Sahasra Educational Society, Warangal, Hyderabad V. ADIT (Exemptions)-I, Hyd, Hyderabad

ITA 772/HYD/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 2605 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 3 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-09-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 29-05-2017
• Assessment Year: 2011-2012
• Appeal Filed On: 24-05-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: L R AMJI RAO
• Assessee Lawyers: A V RAGHURAM
• Keywords: Charitable institution; Retrospective amendment; Benefit of exemption; Condonation of delay
• Section: 43B; 12A; 12AA; 147; 12; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B, HYDERABAD BEFORE SHRI D. MANMOHAN, VICE PRESIDENT AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA NO. 772/HYD/2016 ASSESSMENT YEAR: 2011-12 SAHASRA EDUCATIONAL SOCIETY, WARANGAL. PAN AAGTS 7230L VS. ASST. DIRECTOR OF INCOME-TAX (EXEMPTION) 1, HYDERABAD. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI A.V. RAGHU RAM REVENUE BY : SHRI L. RAMJI RAO DATE OF HEARING : 08-08-2017 DATE OF PRONOUNCEMENT : 22-09-2017 O R D E R PER S. RIFAUR RAHMAN, A.M.: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME-TAX(A) - 9, H YDERABAD, DATED 18-03-2016 FOR AY 2011-12. 2. BRIEFLY THE FACTS OF THE CASE ARE THAT THE ASSE SSEE, A SOCIETY, FILED ITS RETURN OF INCOME FOR THE AY 2011-12 ON 02 /02/2012 DECLARING 'NIL' INCOME. THE CASE WAS SELECTED FOR SCRUTINY AS PER CASS SCRUTINY GUIDELINES AND NOTICE U/S 143(2) WAS ISSUE D ON 02/08/2012 BY THE AD IT (EXEMPTIONS) - II, HYDERABAD. 2.1 ASSESSEE SOCIETY IS RUNNING EDUCATIONAL INSTIT UTIONS AND IT HAS BEEN GRANTED REGISTRATION U/S 12AA OF THE INCOME-TA X ACT, 1961 (IN SHORT 'THE ACT') WITH EFFECT FROM 29/02/2012 I.E. A PPLICABLE FROM AY 2012-13. 2 ITA NO. 772/H/16 SAHASRA EDUCATIONAL SOCIETY 2.2 AO NOTICED THAT AS PER INCOME AND EXPENDITURE ACCOUNT, ASSESSEE HAD SHOWN RS. 37,48,715/- AS INCOME EXCESS OVER EXPENDITURE AND SHOWN TOTAL RECEIPTS OF RS. 2,14,62 ,109/-. ASSESSEE HAD CLAIMED EXEMPTION U/S 11 OF THE ACT WITHOUT OBT AINING REGISTRATION U/S 12AA OF THE ACT. AO OBSERVED THAT, EVEN THOUGH, ASSESSEE IS RUNNING EDUCATIONAL INSTITUTION, IT SHOULD HAVE OBT AINED APPROVAL U/S 10(23C)(VI) OF THE ACT. SINCE ASSESSEE DOES NOT HAV E APPROVAL U/S 10(23C)(VI) AND REGISTRATION U/S 12AA OF THE ACT, T HE SURPLUS INCOME, ACCORDINGLY, WAS BROUGHT TO TAX BY THE AO. 3. AGGRIEVED WITH THE ABOVE ORDER, ASSESSEE PREFER RED AN APPEAL BEFORE THE CIT(A). 4. BEFORE THE CIT(A), ASSESSEE FILED AN ADDITIONAL GROUND OF APPEAL CHALLENGING THE ASSESSMENT ORDER PASSED BY I NVOKING THE AMENDMENT TO SECTION 12A(2), IN WHICH, PROVISO WAS INTRODUCED FROM 01/10/2014 THAT IT IS ONLY A PROVISO AND NOT A SUBS TANTIAL PROVISION AND FURTHER IT IS A BENEFICIAL ONE, IT HAS TO BE TR EATED AS CLARIFICATORY IN NATURE AND IT SHOULD BE TREATED AS RETROSPECTIVE AM ENDMENT. 