2022 (7) TMI 545 - AT - Income Tax

Tribunal grants assessee benefits under Income Tax Act, emphasizing retrospective proviso

The Tribunal allowed the appeal filed by the assessee, directing the Assessing Officer to grant the benefits of sections 11 and 12 as per the first ... Exemption u/s 11 - AO as well as the ld. CIT(A) denied benefit of sections 11 and 12 of the Act to the assessee on the sole ground that the assessee was not having registration u/s 12A of the act for AY 2016-17 - assessee was not having registration u/s 12A of the Act till pronouncement of first appellate order and, thereafter, the aggrieved assessee chose to file appeal before the Tribunal challenging the orders of the authorities below - HELD THAT:- It is not been disputed by the ld. Sr. DR that the assessee was granted registration u/s 12AA of the Act vide order dated 15.09.2020 by CIT (Exemptions), Chandigarh. In view of order of ITAT Pune Bench in the case of Marathwada Auto Cluster [2018 (6) TMI 1809 - ITAT PUNE] and order of SNDP Yogam [2016 (3) TMI 1110 - ITAT COCHIN] in a case where appeal is pending before the Tribunal, then, after grant of registration u/s 12AA of the Act w.e.f. 15.09.2020 as per retrospective operation of first proviso to sub-section (2) of section 12A of the Act. Further, as per order of ITAT Ahmedabad Bench in the case of Shree Bhanushali Mitra Mandal Trust [2016 (4) TMI 578 - ITAT AHMEDABAD] and ITAT Kochin Bench in SNDP Yogam [2016 (3) TMI 1110 - ITAT COCHIN] as per the said proviso to sub-section (2) to section 12A of the Act, the provisions of sections 11 and 12 of the Act shall apply in respect of any income derived by the trust of any assessment year preceding to the year in which registration u/s 12A of the Act was granted for the assessment year for which proceedings are pending before the AO as on the date of such registration and the retrospective benefit of the said first proviso to sub-section (2) to section 12A of the Act is also available in the cases where appeal is pending before the appellate authorities including CIT(A) and Tribunal (ITAT). Therefore, respectfully following the order of the ITAT Pune Bench in the case of Marathwada Auto Cluster (supra), the sole grievance of the assessee in the present appeal is allowed and the AO is directed to allow benefit of section 11 and 12 of the Act to the assessee in terms of first proviso to sub-section (2) of section 12A of the Act. Appeal of assessee allowed. Issues Involved:1. Delay in filing the appeal before the Tribunal.2. Entitlement to the benefit of sections 11 and 12 in terms of the first proviso to section 12A(2) of the Income Tax Act, 1961, for the assessee granted registration under section 12AA of the Act.Detailed Analysis:1. Delay in Filing the Appeal:The assessee contended that there was no delay in filing the appeal before the Tribunal due to the Hon'ble Supreme Court's orders extending the limitation period for filing appeals from 15.03.2020 to 28.02.2022. The Tribunal accepted this argument, noting that the Senior Departmental Representative (DR) did not dispute the submission. Consequently, the Tribunal held that there was no delay in filing the appeal and proceeded to adjudicate it as filed within time.2. Entitlement to the Benefit of Sections 11 and 12:The main issue was whether the assessee's income/surplus was entitled to the benefits of sections 11 and 12 under the first proviso to section 12A(2) of the Act, given that the assessee was granted registration under section 12AA on 15.09.2020.Arguments by the Assessee:- The assessee relied on the ITAT Ahmedabad Bench's decision in the case of Shree Bhanushali Mitra Mandal Trust vs. ITO, which interpreted the first proviso to section 12A(2) as having retrospective effect to avoid hardship to genuine charitable trusts.- The assessee cited various judgments, including those from the Hon'ble High Court of Rajasthan and ITAT Pune Bench, supporting the retrospective application of the proviso.- It was argued that the amendment aimed to provide relief to trusts that fulfilled substantive conditions but lacked registration, and thus should be applied retrospectively.Tribunal's Analysis:- The Tribunal noted that the assessee was granted registration under section 12AA on 15.09.2020, while the assessment order was passed on 10.12.2018 and the CIT(A) dismissed the appeal on 18.11.2019.- The Tribunal referenced multiple judgments, including those from ITAT Kochin Bench and ITAT Kolkata Bench, which supported the retrospective application of the first proviso to section 12A(2).- It was emphasized that sections 11 and 12 are substantive provisions providing exemptions to charitable trusts, while sections 12A and 12AA are procedural. Therefore, a liberal interpretation should be given to remove hardships in genuine cases.- The Tribunal concluded that the Assessing Officer (AO) and CIT(A) were not justified in denying the benefits of sections 11 and 12 solely because the assessee did not have registration under section 12A for the relevant assessment year.Conclusion:The Tribunal directed the AO to allow the benefit of sections 11 and 12 to the assessee in terms of the first proviso to section 12A(2) of the Act, thereby allowing the appeal filed by the assessee.Final Judgment:The appeal filed by the assessee was allowed, and the AO was directed to grant the benefits of sections 11 and 12 as per the first proviso to section 12A(2) of the Income Tax Act, 1961. The order was pronounced in the open court on 08.07.2022.