M/s.Santhula Charitable Trust, Ernakulam V. Dy.Director of Incometax, Cochin

ITA 538/COCH/2015

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 8538 (ITAT-COCHIN)
• Duration Of Justice: 6 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-06-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 07-06-2016
• Assessment Year: 2006-2007
• Appeal Filed On: 02-12-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SHANTOM BOSE
• Assessee Lawyers: N UNNIKRISHNAN
• Keywords: Charitable institution; Opportunity of being heard; Maximum Marginal Rate; Application of stay; Retrospective amendment; Capital receipt; Condonation of delay
• Section: 12A; 12AA; 147; 148; 6

Judgement Text

ITA NO . 538/C/15 & SP NO.90/CC/2015 1 IN THE INCOME TAX APPEL L A TE T R IBUNAL COCHIN BENCH , COCHIN BEFORE S/SH RI B P JAIN , A M & G EORGE GEORGE.K , J M ITA NO .538/COCH/2015 ( A SST YEAR 2006 - 07 ) & STAY PETITION NO.90/COCH/2015 SANTHULA CHARTIBALE TRUST VADAKARA OLIYAPURAM PO KOOTHATTUKULAM ERNAKULAM 686 679 VS THE DY DIRECTOR OF INCOME TAX TA(EXEMPTION) KOCHI ( APPELLANT) (RESPONDENT) PAN NO. AAHTS3966L ASSESSEE BY SH N UNNIKRISHNAN REVENUE BY SH SHANTOM BOSE, CIT - DR DATE OF HEARING 8 TH JUNE 2016 DATE OF PRONOUNCEMENT 10 TH JUNE 2016 OR D ER PER GEORGE GEORGE. K. J M: THIS APPEAL, AT THE INSTANT OF THE ASSESSEE TRUST, IS DIRECTED AGAINST THE CIT(A) ORDER DATED 11 TH SEPT 2015. THE RELEVANT ASSESSMENT YEAR IS 2006 - 07. THE ASSESSEE HAS ALSO FILED STAY PETITION SEEKING STAY OF DEMAND OF RS. 3,68,536/ - . 2 FIRST WE SHALL TAKE UP FOR ADJUDICATION THE APPEAL IN ITA NO. 538/COCH/2015. THE GROUNDS RAISED READ AS FOLLOWS: 1 . THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) - III , KOCHI IS OPPOSED TO LAW , FACTS AND CIRCUMSTANCES OF THE CA SE. 2 . THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) - III ,KOCHI HAS GONE W RONG ITA NO . 538/C/15 & SP NO.90/CC/2015 2 IN HOLDING THAT THE SUM OFRS . 6 , 50 , 000 / - RECEIVED FROM THE TRUSTEES TOWARDS CORPUS FUND IS CLEARLY COVERED BY THE PROVISION OF SEE 2(24)(IIA) AND HENCE IT IS THE INCOME OF THE TRUST . 3 . THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) , HAS COMMITTED A LEGAL ERROR IN CONCLUDING THAT ALL THE THREE DECISIONS RELIED ON BY THE APPELLANT VIZ. I ) ITO (EXEMPTIONS) VS. SMT . BASANTI DEVI AND SHRI. CHAKHANLAL GARG EDUCATION TRUST (ITA NO.508 2 (DEL) 2010) , II) ITO VS. MLS . GOWDIAGRANTHANUVED TRUST ( I TA NO . 386 / AGRA / 20I2) , AND III) HIGH COU R T OF MADRAS IN THE CASE OFCIT VS . NAGI REDDY CHARITIES REPORTED IN 241 ITR 431. ARE NOT APPLICABLE IN THE APPELLANT ' S CASE SINCE THE FACTS OF THE CASE ARE QUITE DIFFERENT FROM APPELLANT ' S OWN CASE. 4 . THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) , HAS COMMITTED A MISTAKE IN RELYING ON THE DECISION BY THE HON ' BLE ITA T LUCKNOW, IN THE CASE OF AWADH PUBLIC SCHOOL ACADEMY VS. INCOME TAX OFFICER IN ITAN O . 