5. LD. CIT(A) CALLED FOR THE REMAND REPORT FROM TH E AO AND REPLY FROM THE ASSESSEE ON THE REMAND REPORT. SHE HAD DIS MISSED THE APPEAL OF THE ASSESSEE BY OBSERVING AS UNDER: '4.4 HOWEVER, THE ASSESSEE'S CONTENTIONS ARE NOT AC CEPTABLE AS FIRSTLY THE REGISTRATION U/S 12AA WAS GRANTED W.E.F . AY 201213. FURTHER, THE PROVISO HAS BEEN INTRODUCED IN THE ACT W. E. F. 01/10/2014 AND HENCE IT IS CLEARLY NOT APPLICABLE F OR THE PRESENT AY I.E. 2011-102. FURTHER, AS OPINED BY THE AO IN T HE REMAND REPORT, THE ASSESSMENT HAS NOT BEEN REOPENED U/S 14 7 OF THE IT ACT AND AS SUCH, THE PROVISO IS NOT APPLICABLE IN T HE ASSESSEE'S CASE. AS SUCH THE ASSESSEE'S CONTENTION CANNOT BE A CCEPTED AND THIS ADDITIONAL GROUND RAISED BY THE ASSESSEE I S DISMISSED. 6. AGGRIEVED WITH THE ORDER OF CIT(A), ASSESSEE IS IN APPEAL BEFORE US RAISING THE FOLLOWING GROUNDS OF APPEAL: 3 ITA NO. 772/H/16 SAHASRA EDUCATIONAL SOCIETY '1. THE ORDER OF THE LEARNED CIT(A) DISMISSING THE APPEAL IS ERRONEOUS BOTH ON LAW AND IN FACTS TO THE EXTENT IT IS PREJUDICIAL TO THE ASSESSEE. 2. THE LEARNED CIT(A) ERRED IN HOLDING THAT THE PRO VISO TO SEC. 12A(2) IS NOT APPLICABLE ON THE GROUND THAT THE SAI D PROVISO IS INTRODUCED FROM 1-10-2014 AND FURTHER THAT THE ASSE SSMENT IS NOT RE-OPENED U/S. 147 WITHOUT APPRECIATING THE LEG AL POSITION THAT THE SECTION CATEGORICALLY PROVIDES THAT FOR AL L APPLICATIONS MADE ON OR AFTER 1-6-2007 AND FURTHER THAT IT ONLY PROVIDES FOR NOT INITIATING PROCEEDINGS U/S. 147 AND IT IS NOT N ECESSARY THAT THE ASSESSMENT SHOULD BE UNDER THAT PROVISION. 3. THE LEARNED CIT(A) FAILED TO APPRECIATE THAT THE APPLICATION FOR REGISTRATION U/S. 12A WAS MADE AFTER 1-6-2007 A ND WHEN REGISTRATION IS GRANTED THE ASSESSMENT FOR THE ASSE SSMENT YEAR 2011-12 IS PENDING AND THEREFORE THE SAID PROVISION SEC. 12A(2) IS APPLICABLE AND THEREBY ERRED IN HOLDING THAT IT IS NOT APPLICABLE. 4. THE LEARNED CIT(A) ERRED IN HOLDING THAT WHEN EX EMPTION IS REFUSED IT IS NOT NECESSARY TO COMPUTE INCOME ON CO MMERCIAL PRINCIPLES APPLYING THE PROVISIONS OF I. T. ACT ON THE GROUND THAT THE APPELLANT HAS FILED RETURN OF INCOME AS A SINGL E ENTITY WHEN IT HAS NO RELEVANCE. 5. ANY OTHER GROUND THAT MAY BE URGED AT THE TIME O F HEARING. 6.1 THE ASSESSEE HAS FILED A PETITION FOR ADMITTIN G THE FOLLOWING ADDITIONAL GROUND UNDER RULE 11 OF APPELLATE TRIBUN AL RULES, 1963, BUT, THE SAME HAS NOT BEEN PRESSED AT THE TIME OF H EARING: 'THE AUTHORITIES BELOW OUGHT TO HAVE APPRECIATED TH E FACT THAT THE RECEIPT OF EACH INDIVIDUAL INSTITUTE DOES NOT E XCEED RS. ONE CRORE AND THEREFORE THE INCOMES OF SUCH INSTITUTES ARE EXEMPT U/S 10(23C)(IIIAD) AND THEREFORE ERRED IN HOLDING T HE INCOME TO BE TAXABLE ON THE GROUND THAT THERE IS NO REGISTRAT ION U/S 12AA AND NO APPROVAL U/S 