TMI Blog2016 (9) TMI 1382X X X X Extracts X X X X X X X X Extracts X X X X ..... in, it was held that appeal is a continuation of the original proceedings and assessment proceedings pending before an appellate authority should be deemed to be "assessment proceedings pending before the Assessing Officer" within the meaning of Section 12A. Accordingly, it is held that the appellate proceedings before the appellate authorities are deemed to be assessment proceedings pending before the Assessing Officer Whether payment of Education Extension Services to the Diocese of Jalandhar, notified U/s 10(23C)(vi), as well as registered U/s. 12A of the Act and persuing the object of prompting education through running various schools, can be regarded as application of income - Held that:- ere, it is not in dispute that the Diocese of Jalandhar is not only registered U/s 12A of the Act, it is also notified U/s. 10(23C)(vi) of the Act. Besides, for A.Ys. 2007-08 to-2013-14, vide orders passed U/s 143(3) of the Act (copies on record), its stands taken note of that the Diocese of Jalandhar is running various schools and that exemption U/ss. 11 and 12 of the Act has been allowed with regard to its income. Therefore, it has wrongly been held in the impugned order that the paymen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .D. JAIN, JUDICIAL MEMBER AND T.S. KAPOOR, ACCOUNTANT MEMBER Ajay Vohra, Sr. Adv., Rohit Garg, Prem Singh and Gunjeet Singh Syal, Advs. for the Appellant. Bhawani Shanker, DR for the Respondent. ORDER 1. What we have before us is two batches of assessees' appeals (38 appeals in all) impinging upon the provisions of Section 12A of the Income Tax Act, 1961 (hereinafter referred as 'the Act'). The first batch involves cases where the provisions of Section 147/148 of the Act have been invoked and assessments have been framed pursuant thereto. The second batch pertains to assessments framed U/s. 143(3) of the Act. 2. The details of these appeals are as follows:- S. No. Name of the appellant school Assessment years No. of appeals 1. St. Jude's Convent School, Nakodar A.Y. 2006-07 to 2010-11 and 2012-13 6 2. St. Francis Convent School, Jandiala Guru A.Y. 2006-07 to 2012-13 7 3. St. Francis Convent School, Fatehgarh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A.Y. 2011-12 1 Christ The King Convent School, Bholath ITA No. 3/Asr/2016 A.Y. 2011-12 1 Sacred Heart Convent School, Patti ITA No. 2/Asr/2016 A.Y. 2011-12 1 Total 15 In the following five cases of this batch of appeals, for AY 2010-11 in all the cases, a common Additional Ground has been taken: ITA No. 749/Asr/2013, 'St. Jude's Convent School, Nakodar' ITA No. 750/Asr/2013, 'Christ the King Convent School, Pathankot' ITA No. 751/Asr/2013, in 'St Francis Convent School, Tarn Taran' ITA No. 752/Asr/2013, in 'St. Francis Convent School, Fatehgarh Churian' ITA No. 44/Asr/2014, in 'St. Francis Convent School, Jandiala Guru'. 4. The second batch asks for application of the second proviso to Section 12A(2) of the Act. The details of these appeals are as follows:- Name of the appellant school Appeal Numbers Assessment years ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vices' to the Diocese of Jalandhar, notified under section 10(23C)(vi), as well as registered under section 12A of the Act and pursuing the object of promoting 'education' through running various schools, as application of income; and (ii) that the surplus reflected in the Income and Expenditure Account, after taking into account capital expenditure incurred during the year, if any, as application of income, was below 15% of the gross receipts. The aforesaid approval/registration granted under section 10(23C)(vi) of the Act was, however, subsequently withdrawn by the CCIT, vide order dated 21.03.2013 (paper book, pages 79-85). Prior thereto, the assessee had applied for registration under section 12A of the Act, vide application dated 02.11,2012, which was duty granted by CIT, vide order dated 25.02.2013 (paper book, pages 11-12). The assessee was, thus, in terms of section 12A(2), eligible to claim exemption in respect of its income under section 11 of the Act, for the assessment year 2013-14 and onwards. At the time when the Assessing Officer initiated action under sections 147/148 (in the second batch of cases), registration of the assessee under section 10(23C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ority below has tailed to consider the explanation filed by the assessee in proper context and the findings of the authority below are not sustainable in law. 8. The following Additional Ground has also been taken: 1. That on the facts and circumstances of the case and in law, the appellant having been granted registration under section 12A vide order dated 25/02/2013, therefore, the benefit of such exemption should be granted for the year under consideration also, in view of the amendment made in section 12A vide Finance (No. 2) Act, 2014. 