548 / LKW / 20I2 DATED 29/08 / 2014 , SINCE THE FACTS OF THAT CA S E IS ENTIRELY DIFFERENT FROM THAT OF THE APPELLANT . 5 . THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) , HAS ERRED IN REL Y ING ON THE DECISION OF THE HON'BLE SUPREME COURT OF INDIA IN THE CASE OF U P FOREST COR P ORATION AND ANOTHER VS . DCIT REPORTED IN 297 I SC( 2008),THAT FOR A TR U ST OR INSTITUTION TO CLAIM BENEFIT U / S II (I )(A) AND SEE 12 OF THE INCOME TAX ACT 1961,REGISTRATION OF THE TRUST OR INSTITUTION U / S 12A IS A CONDITION PRECEDENT, CONSI DERING THE SUBSEQUENT CLARIFICATORY AMENDMENT TO SEE 12A(2) BY THE FINANCE (NO.2) ACT,20 14 W.E.F 1 - 10 - 20 14,BY INSERTION OF A NEW PROVISO TO THE EFFECT THAT 'PROVIDED THAT WHERE REGISTRATION HAS BEEN GRANTED TO THE TRUST OR INSTITUTION U/S 12AA THEN, THE PROVISIONS OF SEE 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 PROCEEDINGS 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 U/S 147 SHALL BE TAKEN BY THE ASSESSING OFFICER IN CASE OF SUCH TRUST OR INSTITUTION F OR ANY 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 FIRST AND SECOND PROVISO SHALL NOT APPLY IN CASE OF ANY TRU ST OR INSTITUTION WHICH WAS REFUSED REGISTRATION OR THE REGISTRATION GRANTED TO IT WAS CANCELLED AT ANY TIME U/S 12AA'. 6 . THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS), HAS GONE WRONG IN CONFIRMING THE ADDITION OF RS. 6,50,0001 - MADE BY THE ASSESSING OFFI CER ON THE PLEA THAT SINCE THE TRUST IS NOT GRANTED REGISTRATION DURING THE FINANCIAL YEAR RELEVANT TO THE A Y 2006 - 07,THE INCOME RECEIVED UNDER CORPUS DONATION IS NOT EXEMPT UNDER THE INCOME TAX ACT,1961 . ITA NO . 538/C/15 & SP NO.90/CC/2015 3 7. SUCH OTHER GROUNDS THAT MAY BE RAISED AT THE TIME OF OR BEFORE THE DATE OF HEARING. 3 BRIEFLY STATED THE FACTS OF THE CASE ARE AS FOLLOWS: THE ASSESSEE IS A TRUST CONSTITUTED ON 24 TH FEB 2006. THE ASSESSEE TRUST WAS F OR MED TO ESTABLISH MENTAL HEALTH CENTERS. IT HAD APPLIED FOR REGISTRATION U/S 1 2A OF THE I T ACT ON 27 TH MARCH 2009. THE ASSESSEE TRUST WAS GRANTED REGISTRATION U/S 12AA VIDE ORDER DATED 14 TH SEPT 2009 W.E.F ASSESSMENT YEAR 2009 - 10. 4 N OTICE U/S 148 WAS ISSUED ON 29 TH MARCH, 2010 FOR REOPENING THE ASSESSMENT FOR THE AY 2006 - 07. TH E AO, VIDE ORDER DATED 27 TH DEC 2010 COMPETED THE ASSESSMEN T FOR THE AY 2006 - 07 U/S 143 (3) R.W.S 147 OF THE ACT. THE CONTRIBUTION CLAIMED TO BE CORPUS FUNDS MADE BY THE TRUSTEES AMOUNTING TO RS. 6,50,000/ - WAS TAXED AS INCOME IN THE HANDS OF THE AS SESSEE TRUST . THE REASONING OF THE AO WAS THAT THE ASSESSEE TRUST WAS NOT GRANTED REGISTRATION U/S 12AA OF THE I T ACT FOR THE AY 2006 - 07 . 