10(23C)(VI), WHICH IS NOT REQUI RED. 7. LD. AR BROUGHT TO OUR NOTICE PROVISO TO SECTION 12A(2), WHICH WAS INTRODUCED FROM 01/10/2014 AND SUBMITTED THAT T HIS PROVISO BEING BENEFICIAL ONE AND SHOULD BE APPLIED RETROSPECTIVEL Y, ACCORDINGLY, THE SOCIETY WAS GRANTED REGISTRATION ON 10102/2014 WHER EAS THE IMPUGNED ASSESSMENT ORDER WAS PASSED ON 18/03/2014. HE SUBMITTED THAT AS PER THE AMENDED PROVISION, WHERE REGISTRATI ON HAS BEEN 4 ITA NO. 772/H/16 SAHASRA EDUCATIONAL SOCIETY GRANTED TO THE TRUST OR INSTITUTION U/S 12AA, THEN, THE PROVISIONS OF SECTION 11 AND 12 SHALL APPLY IN RESPECT OF ANY INC OME DERIVED FROM PROPERTY HELD UNDER TRUST OF ANY AY PRECEDING THE Y EAR IN WHICH REGISTRATION WAS GRANTED, FOR WHICH ASSESSMENT PROC EEDINGS ARE PENDING BEFORE THE AO AS ON THE DATE OF SUCH REGIST RATION AND OBJECTS AND ACTIVITIES OF SUCH SOCIETY REMAIN SAME FOR SUCH PRECEDING AY. HE FURTHER RELIED ON THE EXPLANATORY NOTE TO THE PROVI SIONS OF THE FINANCE ACT, 2014. 8. LD. DR, ON THE OTHER HAND, SUBMITTED THAT THE P ROVISO TO SECTION 12A(2) WAS AMENDED W. E. F. 01/10/2014 AND SINCE RE GISTRATION WAS GRANTED ON 19/02/2014, THE NEW PROVISO WILL NOT APP LY TO THE CASE OF ASSESSEE. HE FURTHER SUBMITTED THAT AS PER THE EXPL ANATORY NOTE, THE BENEFIT WOULD NOT BE AVAILABLE TO THE CASE OF ANY T RUST OR INSTITUTION, WHICH AT ANY TIME HAD APPLIED FOR REGISTRATION AND THE SAME WAS REFUSED U/S 12AA OF THE ACT. I N THE CASE OF ASSESS EE, THE REGISTRATION WAS REJECTED. FURTHER, HE SUPPORTED THE ORDERS OF R EVENUE AUTHORITIES. 9. CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED TH E MATERIAL FACTS ON RECORD. THE MAIN QUESTION BEFORE US IS WHETHER T HE AMENDED PROVISO TO SECTION 12A(2) IS APPLICABLE TO THE ASSE SSEE'S CASE WHEN THE PROVISO WAS INTRODUCED ON 01/10/2014 WHEREAS TH E REGISTRATION WAS GRANTED TO THE ASSESSEE ON 19/02/2014, WHILE, A SSESSMENT FOR THE AY UNDER CONSIDERATION WAS PASSED ON 18/03/2014 . AT THE TIME OF GRANTING REGISTRATION, THE ASSESSMENT PROCEEDING WA S PENDING. SIMILAR ISSUE CAME UP FOR CONSIDERATION BEFORE THE KOLKATA BENCH OF ITAT IN THE CASE OF SREE SREE RAMKRISHNA SAMITY VS. DCIT IN ITA NOS. 1680 TO 1685 OF 2012 VIDE ORDER DATED 09/10/20 15 WHEREIN THE BENCH HAS HELD AS UNDER: 6.8. IT WILL BE RELEVANT TO GET INTO THE EXPLANATO RY NOTES TO THE PROVISIONS OF THE FINANCE (NO. 2), 2014 AS GIVE N IN CBDT CIRCULAR NO. 01 / 2015 DATED 21.1.2015 IN REFERENCE F.NO. 5 ITA NO. 772/H/16 SAHASRA EDUCATIONAL SOCIETY 142/13/2014-TPL WHICH IS REPRODUCED 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 CHA RITABLE 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 REGIST RATION 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 OBJECTS IN THE EARLIER YEARS AND SUBSTANTIVE CONDITIONS STIPULATED IN SECTION 11 TO 13 HAVE BEEN DULY FULFILLED BY THE SAID TRUST. THE BE NEFIT