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D.C.I.T (E) , Circle-2, Kolkata Versus Karmapa Charitable Trust

2018 (1) TMI 595 - ITAT KOLKATA

Exemption u/s 11 - Benefit of registration u/s. 12AA denied - AO completed the assessment u/s. 144 by denying exemption for non production of copy of registration from the prescribed authority - Held that:- Going by the principle of purposive interpretation of statues, an assessment proceeding which is pending in appeal before the first appellate authority should be deemed to be assessment proceedings pending before the assessing officer within the meaning of that term as envisaged under the pro .....

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mention that it is open to the AO to make assessment afresh in accordance with law. The grounds raised by the revenue are dismissed. - I.T.A No. 953/Kol/2015 - Dated:- 10-1-2018 - Shri S. S. Viswanethra Ravi, Judicial Member And Shri Dr. Arjun Lal Saini, Accountant Member For the Appellant Revenue : Shri Arindam Bhattacharjee, Addl. CIT -DR For the Respondent Assessee : Shri Subash Agarwal, Advocate, ld.AR ORDER Shri S. S. Viswanethra Ravi, JM This appeal by the Revenue against the order dt. 30- .....

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e same. On perusal of the said petition dt. 29-06-2015 filed by the DCIT concerned, we find that the reasons stated therein are bona fide and justified accordingly, the delay of 14 days in filing the appeal before the Tribunal is condoned and we proceed to hear the appeal on merits. 3. The appellant Revenue has raised the following grounds:- 1. That the ld. CIT(A) has erred in allowing the appeal whereas the assessment proceedings for the assessment year under consideration was not pending on th .....

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Act. 5. The assessee challenged the same before the CIT-A. The CIT-A after considering the effect of first proviso to section 12A(2) inserted by Finance Act (No.2) 2014 w.e.f 01-10-2014 directed the AO to give benefit of registration u/s. 12AA of the Act for the A.Y under consideration. Relevant portion of which is reproduced herein below:- 3. During course of appellate proceedings, the assessee submitted that the application for registration u/s 12AA was made on 12/02/2012 and the same was gra .....

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thorities. The assessee cited the judgement of Hon'ble ITAT, Kolkata in the case of Sonam Top Gay Bhutia in ITA No 331/K/11, it has been held that- "However, in our opinion since the learned Commissioner of Income-tax (Appeals) has co-terminus powers with the Assessing Officer, he should have allowed the benefit of exemption u/s 10 (26AAA) of the Income-tax Act 1961, which was impossible for assessee to claim in return. Further, Hon'ble Gujarat High Court in the case of Mayur Founda .....

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urisdiction is confined to the issues arising out of impugned order, but if a legal issue comes into operation at appellate proceedings stage only, for which no fresh scrutiny of facts is required, then the legal claim can be entertained by appellate authority particularly, when he has co-terminus powers with the authority passing the impugned order." Conclusion- It is seen that the Finance Act (No 2) 2014 has inserted first proviso to Section 12A(2) w.e.f. 01/10/2014. This proviso is- &quo .....

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ear." It has also been held in the judgement of Hon'ble ITAT cited above that the assessment is not complete as long as it is pending before the appellate authorities. The AO is directed to give the benefit of registration u/s. 12AA to the assessee for this AY. Appeal is allowed. " 6. The Ld.DR submits that inspite of having availing many opportunities, the assessee did not provide the information as required by the AO to examine the claim. The Ld.DR referred to page no-1 and 2 of .....

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g exemption for non production of copy of registration from the prescribed authority. The ld.AR further submits that application u/s. 12A of the Act seeking registration was made to CIT on 12- 02-2010 and the CIT granted registration on 15-05-2014 w.e.f 1-4-2011 and referred to page 8 of the paper book. He argued that as on date of assessment for the A.Y under consideration the application for seeking registration u/s. 12 A of the Act was pending before the CIT. Though it was not granted as on t .....