5 AGGRIEVED, THE ASSESSEE PREFERRED APPEAL TO THE FIRST APPELLATE AUTHORITY. IT WAS CONTENDED BEFORE THE FIRST AP PELLATE AUTHORITY THAT THE SUM OF RS. 6,50,000/ - WAS THE CONTRIBUTIONS MADE BY THE TRUSTEES TOWARDS CORPUS FUNDS OF THE TRUST. IT WAS SUBMITTED THAT THIS AMOUNT WAS A CAPITAL RECEIPT AND CANNOT ITA NO . 538/C/15 & SP NO.90/CC/2015 4 BE TREATED AS INCOME U/S 2(24)(IIA) OF THE ACT. FOR THE ABOVE PROPOSITION, THE ASSESSEE RELIED ON THE FOLLOWING JUDICIAL PRONOUNCEMENTS : I) ITO (EXEMPTIONS) VS SMT BASANTI DEVI & SHRI CHAKHAN LAL GARG EDUCATION TRUST ITA NO.5082/DEL/2010; II) ITO VS M/S GOWDIA GRANTH AN UVED TRUST ITA NO.386/AGRA/2012; III)CIT VAS NAGI REDDY CHARITIES 241 ITR 431 6 THE CIT, HOWEVER, REJECTED THE CONTENTIONS RAISED BY THE ASSESSEE AND HELD THAT IN THE ABSENCE OF REGISTRATION U/S 12A, THE CONTRIBUTIONS BY VARIOUS PERSONS , AMOUNTING TO RS. 6,50,000/ - , IS RIGHTLY TREATED BY THE AO, AS INCOME U/S 2(24)(IIA) OF THE ACT. THE CIT(A) ALSO RELIED ON THE ORDER OF THE LUCKNOW BENCH OF THE TRIBUNAL IN THE CASE OF AWADH PUBLIC SCHOOL ACADEMY VS ITO IN ITA NO.584/LKW/2012 DATED 29 TH AUG 2014. 7 THE ASSESSEE BEING AGGRIEVED IS IN APPEAL BEFORE US. THE LD COUNSEL FOR THE ASS ESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE INCOME TAX AUTHORITIES. IT WAS FURTHER SUBMITTED THAT THE ORDER OF THE LUCKNOW BENCH OF THE TRIBUNAL IN THE CASE OF AWADH PUB LIC SCHOOL ACADEMY (SUPRA), IS NOT APPLICABLE TO THE FACTS OF THE INSTANT CASE; SINCE IN THAT CASE, CONTRIBUTION WAS RECEIVED AS DONATION FROM VARIOUS PERSONS, UNLIKE IN THE INSTANT CASE , WHERE THE CONTRIBUTION WAS RECEIVED FROM THE TRUSTEES FOR THE SPECIF IC PURPOSE OF CONSTRUCTION OF THE BUILDING FOR HOUSING THE MENTAL HE ALTH CENTRE. THE LD COUNSEL FURTHER SUBMITTED THAT THE JUDGMENT OF THE HONBLE SUPREME COURT IN THE CASE OF UP FOREST ITA NO . 538/C/15 & SP NO.90/CC/2015 5 CORPORATION AND ANOTHER VS DCIT 2971 SC (2008) RELIED ON BY THE CIT (A), IS ALSO NOT APPLICABLE TO THE FACTS OF THE INSTANT CASE , SINCE IT RELATES TO THE PERIOD BEFORE THE CLASSIFICATORY AMENDMENT TO SEC 12A(2) BY THE FINANCE (NO.2) ACT, 2014. FUR THER, IT WAS CONTENDED THAT AS PER THE AMENDMENT TO SECTION12A ( 2) BY THE F INANCE (NO.2) ACT, 2014, ONCE REGISTRATION IS GRANTED U/S 12AA, THE PROVISIONS OF SECTION 11 AND 12 WILL APPLY IN RESPECT OF INCOME OF THE TRUST FOR ANY ASSESSMENT YEAR PRECEDING THE ASSESSMENT YEAR IN WHICH REGISTRATION IS GRANTED FOR WHICH ASSESSMENT PRO CEEDINGS ARE PENDING BEFORE THE