE MAIN BODY OF SECTION 43B. WITHOUT THE FIRST PROVISO, EXPLANATION 2 WOULD NOT OBVIATE THE HARDSHIP OR THE UNINTENDED CONSEQUENCES OF SECTION 43B. THE PROVISO SUPPLIES A N 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 PERMISSIBLE DEDUCTIONS. IN THE CASE OF GOODYEAR INDIA LTD VS STATE OF HARYANA (1991) 188 ITR 402 , THIS COURT SAID THAT THE RULE OF REASONABLE CONSTRUCTION MUST BE APPLIED WHILE CONSTRUING A STATUTE. LITERAL CONS TRUCTION SHOULD BE AVOIDED IF IT DEFEATS THE MANIFEST OBJECT AND PURPOSE OF THE ACT. AS OBSERVED BY G.P.SINGH IN HIS PRINCIPLES OF STATUTORY INTERPRETATION, 4TH EDN ., PAGE 291, IT IS WELL SETTLED THAT IF A STATUTE IS CURATIVE OR MERELY 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 RETROSPECTIVE. THE VIEW, THEREFORE, TAKEN BY THE DELHI HIGH COURT CANN OT 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 B ELOW:- THE SUPREME COURT IN THE CASE OF ALLIED MOTORS P LTD AND ALSO IN THE CAS E OF ALOM EXTRUSIONS LTD HAS ALREADY DECIDED THAT THE AFORESAID PROVISION HAS RE TROSPECTIVE APPLICATION. AGAIN, IN THE CASE REPORTED IN 82 ITR 570, THE SUPREME COU RT HELD THAT THE PROVISION, 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 COUR T (PAGE 487): 33.WE WOULD ALSO LIKE TO POINT OUT, FOR THE SAKE OF COMPLETENES S, 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 SO ME PERSONS BUT WITHOUT INFLICTING A WEST BENGAL TRADE PROMOTION ORGANISATION LTD. ITA NO. 36/KOL/2018 ASSESSMENT YEAR:2009-10 P PP PA AA AG GG GE EE E | || | 7 77 7 CORRESPONDING DETRIMENT ON SOME OTHER PERSON OR ON THE PUBLIC GENERALLY, AND WHERE TO CONFER SUCH BENEFIT APPEARS TO HAVE BEEN T HE LEGISLATORS OBJECT, THEN THE PRESUMPTION WOULD BE THAT SUCH A LEGISLATION, GIVIN G IT A PURPOSIVE CONSTRUCTION, WOULD WARRANT IT TO BE GIVEN A RETROSPECTIVE EFFECT . THIS EXACTLY IS THE JUSTIFICATION TO TREAT PROCEDURAL PROVISIONS AS RETROSPECTIVE. 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 CO NFERRING A BENEFIT, IN THE CONTEXT OF IT TO BE GIVEN A RETROSPECTIVE OPERATION. THE SA ME DOCTRINE OF FAIRNESS, TO HOLD THAT A STATUTE WAS RETROSPECTIVE IN NATURE, WAS APP LIED 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, EV EN IN THE ABSENCE OF A PROVISION THE STATUTE MAY BE HELD TO BE RETROSPECTI VE 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 BU RDEN OR LIABILITY WHERE THE PRESUMPTION ATTACHES TOWARDS PROSPECTIVITY. IN THE INSTANT CASE, THE PROVISO ADDED TO SECTION 113 OF THE ACT IS NOT BENEFICIAL TO THE ASSESSEE. ON THE CONTRARY, IT IS A PROVISION WHICH IS ONEROUS TO THE ASSESSEE. THEREFO RE, IN A CASE LIKE THIS, WE HAVE TO PROCEED WITH THE NORMAL RULE OF PRESUMPTION AGAI NST RETROSPECTIVE