OF RETROSPECTIVE APPLICATION ALONE COULD BE THE INT ENTION OF THE LEGISLATURE AND THIS POINT IS FURTHER STRENGTHE NED 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. APPARENTLY THE STATUTE PROVIDES THAT REGISTRATION O NCE GRANTED IN SUBSEQUENT YEAR, THE BENEFIT OF THE SAME HAS TO BE APPLIED IN THE EARLIER ASSESSMENT YEARS FOR WHICH A SSESSMENT PROCEEDINGS ARE PENDING BEFORE THE LEARNED AO, UNLE SS THE REGISTRATION GRANTED EARLIER IS CANCELLED OR REFUSE D FOR SPECIFIC REASONS. THE STATUTE ALSO GOES ON TO ITA N OS. 1680- 1685/KOL/12--C-AM SREE SREE RAMKRSIHNA SAMITY 8 PRO VIDE THAT NO ACTION U/S 147 COULD BE TAKEN BY THE AO MER ELY FOR NON-REGISTRATION OF TRUST FOR EARLIER YEARS. 6.9. 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 A ND IS REQUIRED TO BE READ INTO THE SECTION TO GIVE THE SE CTION A REASONABLE INTERPRETATION, REQUIRES TO BE TREATED A S RETROSPECTIVE IN OPERATION, SO THAT A REASONABLE INTERPRETATION CAN BE GIVEN TO THE SECTION AS A WHO LE AND 6 ITA NO. 772/H/16 SAHASRA EDUCATIONAL SOCIETY ACCORDINGLY THE SAID INSERTION OF FIRST PROVISO TO SECTION 12A(2) OF THE ACT WITH EFFECT FROM 1.10.2014 SHOULD BE RE AD 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-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 COU RT THE DEPARTMENTAL UNDERSTANDING 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 EXP LANATION 2 AND THE MAIN BODY OF SECTION 43B . WITHOUT THE FIRST PROVISO, EXPLANATION 2 WOULD NOT OBVIATE THE HARDSH IP OR THE UNINTENDED CONSEQUENCES OF SECTION 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 PROHI BITED 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 REAS ONABLE CONSTRUCTION MUST BE APPLIED WHILE CONSTRUING A STA TUTE. LITERAL CONSTRUCTION SHOULD BE AVOIDED IF IT DEFEAT S THE MANIFEST OBJECT AND PURPOSE OF THE ACT. AS OBSERVED BY G.P.SINGH IN HIS PRINCIPLES OF STATU TORY INTERPRETATION, 4TH EDN., PAGE 291, 'IT IS WELL SET TLED THAT IF A STATUTE IS CURATIVE OR MERELY DECLARATORY OF THE PR EVIOUS LAW, RETROSPECTIVE OPERATION IS GENERALLY 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 10 AS RETROSPECTIVE. THE VIE W, THEREFORE, TAKEN BY THE DELHI HIGH COURT CANNOT BE SUSTAINED. CIT VS VIRGIN CREATIONS IN ITAT NO. 302 OF 2011 IN GA 3200 / 2011 DATED 23.11.2011, THE HON'BLE CALCUTTA HIGH COURT IN THE CONTEXT OF RETROSPECTIVE APPLICABILITY OF AMEND MENT TO SECTION 40(A)(IA) OF THE ACT HELD AS BELOW:- 'THE SUPREME COURT IN THE CASE OF ALLIED MOTORS P L TD AND ALSO IN THE CASE OF ALOM EXTRUSIONS LTD HAS ALREADY DECIDED THAT THE AFORESAID PROVISION HAS RETROSPECTIVE APPL ICATION. 