AO AS ON THE DATE OF REGISTRATION, AS LONG AS THE OBJECTS AND ACTIVITIES WERE ALSO THE SAME AS IN THE YEAR OF REGISTRATION. FURTHER, IT WAS CONTENDED THAT NO ACTION U/S 147 CAN BE TAKEN FOR ANY ASSESSMENT YEAR PROCEEDING THE YEAR OF REGISTRATION FOR THE SOLE REASON OF NON REGISTRATION OF TRUST, UNLESS REGISTRATION WAS REFUSED/CANCELLED AT ANY TIME U/S 12AA. THE LD COUNSEL ALSO RELIED ON THE ORDER OF THE COCHIN BENCH OF TRIBUNAL IN THE CASE OF SNDP YOGAM VS THE ADIT(EXEMPTION ) IN ITA NO.503 TO 506 & 569/COCH/2014 DATED 1.3.2016 AND CONTENDED THAT THE FIRST PROVISO TO SECTION 12A IS RETROSPECTIVE IN NATURE . IT WAS CONTENDED THAT THE TRIBUNAL HAD CATEGORICALLY HELD THAT THE POWER S OF THE CIT(A) WAS CO - TERMINUS WITH THAT OF THE ASSESSING OFFICER AND THE AMENDMENT / INSERTION OF FIRST PROVISO TO SEC. 12A(2) OF THE ACT OUGHT TO HAVE BEEN TAKEN NOTE BY THE CIT(A), WHEN TRUST WAS ALREADY REGISTERED U/S 12AA OF THE ACT. IT WAS SUBMITTED THAT IN THE INSTANT CASE, THE APPEAL WAS PENDING BEFORE THE CIT(A), WHEN THE ASSESSEE TRUST WAS ALREADY GRANTED REGISTRATION U/S 12AA OF THE ACT AND THE CIT(A) OUGHT TO HAVE TAKEN ITA NO . 538/C/15 & SP NO.90/CC/2015 6 NOTE OF THE GRANT OF REGISTRATION AND EXTENDED THE BENEFIT TO THE CURRENT ASSESSMENT YEAR ALSO. THEREFORE, IT WAS SUBMIT TED THAT THE ISSUE NEEDS RECONSIDERATION AT THE LEVEL OF THE CIT (A) BY TAKING COGNIZANCE OF THE DICTUM LAID DOWN BY THE TRIBUNAL IN THE CASE OF SNDP YOGAM (SUPRA). THE LD DR PRESENT WAS DULY HEARD . THE LD DR DID NOT HAVE A SERIOUS OBJECTION WITH REGARD TO THE APPEAL BEING RECONSIDERATION DE - NOVA BY THE CIT(A). 8 W E HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE COCHIN BENCH OF THE TRIBUNAL IN THE CASE OF SNDP YOGAM (SUPRA) AFTER CONSIDERING THE FIRST PROVISO TO SECTION 12A(2) HAS HELD THAT IT HAS GOT RETROSPECTIVE EFFECT. THE RELEVANT FINDINGS OF THE TRIBUNAL READ AS FOLLOWS : 7. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS, PERUSED THE RELEVANT MATERIALS ON RECORD AND THE CASE LAW ON WHICH THE LEARNED AR HAD PLACED STRONG RELIANCE. THE PRIMARY ISSUE FOR OUR CONSIDERATION IS WHETHER THE CIT (A) IS JUSTIFIED IN CONFIRMING THE AOS ACTION, FOR ALL THE ASSESSMENT YEARS UNDER CONSIDERATION, IN ASSESSING THE ENTIRE INCOMES OF THE ASSESSEE FROM ALL THE INSTITUTIONS AT THE MAXIMUM MARGINAL RATE. IN THIS CONTEXT, IT IS APPROPRIATE TO REFER THE AMENDMENT TO SECTION 12A(2) OF THE ACT AND ITS PROVISO. FOR READY REFERENCE THE SAME IS REPRODUCED BELOW: (SECTION 12A(2) & ITS PROVISO) [(2) WHERE AN APPLICATION HAS BEEN MADE ON OR AFTER T HE 1ST DAY OF JUNE, 2007, THE PROVISIONS OF SECTIONS 11 AND 12 SHALL APPLY 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 RE GISTRATION 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 YEA R, FOR ITA NO . 