OPERATION. THUS, THE RULE AGAINST RETROSPECTIVE OPERATION IS A FUNDAMENTAL 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 FRAMED, THE RULE IS NO MORE THAN A PRESUMPTION, AND THUS COULD BE DISPLACED BY OUT WEI GHING FACTORS. CIT VS J.H.GOTLA REPORTED IN (1985) 156 ITR 323 (SC) IF TH E PURPOSE OF A PARTICULAR PROVISION IS EASILY DISCERNIBLE FROM THE WHOLE OF T HE 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 T HAT PURPOSE IN MIND, WE SHOULD FIND OUT THE INTENTION FROM THE LANGUAGE USED BY TH E LEGISLATURE AND IF STRICT LITERAL CONSTRUCTION LEADS TO AN ABSURD RESULT, I.E., RESUL T NOT INTENDED TO BE SUBSERVED BY THE OBJECT OF THE LEGISLATION FOUND IN THE MANNER I NDICATED BEFORE, THEN ANOTHER CONSTRUCTION IS POSSIBLE APART FROM STRICT LITERAL CONSTRUCTION THEN THAT CONSTRUCTION SHOULD BE PREFERRED TO THE STRICT LITE RAL 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 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 STATUTORY PROVISION IS TO BE INTERPRETED UT RES MAGIS VALEAT QUAMPEREAT, I.E TO MAKE IT WORKABLE RATHER THAN REDUNDANT. APPLYING THIS LEGAL MAXIM, IT WOULD BE J UST AND FAIR TO HOLD THAT THE AMENDMENT IN SECTION 12A IS BROUGHT IN 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 P AST AS WELL AS IN THE CURRENT YEAR BASED ON WHICH THE REGISTRATION U/S 12AA IS GR ANTED BY THE DIT(EXEMPTIONS). 25. WE HOLD THAT THE ARGUMENTS OF THE LEARNED AR TH AT, EVEN ASSUMING WITHOUT CONCEDING, IN THE WORST SCENARIO, THE ASSESSEE SOCI ETY COULD ONLY BE TAXED IN THE STATUS OF AN AOP DOES NOT REQUIRE ANY ADJUDICATION AS WE HOLD THAT THE ASSESSEE SOCIETY TO BE CONSTRUED AS A PUBLIC CHARITABLE TRUS T AND ELIGIBLE TO CLAIM WEST BENGAL TRADE PROMOTION ORGANISATION LTD. ITA NO. 36/KOL/2018 ASSESSMENT YEAR:2009-10 P PP PA AA AG GG GE EE E | || | 8 88 8 EXEMPTION U/S 11 OF THE ACT FOR THE EARLIER ASSESSM ENT YEARS, MORE ESPECIALLY, ASST YEARS 2003-04 TO 2008-09 , THE DONATIONS RECEIVED F ROM VARIOUS DONORS FOR CONSTRUCTION OF AN OLD AGE HOME WOULD TAKE THE CHAR ACTER 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 DONAT ION 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, GENUINITY OF THE DONORS AND ITS UTILIZAT ION IN THE REMAND PROCEEDINGS. HENCE IN ANY CASE, A RECEIPT WHICH IS BY BIRTH, CAP ITAL IN NATURE, CANNOT CHANGE ITS CHARACTER MERELY FOR WANT OF REGISTRATION OF SOCIET Y 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 SOCIET Y, IN WHICH EVENT, THE DONATIONS RECEIVED THEREON WOULD TAKE THE CHARACTER OF REVENU E RECEIPTS REQUIRING TO BE CREDITED IN THE INCOME AND EXPENDITURE ACCOUNT FOR UTILIZATION TOWARDS CHARITABLE OBJECTS THEREON. HENCE WE HOLD THAT IN ANY CASE, TH E DONATIONS RECEIVED BY THE ASSESSEE SOCIETY CANNOT BE BROUGHT TO TAX IN THE AS SESSMENT. 26. WE HOLD THAT SINCE THE ONLY REASON FOR DENIAL OF EXEMPTION U/S 11 WAS ABSENCE OF REGISTRATION U/S 12AA (WHICH WAS GRANTED TO ASSESSEE SOCIETY ON 29.10.2010 WITH EFFECT FROM 1.4.2010) FOR THE RELEV ANT ASSESSMENT YEARS AND ON NO OTHER GROUND, THE BENEFIT OF CHANGE IN LAW AS ABOVE BY FINANCE ACT 2014 SHOULD BE AVAILABLE AND FOR ALL THE YEARS, THE BENEFIT OF EXEMPTION SHOULD BE AVAILABLE ON THE DATE OF REGISTRATION AS ALL THE ASSESSMENTS WER E PENDING AS SHOWN ABOVE. IN THIS CONNECTION, IT REQUIRES MENTION SPECIFICALLY T HAT 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 HOME) FOR WHICH THEY WERE RECEIVED. 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 OPERATI ON. 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 1ST PROVISO TO SUB-SECTI ON (2) OF SECTION 12A OF THE ACT HAS BEEN ANSWERED AS RETROSPECTIVE IN OPERATION B Y THE LD. CIT(A) AFTER TAKING NOTE OF THE ORDER OF COORDINATE BENCHS DECISION OF THIS TRIBUNAL IN SREESREERAMKRISHNA SAMITY (SUPRA) WHEREIN THE TRIBU NAL HAD HELD AT PARA 27 THAT THE INSERTION OF THE PROVISO TO SEC. 12A(2) O F 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. THEREFORE, EVEN THOUGH THE ASSESSMENT ORDER HAS BEE N PASSED ON 28.03.2014, FOR THE ENDS OF JUSTICE AND FAIR PLAY AND TAKING INTO C ONSIDERATION THE FACT THAT THE ASSESSEE IS BASICALLY A CONSORTIUM OF STATE GOVT., CENTRAL GOVT AND MUNICIPAL CORPORATION WHICH WAS INCORPORATED 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 IS PERTIN ENT TO NOTE THAT THAT IT WILL APPLY ITS PROFIT IF ANY OR OTHER INCOME IN PROMOTING ITS OBJECTS AND IT PROHIBITS THE PAYMENT OF ANY DIVIDEND TO ITS MEMBERS. THUS, THE L D. CIT(A) HAS RIGHTLY NOTED WEST BENGAL TRADE PROMOTION ORGANISATION LTD. ITA NO. 36/KOL/2018 ASSESSMENT YEAR:2009-10 P PP PA AA AG GG GE EE E | || | 9 99 9 THAT THE ASSESSEES ACTIVITIES ARE FOR CHARITABLE P URPOSES. THEREFORE, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD. CIT(A) I N THIS REGARD AND WE DISMISS THE APPEAL OF THE REVENUE. THUS WE FIND THAT THE LD. CI T(A) HAS RIGHTLY HELD THAT THE BENEFIT OF GRANT OF REGISTRATION U/S. 12AA OF THE A CT ALSO NEED TO BE EXTENDED TO AY 2011-12 AND, THEREFORE, 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 ACCO UNT OF AMORTIZED LEASE RENT PAYMENT AND DISALLOWANCE MADE OF RS.19,40,000/- ON ACCOUNT OF DEPRECIATION ON LEASEHOLD LAND. SINCE WE UPHELD THE DIRECTION OF TH E LD. CIT(A) TO EXTENT THE BENEFIT OF GRANT OF REGISTRATION U/S 12AA OF THE AC T TO THIS AY 2011-12 AND, THEREFORE, THE ASSESSEE IS ELIGIBLE TO CLAIM EXEMPT ION OF ITS INCOME U/S. 11 OF THE ACT. THE EXPENDITURE 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. THERE FORE, WE DO NOT FIND ANY MERIT IN THESE GROUNDS OF APPEAL AND SO STAND DISMISSED. 