Amendment of section 12A
8. In section 12A of the Income-tax Act, in sub-section (2), the following provisos shall be inserted with effect from the 1st day of October, 2014, namely:––
“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 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 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.”.
Notes on Clauses:
Clause 8 of the Bill seeks to amend section 12A of the Income- tax Act relating to conditions for applicability of sections 11 and 12.
Under the existing provisions of aforesaid section 12A, conditions to be fulfilled by a trust or an institution before it can claim exemption have been provided under sections 11 and 12 of the Act. It is provided that before any benefit of exemption is claimed, the trust or institution should apply for registration under section 12AA and only after such registration has been granted such trust or institution shall be eligible to claim the benefit of such exemption. In case of trusts or institutions which apply for registration after the 1st day of June, 2007, the registration shall be effective only for the assessment years following the financial year in which application has been made.
It is proposed to amend the said section so as to provide that once a registration under section 12AA is granted to a charitable organisation in a financial year, then, such registration would also entitle the entity for the benefits of sections 11 and 12 in cases for prior years where the assessment proceedings are pending before the Assessing Officer on the date of registration, if the objects and the activities are the same which have been considered by the Commissioner while granting registration.
No action under section 147 shall be taken by the Assessing Officer in case of such trust or institution for any assessment year preceding first assessment year for which the registration applies, merely for the reason that such trust or institution has not obtained registration under section 12AA for the said assessment year.
Further, the above benefits would not be available where the registration to the trust or institution has been refused or cancelled by the Commissioner at any time.
These amendments will take effect from 1st October, 2014.
