TaxTMI 
TaxTMI 
2016 (8) TMI 1000
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.... for registration u/s. 12AA of the Act in the prescribed form on 16-01-2013. The Commissioner of Income Tax vide order dated 25-03-2014 granted registration to the assessee u/s. 12AA w.e.f. assessment year 2014-15. Notice u/s. 148 was issued to the assessee on 22-03-2013. The assessee was provided with reasons for issuing notice u/s. 148 for the assessment year 2011-12 vide letter dated 18-06-2013. The assessee filed objections against the issuing of notie u/s. 148, which were disposed off by the Assessing Officer on 23-08-2013. The Assessing Officer, thereafter, vide order dated 27-01-2014 passed order u/s. 143(3) r.w.s. 147 of the Act making addition of Rs. 40,92,239/- on account of disallowance of deduction u/s. 57 of the Act. Aggrieved by the assessment order, the assessee preferred an appeal before the Commissioner of Income Tax (Appeals) challenging the reassessment proceedings, as well as addition/disallowance made by the Assessing Officer. The First Appellate Authority vide impugned order rejected the contentions of the assessee with regard to reassessment proceedings. However, on merits the Commissioner of Income Tax (Appeals) accepted the appeal of the assessee. Now, b....
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....ns recorded for issuing of notice u/s. 148 communicated to the assessee vide letter dated 18-06-2013, it is mentioned that during the year the assessee has received donations of Rs. 40,77,937/- and has claimed expenses of Rs. 39,21,244/-. Thus, there is a surplus of Rs. 1,56,693/-. In fact, the amount of Rs. 1,56,693/- is deficit and not surplus. The ld. AR referred to income and expenditure account for the year ending on 31-03-2011 at page 16 of the paper book. The ld. AR pointed that the income of the assessee from donations, bank interest and sale of Shenkhat (cow dung) is Rs. 40,77,937/-, against the expenditure of Rs. 42,34,630/-. The assessee has claimed income from sale of Shenkhat as agricultural income exempt from tax. Thus, the total income declared by the assessee in computation was Rs. (- )5,42,898/-. The ld. AR further pointed out that in the reasons recorded it has been mentioned that the assessee has shown incorrect income there is escapement of income to the extent of Rs. 6,99,411/-. However, in the reassessment proceedings, the Assessing Officer did not make any addition on account of such aforesaid escapement but made disallowance of deduction u/s. 57 to the tune ....
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....are contained in section 12A of the Act. The provisions of subsection (2) of section 12A of the Act were amended by the Finance (No. 2) Act, 2014. Proviso to sub-section (2) were inserted by amendment which reads as under : "(2) Where an application has been made on or after the 1st day of June, 2007, the provisions of sections 11 and 12 shall apply in relation to the income of such trust or institution from the assessment year immediately following the financial year in which such application is made. Provided that where registration has been granted to the trust or institution under section 12AA, 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: 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 asses....
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....officer [ADIT (Exemption) in the present case] were two well established principles of law. In view of the above and going by the principle of purposive interpretation of statues, an assessment proceeding which is pending in appeal before the appellate authority should be deemed to be 'assessment proceedings pending before the assessing officer' within the meaning of that term as envisaged under the proviso. It follows there-from that the assessee which obtained registration u/s 12AA of the Act during the pendency of appeal was entitled for exemption claimed u/s 11of the Act. 7.3. The explanatory Memorandum to Finance (No.2) Bill, 2014 which sought to amend section 12A explains the objects and reasons for making such amendments. The explanation makes it clear that it was in order to provide relief to such trusts in respect of which, due to absence of registration u/s 12AA tax liability got attached though otherwise they were eligible for exemption by fulfilling other substantive conditions that the amendment was brought in. That being so, denying such benefit to a trust like the assessee who had obtained registration u/s 12AA during the pendency of the appeals filed against the ....
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.... trust are excluded u/s. 11(1)(a) from the scope of income u/s. 11(1) of Incometax Act. Therefore, even if exemption is not allowable in view of non registration u/s. 12AA of Income-tax Act, the income of the Trust is required to be computed not in accordance with the provisions of Act but in accordance with the provisions of Act but in accordance with the normal rule of accountancy, in a commercial sense without reference to the head of income specified in See. 14. This is a matter of settled law. The Hon'ble Supreme Court in CIT Vs. Programme for community organization, 248 ITR 1 (SC) had approved Kerala High Court's decision in the same case in 228 ITR 620 (Ker) as to the manner of computation stating that income has to be computed on commercial basis and not headwise or statutory basis wherein Expenditure would be charge on the income, while the net income along with donations other than corpus donations will form eligible base out of which the appellant is expected to apply 75% (now 85%). Therefore, in my opinion, the manner of computation of income will be the same though the appellant will not be entitled to exemption u/s. 11 & 12 of the Income-tax Act being not register....