538/C/15 & SP NO.90/CC/2015 7 WHICH ASSESSMENT PROCEEDINGS 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 ACTIO N UNDER SECTION 147 SHALL BE TAKEN BY THE 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 ASSESSMENT 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.] 7.1 FURTHER IT WOULD BE R ELEVANT TO REPRODUCE THE EXPLANATORY NOTE TO THE PROVISIONS OF THE FINANCE (NO.,2) ACT 2014 AS GIVEN IN CBDT NO.1/15 DATED 21.1.2015 PARA 8.2 NON - APPLICATION OF REGISTRATION FOR THE PERIOD PRIOR TO THE YEAR OF REGISTRATION CAUSED GENUINE HARDSHIP TO CHAR ITABLE ORGANIZATIONS. DUE TO 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 DELAY IN SEEKING REGISTRATION WAS NOT AVAILABLE. THE FIRST PROVISO 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 CONDI TIONS 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 EXPLANATORY NOTES TO FINANCE (NO.2) ACT , 2014 ISSUED BY THE CENTRAL BOARD OF DIRECT TAXES VIDE ITS CIRCULAR NO. 01/2015 DATED 21.1.2015. APPARENTLY THE STATUTE PROVIDES THAT REGISTRATION 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 LD. A.O., UNLESS THE REGISTRATION GRANTED EARLIER IS CANCELLED OR REFUSED FOR SPECIFIC REASONS. THE STATUTE ALSO GOES ON TO PROVIDE THAT NO ACTION U/S147 COULD BE TAKEN BY THE AO MERELY FOR NON - REGIS TRATION OF TRUST FOR EARLIER YEARS. ITA NO . 538/C/15 & SP NO.90/CC/2015 8 7.2 WHEN SECTION 12A OF THE ACT WAS AMENDED BY INTRODUCING NEW PROVISOS TO SUB - SECTION (2) OF S. 12A BY FINANCE ACT, 2014 WITH EFFECT FROM 01.10.2014, THE ASSESSMENT ORDERS PASSED BY THE ASSESSING OFFICER IN RESPECT OF THE PRESENT ASSESSEE WERE PENDING IN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY. DURING SUCH PENDENCY, THE ASSESSEE WAS GRANTED REGISTRATION U/S 12AA OF THE ACT ON 29.07.2013 W.E.F. THE ASSESSMENT YEAR 2013 - 14. THOSE APPEALS WERE THE CONTINUATION OF THE ORIGINAL PROCEEDINGS AND THAT THE POWER OF THE COMMISSIONER OF INCOME - TAX WAS CO - TERMINUS WITH THAT OF THE ASSESSING OFFICER [ADIT (EXEMPTION) IN THE PRESENT CASE] WERE TWO WELL ESTABLISHED PRINCIPLES OF LAW. IN VIEW OF THE ABOVE AND GOING BY THE PRIN CIPLE OF PURPOSIVE INTERPRETATION OF STATUES, AN ASSESSMENT PROCEEDING WHICH IS PENDING IN APPEAL BEFORE THE APPELLATE AUTHORITY SHOULD BE DEEMED TO BE ASSESSMENT PROCEEDINGS PENDING BEFORE THE ASSESSING OFFICER WITHIN THE MEANING OF THAT TERM AS ENVISAG ED UNDER THE PROVISO. IT FOLLOWS THERE - FROM THAT THE ASSESSEE WHICH OBTAINED REGISTRATION U/S 12AA OF THE ACT DURING THE PENDENCY OF APPEAL WAS ENTITLED FOR EXEMPTION CLAIMED U/S 11OF THE ACT. 7.3. THE EXPLANATORY