TMI Blog2018 (7) TMI 2125X X X X Extracts X X X X X X X X Extracts X X X X ..... its objects and it prohibits the payment of any dividend to its members. CIT(A) has rightly noted that the assessee s activities are for charitable purposes. Therefore, we do not find any infirmity in the order of the CIT(A) in this regard and we dismiss the appeal of the revenue. We find that the CIT(A) has rightly held that the benefit of grant of registration u/s. 12AA of the Act also need to be extended to AY 2011-12 and, therefore, we confirm the order of Ld. CIT(A) on this issue. Disallowance of expenditure made on account of amortized lease rent payment and disallowance made on account of depreciation on leasehold land - HELD THAT:- Since we upheld the direction of the Ld. CIT(A) to extent the benefit of grant of registration u/s 12AA of the Act to this AY 2011-12 and, therefore, the assessee is eligible to claim exemption 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. Therefore, we do not find any merit in these grounds of appeal and so stand dismissed. Appeal of revenue is dismiss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the coordinate bench decision of this Tribunal in Sree Sree Ramkrishna Samity Vs. DCIT (2015) 44 ITR (Trib) 678 (ITAT, Kol). Since the Ld. CIT(A) has relied on this Tribunal s decision we would reproduce the operative portion of the order which is as under: 13. It is relevant at this juncture to get into the amendment brought in section 12A by Finance Act 2014 with effect from 1.10.2014 by way of insertion of first proviso to section 12A(2) of the Act which is reproduced below for the sake of convenience :- 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 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 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 proceedings are pending before the Assessing Officer as on date of such registration and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e first and second proviso shall be made applicable for the trusts 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 section 12A of the Act once done is a fait accompli and the AO cannot thereafter make further probe into the objects of the trust. Reliance in this regard is placed on the decision of the Hon ble Apex Court rendered in the case of ACIT vs Surat City Gymkhana reported in (2008) 300 ITR 214 (SC). Drawing analogy from this judgement, the logical inference could be that as long as the objects were charitable in nature in the earlier years and in the year in which registration u/s 12AA was granted, the existence of trust for charitable purposes in the earlier years cannot be doubted with. Even otherwise, no adverse findings were given by the revenue with regard to the existence of the assessee society for charitable purposes in the assessment years under appeal. 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 rep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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:- contributions 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 section 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 they will form part of the corpus of the trust for utilization in acquisition / construction of a capital asset. Thus what is not income as per the definition of the word income in the Act cannot be brought to tax under any other provision of the Act. We find that the order of the Learned CITA failed to distinguish between a case where a receipt is not 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 provision granting exemptio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eations 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 amendment to section 40(a)(ia) of the Act held as below:- The supreme court in the case of Allied Motors P ltd and also in the case of Alom Extrusions Ltd has already decided that the aforesaid provision has retrospective application. Again, in the case reported in 82 ITR 570, the Supreme Court held that the provision, which has inserted the remedy to make the provision workable, requires to be treated with retrospective operation so that reasonable deduction can be given to the section as well . CIT vs Vatika Township P Ltd reported in (2014) 367 ITR 466 (SC) Five Judges decision of the Supreme Court (page 487): 33.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 construction is different. If a legislation confers a benefit on some 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 object, then the pre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion should be preferred to the strict literal construction. 24. 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 provision is to be interpreted ut res magis valeat quam pereat, i.e to make it workable rather than redundant. Applying this legal maxim, it would be just and fair to hold that the amendment in section 12A is brought in the statute to confer benefit of exemption 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). 25. We hold that the arguments of the Learned AR that, even assuming without conceding, in the worst scenario, the assessee society 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 trust and eligible to claim exemp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as retrospective in operation by the Ld. CIT(A) after taking note of the order of coordinate bench s decision of this Tribunal in Sree Sree Ramkrishna Samity (supra) wherein the Tribunal had held at para 27 that the insertion of the proviso to sec. 12A(2) of 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 been passed on 28.03.2014, for the ends of justice and fair play and taking into consideration 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 pertinent 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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