Retrospective application of registration allows charitable trusts to claim prior-year exemptions when assessments were pending.

Whether registration granted after relevant assessment years operates retrospectively so that sections 11 and 12 apply to earlier years where assessment proceedings were pending was decided by applying the proviso to section 12A(2): the proviso is remedial and to be given a purposive, liberal interpretation; where objects and activities remain unchanged and registration proceedings were pending, the benefit of registration extends to those earlier pending or reopened assessment years. Outcome: assessments were set aside and remanded to the assessing officer to admit claims for exemption under section 11 if substantive conditions are satisfied.

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Issues: Whether registration granted under section 12AA/12A, after the relevant assessment years, applies retrospectively so that provisions of sections 11 and 12 operate for earlier assessment years where assessment proceedings were pending, and whether assessments should be set aside/remanded for giving effect to such retrospective registration.

Analysis: The Tribunal examined the provisos to section 12A(2) (introduced by Finance (No.2) Act, 2014) which provide that sections 11 and 12 shall apply to assessment years prior to the year of registration if the assessments for those years were pending as on the date of registration, subject to the objects and activities remaining the same; and that no action under section 147 shall be taken solely for non-registration for those years. The Tribunal relied on precedents (including the SMC Bench decision in Shree Bhanushali Mitra Mandal Trust and a Coordinate Bench decision of this Tribunal) holding that the proviso is remedial and procedural and must be given a purposive, liberal interpretation so as to relieve genuine charitable trusts. The Tribunal applied these principles to the facts where registration was granted w.e.f. a later date while appeals/assessments for earlier years were pending or reopened, observed no change in objects or disqualifying activity, and noted that registration proceedings were pending before the competent authority. In consequence, the Tribunal concluded that the benefit of registration must be applied to earlier assessment years where proceedings were pending and directed that the assessments be set aside and remanded to allow claim of exemption under section 11, subject to satisfaction of substantive conditions of section 11.

Conclusion: The proviso to section 12A(2) applies to assessment years prior to the year of registration where assessment proceedings were pending or reopened; the assessee is entitled to apply the benefits of registration for those years if substantive conditions of section 11 are met. The assessments are set aside and remanded to the Assessing Officer to decide claims for exemption under section 11 in accordance with law.

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