MEMORANDUM TO FINANCE (NO.2) BILL, 2014 WHICH SOUGHT TO AMEND SECTION 12A EXPLAINS THE OBJECTS AND REASONS FOR MAKING SUCH AMENDMENTS. THE EXPLANATION MAKES IT CLEAR THAT IT WAS IN ORDER TO PROVIDE RELIEF TO SUCH TRUSTS IN RESPECT OF WHICH, DUE TO ABSENCE OF REGISTRATION U/S 12AA TAX LIABILITY GOT ATTACHED THOUGH OTHERWISE THEY WERE ELIGIBLE FOR EXEMPTION BY FULFILLING OTHER SUBSTANTIVE CONDITIONS THAT THE AMENDMENT WAS BROUGHT IN. THAT BEING SO, DENYING SUCH BENEFIT TO A TRUST LIKE THE ASSESSEE WHO HAD OBTAINED REGISTRATION U/S 12AA DURING THE PENDENCY OF THE APPEALS FILED AGAINST THE ORDERS OF THE ASSESSING AUTHORITY, BY NARROWLY INTERPRETING THE TERM, PENDING BEFORE THE ASSESSING OFFICER SO AS TO EXCLUDE ITS PENDENCY BEFORE THE APPELLATE AUTHORITY, WILL BE DOING VIOLENCE TO THE PROVISIONS O F THE STATUTE AND, AS SUCH, LIABLE TO BE INTERFERED WITH. MOREOVER, UNDER THE SCHEME OF THE ACT, SECTIONS 11 AND 12 ARE SUBSTANTIVE PROVISIONS WHICH PROVIDE FOR EXEMPTIONS TO A RELIGIOUS OR CHARITABLE TRUST. SECTIONS 12A AND 12AA DETAIL THE PROCEDURAL REQ UIREMENTS FOR MAKING AN APPLICATION TO CLAIM EXEMPTIONS UNDER SECTIONS 11 AND 12 BY THE ASSESSEE AND THE GRANT OR REJECTION OF SUCH APPLICATION BY THE COMMISSIONER. THUS, IN OUR VIEW, SECTIONS 12A AND 12AA ARE ONLY PROCEDURAL IN NATURE. HENCE, IT IS NOT THE REGISTRATION U/S 12AA BY ITSELF THAT OFFERS IMMUNITY FROM TAXATION. A RECEIPT WHETHER IT IS REVENUE OR CAPITAL IN NATURE IS TO BE DECIDED AT THE ASSESSMENT STAGE. BEING PROCEDURAL IN NATURE, IN OUR VIEW, LIBERAL INTERPRETATION WILL GIVE EFFECT TO THE INTENTION OF THE AMENDMENT, THEREBY REMOVING THE HARDSHIP IN GENUINE CASES LIKE THE PRESENT ASSESSEE UNDER CONSIDERATION. 7.4. TAKING INTO ACCOUNT THE ABOVE FACTS AND CIRCUMSTANCES OF THE ISSUE, WE ARE OF THE VIEW THAT THE AO WAS NOT JUSTIFIED IN TAKING A STAND THAT REGISTRATION U/S 12A WAS NOT APPLICABLE TO THE ASSESSEE FOR THE AYS UNDER DISPUTE AND THE CONDONATION PETITION FOR DELAY IN FILING THE APPLICATION FOR REGISTRATION U/S 12A [FOR THE AYS UNDER DISPUTE] HAS NOT YET BEEN DECIDED BY THE CBDT AND, ITA NO . 538/C/15 & SP NO.90/CC/2015 9 THEREFORE, THE TOTAL INCOMES OF THE ASSESSEE WERE TO BE ASSESSED AS PER COMMERCIAL PRINCIPLES. THE CIT (A) WAS ALSO NOT JUSTIFIED IN TAKING A SIMILAR STAND THAT OF THE AO, WITHOUT TAKING COGNIZANCE AND INTENTION OF THE AMENDMENT TO S. 12A OF THE ACT. IF N O JUDICIOUS OR A LIBERAL VIEW IS NOT TAKEN EITHER BY THE ASSESSING AUTHORITY OR THE APPELLATE AUTHORITY AS IN THE CASE UNDER CONSIDERATION, THE VERY PURPOSE FOR WHICH SUCH AN AMENDMENT TO S. 12A OF THE ACT ENACTED,IN OUR VIEW, WOULD BE DEFEATED. WE ARE AL SO SUPPORTED BY THE ORDER OF KOLKATA BENCH