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 proviso to section 12A(2) of the Income Tax Act, 1961. The decision was based on the retrospective application of the proviso and the substantive nature of sections 11 and 12, emphasizing the need to alleviate hardships faced by genuine charitable trusts.

---

---

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.

---