7 ITA NO. 772/H/16 SAHASRA EDUCATIONAL SOCIETY AGAIN, IN THE CASE REPORTED IN 82 ITR 570, THE SUPR EME COURT HELD THAT THE PROVISION, WHICH HAS INSERTED THE REM EDY TO MAKE THE PROVISION WORKABLE, REQUIRES TO BE TREATED WITH RETROSPECTIVE OPERATION SO THAT REASONABLE DEDUCTIO N 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 'WE WOULD ALSO LIKE TO POINT OUT, FOR THE SAKE OF COMPLETENESS, THAT WHERE A BENEFIT IS CONFERRED BY A LEGISLATION, THE RULE AGAINST A RETROSPECTIVE CONST RUCTION IS DIFFERENT. IF A LEGISLATION CONFERS A BENEFIT ON SO ME PERSONS BUT WITHOUT INFLICTING A CORRESPONDING DETRIMENT ON SOME OTHER PERSON OR ON THE PUBLIC GENERALLY, AND WHERE TO CONFER SUCH BENEFIT APPEARS TO HAVE BEEN THE LEGISLATORS O BJECT, THEN THE PRESUMPTION WOULD BE THAT SUCH A LEGISLATION, G IVING IT A PURPOSIVE CONSTRUCTION, WOULD WARRANT IT TO BE GIVE N A RETROSPECTIVE EFFECT. THIS EXACTLY IS THE JUSTIFICA TION TO TREAT PROCEDURAL PROVISIONS AS RETROSPECTIVE. IN GOVERNMENT OF INDIA VS INDIAN TOBACCO ASSOCIATION REPORTED 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 CONTEXT OF IT TO BE GIVEN A RETROSPECTIVE OPERATION . THE SAME DOCTRINE OF FAIRNESS, TO HOLD THAT A STATUTE WAS RE TROSPECTIVE 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 STATU TE MAY BE HELD TO BE RETROSPECTIVE IN NATURE. HOWEVER, WE ARE CONFRONTED WITH ANY SUCH SITUATION HERE'. IN SUCH CASES, RETROSPECTIVITY IS ATTACHED TO BENEF IT THE PERSONS IN CONTRADISTINCTION TO THE PROVISION IMPOS ING SOME BURDEN OR LIABILITY WHERE THE PRESUMPTION ATTACHES TOWARDS PROSPECTIVITY. IN THE INSTANT CASE, THE PROVISO ADD ED TO SECTION 113 OF THE ACT IS NOT BENEFICIAL TO THE ITA NOS. 1680-1685/KOL/12--C-AM SREE SREE RAMKRSIHNA SAMITY 11 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 OPERATION. THUS, THE RULE AGAINST RET ROSPECTIVE OPERATION IS A FUNDAMENTAL RULE OF LAW THAT NO STAT UTE SHALL BE CONSTRUED TO HAVE A RETROSPECTIVE OPERATION UNLE SS SUCH A CONSTRUCTION APPEARS VERY CLEARLY IN THE TERMS OF T HE ACT OR ARISES BY NECESSARY AND DISTINCT IMPLICATION. DOGMA TICALLY FRAMED, THE RULE IS NO MORE THAN A PRESUMPTION, AND THUS COULD BE DISPLACED BY OUT WEIGHING FACTORS. 8 ITA NO. 772/H/16 SAHASRA EDUCATIONAL SOCIETY 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 TH IS CASE, IS TO COUNTERACT THE EFFECT OF TRANSFER OF ASSETS SO F AR AS COMPUTATION OF INCOME OF THE ASSESSEE IS CONCERNED, THEN BEARING THAT PURPOSE IN MIND, WE SHOULD FIND OUT TH E INTENTION FROM THE LANGUAGE USED BY THE LEGISLATURE AND IF STRICT LITERAL CONSTRUCTION LEADS TO AN ABSURD RESU LT, I.E., RESULT NOT INTENDED TO BE SUBSERVED BY THE OBJECT O F THE LEGISLATION FOUND IN THE MANNER INDICATED BEFORE, T HEN ANOTHER CONSTRUCTION IS POSSIBLE APART FROM STRICT LITERAL CONSTRUCTION THEN THAT CONSTRUCTION SHOULD BE PREFE RRED TO THE STRICT LITERAL CONSTRUCTION. 