OF ITAT IN CASE OF SREE SREE RAMKRISHNA SAMITY VS. DCIT (ITA NO. 1680/2012, ORDER DATED 09.10.2015) WHERE IT WAS HELD THAT AMENDMENT TO SECTION 12A W.E.F. 01.10.2014 IS RETROSPECTIVE. THE RELEVANT FINDING OF THE HONBLE KOLKATA BENCH IN CASE OF SREE SREE RAMKRISHNA SAMITY VS. DCIT (SUPRA) READ AS FOLLOWS: 6.10. WE HOLD THAT IT IS AN ESTABLISHED POSITION IN LAW THAT A PROVISO WHICH IS INSERTED TO REMEDY UNINTENDED CONSEQUENCES AND TO MAKE 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 REASONABLE INTERPRETATION, REQUIRES TO BE TREATED AS RETROSPECTIVE IN OPERATION, SO THAT A REASONABLE 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 DATE 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 - CONDITION FOR APPLICABILITY OF SECTION 12A. FURTHER, THE KOLKATA TRIBUNAL OBSERVED AS UNDER: 6.11. WE ALSO HOLD THAT THOUGH EQUITY AND TAXATION ARE OFTEN STRANGERS, ATTEMPTS SHOULD BE MADE THAT THESE DO NOT REMAIN ALWAYS SO AND IF A CONSTRUCTION RESULTS IN EQUITY RATHER THAN IN INJUSTICE, THEN SUCH CONSTRUCTION SHOULD BE PREFERRED TO THE LITERAL CONSTRUCTION. IT IS ONLY ELEMENTARY THAT A STATUTORY PR OVISION IS TO BE INTERPRETED UT RES MAGISVALEAT 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 EXEMPT ION 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). 7.5 IN LIGHT OF THE AFORESAID REASONING AND ORDER OF THE TRIBUNAL IN CASE OF SREE SREE RAMKRISHNA SAMITY (SUPRA), WE DIRECT THE DIRECTOR OF INCOME - TAX (EXEMPTION) TO GRANT REGISTRATION TO THE ASSESSEE TRUST FOR ALL THE ASSESSMENT YEARS UNDER DISPUTE, SUBJECT TO THE FOLLOWING CONDITIONS, NAMELY: I) THE REGISTRATION U/S.12AA (1)(B)(I) OF THE INCOME TAX ACT, 1961 DOES NOT AUTOMATICALLY EXEMPT THE INCOME OF THE TRUST/INSTITUTION. THE QUESTION OF TAXABILITY OF THE INCOME OF THE TRUST/INSTITUTION SHALL BE EXAMINED AND ITA NO . 538/C/15 & SP NO.90/CC/2015 10 DECIDED UPON BY THE ASSESSING OFFICER AT THE TIME OF ASSESSMENT BASED ON THE CONDUCT OF THE ACTIVITIES, COMPLIANCE WITH VARIOUS STATUTORY AND OTHER REQUIREMENTS, ETC., AS REFERRED TO IN SECTIONS 2(15), 11, 12 & 13 OF THE INCOME TAX ACT, 1961, WITHOUT PREJ UDICE TO THE FACT OF GRANTING MERELY IN PRINCIPLE REGISTRATION BY DIT(E). II) WITH EFFECT FROM THE ASSESSMENT YEAR 2009 - 10, THE ADVANCEMENT OF ANY OBJECT OF GENERAL PUBLIC UTILITY OTHER THAN RELIEF OF THE POOR, EDUCATION AND MEDICAL RELIEF AS DEFINED IN S ECTION 2(15) OF THE INCOME TAX ACT SHALL NOT BE A CHARITABLE PURPOSE, IF IT INVOLVES THE CARRYING ON OF ANY ACTIVITY IN THE NATURE OF TRADE, COMMERCE OR BUSINESS, OR ANY ACTIVITY OF RENDERING ANY SERVICE IN RELATION TO ANY TRADE, COMMERCE OR BUSINESS, FOR A CESS OR FEE OR ANY OTHER CONSIDERATION, IRRESPECTIVE OF THE NATURE OF USE OR APPLICATION, OR RETENTION, OF THE INCOME FROM SUCH ACTIVITY. III) AMENDMENTS TO THE DEED/MEMORANDUM, RULES AND REGULATIONS, IF ANY, OF THE TRUST / INSTITUTION SHALL BE MADE ONL Y WITH THE PRIOR APPROVAL OF THE COMMISSIONER OF INCOME TAX(EXEMPTIONS) OR ANY OTHER PRESCRIBED AUTHORITY UNDER THE INCOME TAX ACT,1961. IV) THE REGISTRATION MAY BE WITHDRAWN ON VIOLATION OF ANY OF THE STIPULATIONS LAID DOWN IN THE INCOME TAX ACT, 1961, V ) THE SOCIETY/TRUST SHALL REGULARLY FILE ITS INCOME TAX RETURN. 8 .1 FROM THE ABOVE FINDINGS OF THE TRIBUNAL, IT IS CLEAR THAT ONCE REGISTRATION IS GRANTED U/S 12AA OF THE I T ACT, SECTION 11 AND 12 WILL APPLY IN RESPECT OF INCOME OF TRUST FOR ANY AY PREC EDING THE AY IN WHICH REGISTRATION IS GRANTED, PROVIDED APPEAL IS PENDING BEFORE THE CIT(A) AND OBJECTS AND ACTIVITIES OF THE ASSESSEE TRUST ARE THE SAME AS IN THE YEAR OF REGISTRATION. IN THE INSTANT CASE, THE ASSESSEE TRUST WAS GRANTED REGISTRATION W.E. F 14.9.200 9 AND THE CIT(A) WAS AWARE OF GRANT OF REGISTRATION, SINCE THE APPEAL WAS DISPOSED OFF ONLY ON 11.9.2015. FURTHER, IN THE INSTANT CASE THE NOTICE U/S 148 OF THE ACT WAS ISSUED ONLY ON 29.3.2010 I.E SUBSEQUENT TO THE GRANT OF REGISTRATION ON 14.9.2009, HENCE, THE SECOND PROVISO PUT AN EMBARGO ON THE ISSUANCE OF NOTICE U/S 148 OF THE ACT. THEREFORE, T HE ITA NO . 538/C/15 & SP NO.90/CC/2015 11 CI T (A) OUGHT TO HAVE TAKEN NOTE OF THE 1 ST PROVISO AS WELL AS 2 ND PROVISO TO SECTION 12A, WHICH WAS INSERTED BY THE FINANCE A C T, 2014 W.E.F 1 .10.2014. SINCE BOTH THE PARTIES HAVE AGREED THAT THE MATTER NEEDS FRESH CONSIDERATION BY THE CIT(A), IN LINE OF THE DICTUM LAID DOWN BY THE COCHIN BENCH OF THE TRIBUNAL IN THE CASE OF SNDP YOGUM (SUPRA), WE RESTORE THE ISSUE TO THE CIT(A) . THE CIT(A) SHAL L DISPOSE OFF THE MATTER AS EXPEDITIOUSLY AS POSSIBLE AFTER AFFORDING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE TRUST. IT IS ORDERED ACCORDINGLY. 9 IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE. STAY PETIT ION NO. 90/COCH/2015 10 SINCE THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE, THE STAY PETITION FILED BY THE ASSESSEE HAS BECOME INFRUCTUOUS AND HENCE, THE SAME IS DISMISSED. 11 TO SUM - UP, THE APPEAL FILED BY THE ASSESSEE IS ALLOWE D FOR STATISTICAL PURPOSE ; WHEREAS THE STAY PETITION IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 10 TH , DAY OF JUNE 2016 . SD/ - SD/ - ( B P JAIN ) ( GEORGE GEORGE K ) ACCOUNTANT MEMBER JUDICIAL MEMBER COCHIN: DATED 10 TH , JUNE 2016 RAJ* ITA NO . 538/C/15 & SP NO.90/CC/2015 12 COPY TO: 1 . AP PELLANT 2 . RESPONDENT 3 . CIT(A) 4 . CIT , 5 . DR 6 . GUARD FILE BY ORDER ASSISTANT REGISTRAR ITAT, COCHIN