6.A SIMILAR/IDENTICAL CASE OF SHREE RAMKRISHNA SAMI TY VS. DCIT, CIRCLE-2, SILIGURI [2015] (ITA NOS. 1680-1685/KOL) ITAT, KOLKATA C B ENCH HAD EXAMINED THE ISSUE ON THE RETROSPECTIVITY OPERATION OF THE 1 ST PROVISO TO SUB-SECTION (2) OF SECTION 12A, AS FOLLOWS: IN CONCLUSION WE HOLD THAT THE INSERTION OF THE P ROVISO TO SECTION 12A(2) OF THE ACT HAS TO BE CONSTRUED AS RETROSPECTIVE IN OPERATION. AS SUCH THE EXEMPTION CLAIMS IN RESPECT OF THE INC OME FOR THE ASSESSMENT YEARS 2003-04 TO 2008-09, THE ASSESSMENTS OF WHICH WERE P ENDING ON THE DATE OF REGISTRATION UNDER SECTION 12AA OF THE ACT ON 29.10 .2010 WITH EFFECT FROM 01.04.2010, NEEDS TO BE ASSESSED UNDER SECTION 12A READ WITH SECTION 11 AND 12 OF THE ACT. 7.AS THE ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF CO- ORDINATE BENCH IN THE ASSESSEES OWN CASE AND THERE IS NO CHANGE IN FACTS AND LAW AND THE REVENUE IS UNABLE TO PRODUCE ANY MATERIAL T O CONTROVERT THE ABOVE SAID FINDINGS OF THE CO-ORDINATE BENCH (SUPRA). THEREFOR E, RESPECTFULLY FOLLOWING THE DECISION OF CO-ORDINATE BENCH WE ALLOW GROUNDS OF A PPEAL RAISED BY THE ASSESSEE. 8. SINCE WE HAVE ALLOWED THE APPEAL OF THE ASSESSEE ON MERITS THEREFORE TECHNICAL GROUND RAISED BY THE ASSESSEE CHALLENGING THE REOPE NING OF THE ASSESSMENT U/S 147 WEST BENGAL TRADE PROMOTION ORGANISATION LTD. ITA NO. 36/KOL/2018 ASSESSMENT YEAR:2009-10 P PP PA AA AG GG GE EE E | || | 1 11 10 00 0 OF THE ACT IS RENDERED ACADEMIC AND INFRUCTUOUS AS PER LEARNED AUTHORIZED REPRESENTATIVE, HENCE DOES NOT REQUIRE ADJUDICATION . 9. BEFORE PARTING, IT IS NOTED THAT THE ORDER IS B EING PRONOUNCED AFTER 90 DAYS OF HEARING. HOWEVER, TAKING NOTE OF THE EXTRAORDINARY SITUATION IN THE LIGHT OF THE COVID-19 PANDEMIC AND LOCKDOWN, THE PERIOD OF LOCKD OWN DAYS NEED TO BE EXCLUDED. FOR COMING TO SUCH A CONCLUSION, WE RELY UPON THE DECISION OF THE CO- ORDINATE BENCH OF THE MUMBAI TRIBUNAL IN THE CASE O F DCIT VS JCB LIMITED IN ITA NO 6264/MUM/2018 AND ITA NO. 6103/MUM/2018 FOR A.Y. 2013-14 ORDER DATED 14.05.2020. 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS P ARTLY ALLOWED. ORDER PRONOUNCED IN THE COURT ON 28.07.2020 SD/- ( S. S. GODARA ) SD/- (A. L. SAINI) / JUDICIAL MEMBER / ACCOUNTANT MEMBER /KOLKATA; / DATE: 28 /07/2020 ( SB, SR.PS ) COPY OF THE ORDER FORWARDED TO: 1. WEST BENGAL TRADE PROMOTION ORGANISATION LTD. 2. ITO(EXEMPTION), WARD-1(3), KOLKATA 3. C.I.T(A)- 4. C.I.T.- KOLKATA. 5. CIT(DR), KOLKATABENCHES, KOLKATA. 6. GUARD FILE. TRUE COPY BY ORDER ASSIST ANT REGISTRAR ITAT, KOLKA TA BENCHES