9911796707
TMI Blog2024 (6) TMI 1292X X X X Extracts X X X X X X X X Extracts X X X X ..... tates exemption u/s section 11 and 12 can be given with retrospective effect. Exemption u/s. 11 : The learned A.O has erred in not considering various legal pronouncements allowing effect to the registration u/s 12A provided the activities and objects of the trust remains substantially the same. Exemption u/s. 11 : The learned A.O. has erred in not considering the CBDT Instruction No. 16/2015 dated 16-1-2015 allowing six months only while passing order under section 12AA. The Learned AO has erred in not allowing genuine expense of the Trust and has considered the gross receipts as taxable income instead of considering the net income of the Trust. Exemption u/s. 11 : Appellant craves leave to add, alter, amend or delete any of the above grounds of appeal. 2. None appeared for assessee. No adjournment letter was filed. It is observed that notice for hearing was issued on 06.06.2024 and was duly served at the email address [email protected], mentioned in Form No.36 filed by assessee. Submission of ld.DR : 3. The ld.DR for the Revenue relied on the order u/sec. 143(1) and order u/sec. 250 of the Act. Findings &Analysis : 4. We have heard ld.DR and perused the recor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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.]." Unquote. 7.2 The Central Board of Direct Taxes(CBDT) vide Circular No.1/2015 explained the section 12A(2) of the Act, the relevant part of the circular is reproduced here as under : "8.2 Non-application of registration for the period prior to the year of registration caused genui ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs 2003- 04 to 2008-09 as on the date of granting registration u/s 12AA of the Act on 29.10.2010 with effect from 1.4.2010 as reassessment proceedings got commenced pursuant to issuance of notice u/s 148 on 30.3.2010 as stated supra. Admittedly, the objects and activities of the trust had remained the same in preceding assessment years also i.e Asst Years 2003-04 to 2008-09. Though this first proviso to section 12A(2) talks about pendency of assessment proceedings, it is relevant to get into the definition of the term 'assessment' in section 2(8) of the Act, wherein it is defined as "assessment includes reassessment". Hence even reassessment proceedings that were pending would also come under the ambit of the first proviso to section 12A(2) of the Act. 6.5 The second proviso to section 12A(2) also provides that no action u/s 147 of the Act shall be taken merely for non-registration of trust or institution. Reading this proviso with the first proviso to section 12A(2) and applying the Rule of Harmonious Construction, it could safely be concluded that the legislature in its wisdom had only brought this proviso to prevent genuine hardship that could be caused on the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was granted by the ld. CIT(E) u/s 12AA on 16-5-2017. At this stage, it is relevant to take note of the mandate of sub-section (2) of section 12A granting benefit of exemption to the years prior to the grant of registration, which provides through the second proviso that : 'where registration has been granted to the trust or institution under section 12AA or section 12AB, 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.' A bare perusal of the proviso amply transpires that where the subsequent registration has been granted u/s 12AA, then the benefit of such registration will also be conferred to earlier years for which assessment proceedings are pending before the AO as on the date of such registration. The crucial words used in the second proviso are the pendency of assessment proceedings. To put it simply, if the assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A.Y. 2016-17 was passed by Income Tax Central Processing Centre, Bangalore. Accordingly, grounds of appeal number 1 to 4 raised by the assessee are allowed.
Ground Number 5:
10. Ground Number 5 is regarding 12AA proceedings which is not related to the present appeal and it is not arising from the impugned Order u/s 250 of the Act. Hence, Ground Numnber 5 is dismissed.
Ground Number 6:
11. Since we have allowed the assessee benefit of exemption u/s 11 of the Act the ground number 6 becomes academic in nature. However, in principle, we agree with the assessee that without prejudice to earlier grounds, only the profit can be taxed and not the entire receipt if benefit of section 11 is to be denied. Therefore, the CPC has erred in taxing entire receipt of the assessee u/s 143(1) of the Act. However, this is merely academic discussion, as we have held that assessee is eligible for deduction u/sec. 11 of the Act.
Ground No.7 :
12. Ground number 7 is general in nature. No additional ground was raised or no ground was altered. Hence, ground number 7 is dismissed.
13. In the result, appeal of the assessee is partly allowed.
Order pronounced in the open Court on 26th June, 2024. X X X X Extracts X X X X X X X X Extracts X X X X
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