6.11. WE ALSO HOLD THAT THOUGH EQUITY AND TAXATION ARE OFTEN STRANGERS , ATTEMPTS SHOULD BE MADE THAT THESE DO N OT REMAIN ALWAYS SO AND IF A CONSTRUCTION RESULTS IN E QUITY RATHER THAN IN INJUSTICE, THEN SUCH CONSTRUCTION SH OULD BE PREFERRED TO THE LITERAL CONSTRUCTION. IT IS ONLY E LEMENTARY THAT A STATUTORY 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 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 O F THE ACT ON THE GENUINE TRUSTS WHICH HAD NOT CHANGED ITS OBJECT IVES AND HAD CARRIED ON THE SAME CHARITABLE OBJECTS IN THE P AST AS WELL AS IN THE CURRENT YEAR BASED ON WHICH THE REGISTRAT ION U/S 12AA IS GRANTED BY THE DIT(EXEMPTIONS). RESPECTFULLY FOLLOWING THE ABOVE DECISION AND FINDI NGS THAT THE AMENDED PROVISO TO SECTION 12A(2) ON 01/10/2010 IS APPLICABLE RETROSPECTIVELY, IT IS OBSERVED THAT, IN THE PRESEN T CASE, THE ASSESSEE WAS GRANTED REGISTRATION U/S 12A ON 19/02/2014. AS PER THE AMENDED PROVISION, ANY PROCEEDING PENDING WITH AO ON THE DA TE OF REGISTRATION, SUCH PENDING PROCEEDING/ASSESSMENT, THE ASSESSEE IS ELIGIBLE TO GET THE BENEFIT U/S 11 & 12 OF THE ACT. I N THE GIVEN C ASE, THE ASSESSMENT FOR AY 2011-12 WAS COMPLETED ON 18/03/2014, I.E. ON THE DATE OF REGISTRATION, THE ASSESSMENT FOR AY 2011-12 WAS PEN DING WITH THE AO. ACCORDINGLY, WE DIRECT AO TO EXTEND THE BENEFIT OF DEDUCTION U/S 11 TO AY 2011-12 WHICH IS UNDER DISPUTE. MOREOVER, AS PER THE 9 ITA NO. 772/H/16 SAHASRA EDUCATIONAL SOCIETY AMENDED PROVISION, THE OBJECT OF THE SOCIETY SHOULD REMAIN SAME IN THE PENDING YEAR OF PROCEEDINGS AND THE YEAR IN WHI CH REGISTRATION IS GRANTED. IN THE CASE BEFORE US ALSO, THE OBJECTS OF THE SOCIETY REMAIN SAME. 9.1 LD. DR RAISED OBJECTION BEFORE US THAT THE REG ISTRATION WAS DENIED TO THE ASSESSEE, AS PER THE AMENDED PROVISO, THE BENEFIT CANNOT BE EXTENDED TO ASSESSEE. LD. AR IN THE REJOI NDER CLARIFIED THAT THE REGISTRATION WAS GRANTED TO ASSESSEE ONLY ON TH E DIRECTION OF ITAT AS PER THE APPEAL AGAINST SUCH ORDER. ACCORDINGLY, THE GROUNDS RAISED BY THE ASSESSEE ARE ALLOWED. 10. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOW ED. PRONOUNCED IN THE OPEN COURT ON 22 ND SEPTEMBER, 2017. SD/- SD/- (D. MANMOHAN) (S. RIFAUR RAHMAN ) VICE PRESIDENT AC COUNTANT MEMBER HYDERABAD, DATED: 22 ND SEPTEMBER, 2017. KV COPY TO:- 1) M/S SAHASRA EDUCATIONAL SOCIETY, C/O K. VASANTKU MAR, AV RAGHURAM, P. VINOD, ADVOCATES, 610, BABUKHAN ESTATE, BASHEERBAGH, HYDERABAD 500 001 2) ADIT (EXEMPTIONS) - I, POSNETT BHAVAN, TILAK ROA D, ABIDS, HYDERABAD. 3) CIT(A) - 9, HYDERABAD 4 PR. CIT (EXEMPTIONS), HYDERABAD 5) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDE RABAD. 6) GUARD FILE 10 ITA NO. 772/H/16 SAHASRA EDUCATIONAL SOCIETY S.NO. DESCRIPTION DATE INTLS 1. DRAFT DICTATED ON SR.P.S./P.S 2. DRAFT PLACED BEFORE AUTHOR SR.P.S/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5 APPROVED DRAFT COMES TO THE SR.P.S./PS SR.P.S./ P.S 6. KEPT FOR PRONOUNCEMENT ON SR. P.S./P.S. 7. FILE SENT TO THE BENCH CLERK SR.P.S./P.S 8 DATE ON WHICH FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER