Tribunal grants retrospective tax benefits and deems payments to Diocese as valid income applications

The Tribunal allowed all appeals, ruling that the first and second provisos to Section 12A(2) of the Income Tax Act are applicable retrospectively. It held that assessment proceedings pending in appeal are deemed to be pending before the Assessing Officer. Additionally, payments to the Diocese of Jalandhar were deemed as legitimate applications of income under Sections 11(1)(a) and 11(3)(d). This decision provided significant relief to the assessee by ensuring retrospective application of exemption benefits and recognition of payments to another charitable trust as valid income applications.

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Issues Involved:
1. Applicability of the first proviso to Section 12A(2) of the Income Tax Act, 1961.
2. Applicability of the second proviso to Section 12A(2) of the Income Tax Act, 1961.
3. Whether assessment proceedings pending in appeal can be considered as pending before the Assessing Officer.
4. Whether payment of Education Extension Services to the Diocese of Jalandhar can be regarded as application of income.

Detailed Analysis:

1. Applicability of the First Proviso to Section 12A(2):
The first proviso to Section 12A(2) was inserted by the Finance (No. 2) Act, 2014, effective from 01/10/2014. The Tribunal examined whether this proviso, which grants exemption benefits for pending assessment proceedings as of the date of registration, applies retrospectively. The Tribunal noted that procedural laws, particularly those intended to remove hardships, are generally retrospective. Citing various judicial precedents, including the Supreme Court's decision in *Vatika Township (P.) Ltd.*, the Tribunal concluded that the first proviso to Section 12A(2) is procedural and curative, thus applicable retrospectively.

2. Applicability of the Second Proviso to Section 12A(2):
Similarly, the second proviso to Section 12A(2) prevents reopening of assessments under Section 147 solely for non-registration of the trust for the relevant assessment years. The Tribunal held that this proviso is also procedural and curative, intended to prevent undue hardship. Consequently, it should be applied retrospectively.

3. Assessment Proceedings Pending in Appeal:
The Tribunal addressed whether assessment proceedings pending in appeal can be considered as pending before the Assessing Officer. It referred to judicial precedents such as *Shree Bhanushali Mitra Mandal Trust* and *SNDP Yogam*, which established that appellate proceedings are a continuation of the original assessment proceedings. Thus, the Tribunal held that assessment proceedings pending in appeal are deemed to be pending before the Assessing Officer.

4. Payment of Education Extension Services:
The Tribunal examined whether payments made by the assessee to the Diocese of Jalandhar could be considered as application of income. The Diocese of Jalandhar is registered under Section 12A and notified under Section 10(23C)(vi). The Tribunal noted that the payment was made out of current year income, not accumulated income, and cited judicial precedents such as *Sarladevi Sarabhai Trust (No. 2)* and *Thanthi Trust* to support the view that donations to another charitable trust with similar objects meet the requirements of Section 11(1)(a). Additionally, the Tribunal found no evidence that the Diocese of Jalandhar pursued religious objects, reinforcing that the payment was for educational purposes. Therefore, the Tribunal concluded that such payments should be allowed as application of income.

Conclusion:
The Tribunal allowed all the appeals, holding that:
1. The first and second provisos to Section 12A(2) are applicable retrospectively.
2. Assessment proceedings pending in appeal are deemed to be pending before the Assessing Officer.
3. Payments made to the Diocese of Jalandhar qualify as application of income under Sections 11(1)(a) and 11(3)(d).

The Tribunal's decision provided significant relief to the assessee by ensuring that the benefits of exemption under Section 12A were applied retrospectively and that payments to another charitable trust were recognized as legitimate applications of income.

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