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ven in view of the insertion of 1st proviso in the Act. The ld.AR of the assessee also submits that the Hon ble High Court of Gujarat in the case of Mayur Foundation held that the assessment proceedings do not come to an end with the passing of assessment order and the appellate proceedings are also part of assessment proceedings and as such assessment comes to an end only when at the completion of proceedings at first appellate proceedings. He also submits that the CIT-A rightly directed the AO .....

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re would be defeated. The Cochin Tribunal in the case of supra has placed reliance on the order dt. 09-10- 2015 of the Kolkata Tribunal (ITAT Kolkata) in the case of Sree Sree Ramkrishna Samity Vs. DCIT, ITA No. 1680/2012, wherein it was held that the amendment to section 12A came into force from 01-10-2014 is retrospective. The ld.AR also submits that on the date of application filed seeking registration u/s. 12A of the Act the assessment for the A.Y under consideration is pending before the CI .....

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he order dt:09-10-15 of the Kolkata Bench, wherein, the Kolkata Bench by placing reliance on the decision of the Hon ble High Court of Gujarat which held that a legal claim can always be entertained in first appellate proceedings which is part and parcel of assessment proceedings in determining the correct income. The Cochin Tribunal in the case of supra has placed reliance on the order of Kolkata Bench in the case of Sree Sree Ramkrishna Samity supra, and held that insertion of 1st proviso to s .....

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meaning of that term as envisaged under the proviso. It follows there-from that the assessee which obtained registration u/s 12AA of the Act during the pendency of appeal was entitled for exemption claimed u/s 11of the Act. We further find that the facts in the case of supra of the Cochin Tribunal as relied on by the assessee are similar to the facts of the present case. In this regard, we may refer to the findings of the order dt. 01-03- 2016 of the Cochin Tribunal in the case of supra, which .....

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re the continuation of the original proceedings and that the power of the Commissioner of Income-tax was co-terminus with that of the assessing officer [ADIT (Exemption) in the present case] were two well established principles of law. In view of the above and going by the principle of purposive interpretation of statues, an assessment proceeding which is pending in appeal before the appellate authority should be deemed to be assessment proceedings pending before the assessing officer within the .....

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e of registration u/s 12AA tax liability got attached though otherwise they were eligible for exemption by fulfilling other substantive conditions that the amendment was brought in. That being so, denying such benefit to a trust like the assessee who had obtained registration u/s 12AA during the pendency of the appeals filed against the orders of the assessing authority, by narrowly interpreting the term, pending before the assessing officer so as to exclude its pendency before the appellate aut .....

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A and 12AA are only procedural in nature. Hence, it is not the registration u/s 12AA by itself that offers immunity from taxation. A receipt whether it is revenue or capital in nature is to be decided at the assessment stage. Being procedural in nature, in our view, liberal interpretation will give effect to the intention of the amendment, thereby removing the hardship in genuine cases like the present assessee under consideration. 7.4. Taking into account the above facts and circumstances of th .....

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ut taking cognizance and intention of the amendment to s. 12A of the Act. If no judicious or a liberal view is not taken either by the assessing authority or the appellate authority as in the case under consideration, the very purpose for which such an amendment to s. 12A of the Act enacted, in our view, would be defeated. We are also supported by the order of Kolkata Bench of ITAT in case of Sree Sree Ramkrishna Samity vs. DCIT (ITA No. 1680/2012, order dated 09.10.2015) where it was held that .....

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ires to be treated as retrospective in operation, so that a reasonable interpretation can be given to the section as a whole and accordingly the said insertion of first proviso to section 12A(2) of the Act with effect from 1.10.2014 should be read as retrospective in operation with effect from the date 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. Furthe .....

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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). 7.5 In light of the aforesaid reasoning and order of the Tribunal in case of Sree Sree Ramkrishna Samity(supra), we direct the Director of Inco .....

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