9. The Additional Ground is admitted, being based on the amendment made in Section 12A(2) of the Act, by virtue of Finance (No. 2) Act, 2014, w.e.f. 01/10/2014, post passing of the impugned order. 10. Apropos the merits of the Additional Ground, the Id. Counsel for the assessee has contended that as per the mandate of the amended Section 12A of the Act, the benefit of exemption should be granted to the assessee for the year under consideration, since the assessment proceedings for the said assessment year were pending as on 25/2/2013, the date on which the assessee was granted registration U/s. 12A and since the objects and activi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... June, 2007 in the prescribed form and manner to the Principal Commissioner or Commissioner and such trust or institution is registered under section 12AA; ** ** ** (2) Where an application has been made on or after the 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 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 in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a proviso, which is intended to intended 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, is required to be treated as retrospective in operation, so that a reasonable interpretation can be given to the section as a whole. It is, thus, trite that if a provision is curative or merely declaratory of the previous law, retrospective operation thereof is generally intended. 21. In CIT (Central) v. Vatika Township (P.) Ltd. [2014] 367 ITR 466 (SC), the Constitutional Bench of the Hon'ble Supreme Court held that 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 presumption would be that such a legislation, giving it a purposive construction, would warrant it to be given a retrospective effect. 22. In Government of India v. Indian Tobacco Association [2005] 7 SCC 396, the doctrine of fairness was held to be a relevant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the CBDT while issuing the Explanatory Notes to the provisions of the Finance (No. 2) Act, 2014, vide CBDT circular No. 1 of 2015, dated 21/1/2015. It was this anomaly, which was cured by brining in the first proviso to Section 12A(2), This proviso, even as avowed by the above-quoted Memorandum explaining the provisions of the Finance (No. 2) Bill, has sought to remedy the said unintended hardship visiting Trusts and Institutions. It has supplied the aforesaid omission in the section and has thereby made the provision of the section workable, providing a reasonable interpretation to it by providing the benefit mandated by it. It is, thus, a curative proviso, which is but merely declaratory of the previous law. It has, by removal of the hardship, rendered the procedure more relief-oriented. It adequately complies with the natural justice principle of fairness to all. Hence, it has to be presumed and construed as retrospective in nature, in order to give the section a purposive interpretation. 27. In Sree Sree Ramkrishna Samity v. Dy. CIT [2016] 156 ITD 646 (Kol.), the above position has elaborately been considered to hold the first proviso to Section 12A(2) to be retrospectiv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rders passed U/s 143(3) of the Act (copies on record), its stands taken note of that the Diocese of Jalandhar is running various schools and that exemption U/ss. 11 and 12 of the Act has been allowed with regard to its income. Therefore, it has wrongly been held in the impugned order that the payment of education extension services made by the assessee to the Diocese of Jalandhar out of the current year income, as is also available from the income and expenditure account of the relevant financial years, is not allowable as application of income. 34. In this regard, in CIT v. Sarladevi Sarabhai Trust (No. 2) [1988] 172 ITR 698 (Guj.), it has been held that when a charitable Trust donates its income to another Trust having similar objects, the provisions of Section 11(l)(a) can be said to have been met by such donor Trust. For this proposition, the assessee has correctly relied on the following decisions too: (i) CIT v. Thanthi Trust [1999] 239 ITR 502 (SC) (ii) CIT v. Hindustan Charity Trust [1983] 139 ITR 913 (Cal.) (iii) CIT v. Shri Ram Memorial Foundation [2004] 269 ITR 35 (Delhi) (iv) CIT v. Nirmala Bakubhai Foundation [1997] 226 ITR 394 (Guj.). Yet again, thes ..... X X X X Extracts X X X X X X X X Extracts X X X X
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