TMI Blog2016 (7) TMI 136X X X X Extracts X X X X X X X X Extracts X X X X ..... r Chakraborty, Sr. Advocate Shri Abhijit Biswas, Advocate For the Respondent : Shri S. Srivastava, CIT-DR ORDER Per Waseem Ahmed, Accountant Member This appeal by the assessee is against the order passed u/s 12AA of the Income Tax Act, 1961 (hereinafter referred to as the Act ) dated 31.12.2009 of Commissioner of Income Tax, Durgapur dated 10.09.2009. Dr. Samcere Chakraborty and Shri Abhijit Biswas, Ld. Authorized Representatives appeared on behalf of the assessee and Shri S. Srivastava, Ld. Departmental Representative appeared on behalf Revenue. 2. At the outset, Ld. AR of assessee-trust drew our attention that the appeal is barred by limitation for 152 days due to wrong advice and ill health of ld. advocate. We observe the delay in the filing of its appeal by assessee- trust which though stands suitably explained as per accompanying condonation petition of delay. The ld. DR raised no objection if the delay of condonation is considered. Hence, we condone the delay and proceed for hearing the appeal. 3. Solitary ground raised by assessee in this appeal is that Ld. CIT erred in rejecting the registration application u/s 12AA of the Act on account of dela ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... registration u/s 12A of the Act on dated 19.03.2009. In view of above the Ld. CIT rejected the application filed by assessee u/s 12A of the Act. Being aggrieved by this order of L d CIT(A) assessee preferred an appeal before us. 5. We have heard rival contentions and perused the materials available on record. Before us Ld. AR argued that the activity and source of income assumed by assessee-trust is erroneous on the ground that land does not belong to the assessee. The land is the property of Govt. of West Bengal. The appellant acts only as custodian of said laid on behalf of State Government. So the appellant can claim immunity from union taxation under Article 289 of the Constitution of India as the income relating to land really belongs to State Government and not to appellant-assessee. The assessee is only the custodian of fund on behalf of State Government. The Ld. AR further submitted that after the amendment made in the Finance Act 2007, it is necessary for the trust / institution to file registration application u/s 12A of the Act within one year from the date of its creation or establishment, whichever is later. If it is filed on or after 01.06.2007 the exemption sha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reproduce the provision of the Act. 12A [conditions for applicability of Sections 11 and 12] [(1)] . .. [(2)] where an application has been made on or after the first day of June, 2007, the provisions of Sections 11 and 12 shall apply in relation to the income of such trust or institution form the assessment year, immediately following the financial year in such application is made:] From a bare reading of the aforesaid proviso this is amply clear that exemption Sections 11 12 will be available from the first day of assessment year immediately following the financial year in which the application is made. Now in the instant case, since the application has been made on 19.03.2009 then the assessee-trust cannot claim the exemption for the earlier years but certainly entitle to claim the exemption benefit prospectively from the financial year in which the application has been made. In this connection, we are of the considered view that L d CIT is not supposed to done the delay for registration application but should grant the registration on prospective basis. In our considered view, the action of L d CIT for rejecting the registration application on the ground th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... then such a factor cannot warrant or justify the powers under section 12AA(3) being invoked. We, therefore, uphold the grievance of the assessee that the action of the learned Commissioner, in withdrawing the registration under section 12AA(3), was well beyond the limited scope of the powers conferred on him by the statute. The assessee, therefore, must succeed in the appeal for this short reason alone. 10. There is, however, a much more fundamental reason for the assessee succeeding in this appeal. In our considered view, the considerations with respect to the first proviso to Section 2(15) /coming into the play and, for that reason, the objects of an assessee trust or institution being held to be not covered by the definition of 'charitable purposes', have no role to play in the matters relating to registration of a trust or institution under section 12A or 12AA - whether in respect of granting or declining of a registration or in respect of cancellation, even if otherwise permissible, of a registration. A closer look at the scheme of the Act would unambiguously show this aspect of the matter. 11. Let us begin by taking a look at Section 2(15) which defines cha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st proviso to clause (15) of section 2 become applicable in the case of such person in the said previous year . 13. While introducing this amendment, Explanatory Memorandum to the Finance Bill 2012 fhttp://indiabudgetnic.in/budget2012-2013/ub2012- 13/mem/meml.pdFI explained the reasons and backdrop of this legislative amendment as follows: Assessment of charitable organization in case commercial receipts exceed the specified threshold Sections 11 and 12 of the Act exempt income of any charitable trust or institution, if such income is applied for charitable purposes in India and such institution is registered under section 12AA of the Act Section 2(15) of the Act provides definition of charitable purpose. It includes advancement of any other object of general public utility as charitable purpose provided that it does not involve carrying on of any activity in the nature of trade, commerce or business. 2nd proviso to said section provides that in case where the activity of any trust or institution is of the nature of advancement of any other object of general public utility, and it involves carrying on of any activity in the nature of trade, commerce or business; bu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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