TaxTMI 
TaxTMI 
2016 (9) TMI 1382
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..... Jude's Convent School, Nakodar A.Y. 2006-07 to 2010-11 and 2012-13 6 2. St. Francis Convent School, Jandiala Guru A.Y. 2006-07 to 2012-13 7 3. St. Francis Convent School, Fatehgarh Churian A.Y. 2006-07 to 2010-11 and 2012-13 6 4. Christ the King Convent School, Pathankot A.Y. 2006-07 to 2010-11 and 2012-13 6 5. St. Francis Convent School, Tarn Taran A.Y. 2006-07 to 2010-11 and 2012-13 6 6. St. Joseph Convent School, Phagwara A.Y. 2007-08, 2008-09, 2011-12 and 2012-13 4 7. St. Antony's Convent School, Adampur A.Y. 2011-12 1 8. Christ The King Convent School, Bholath A.Y. 2011-12 1 9. Sacred Heart Convent School, Patti A.Y. 2011-12 1 Total 38 3. The first batch of appeals seeks relief under the first proviso to Section 12A(2) of the Act. The appeals in this batch are as follows:- Name of the appellant school Appeal Numbers Assessment years No. of appeals St. Jude's Convent School, Nakodar ITA No. 749/Asr/2013 & 8/Asr/2016 A.Y. 2010-11 and 2012-13 2 St. Francis Convent School, Fatehgarh Churian ITA No. 752/Asr/2013 & 13/Asr/2016 A.Y. 2010-11 and-2012-13 2 St. Francis Convent School, Jandiala Guru ....
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....contained in its Memorandum of Association (page-1 of the paper book). In furtherance of its objects, the assessee-society had, during the relevant year, been managing and running various convent schools for imparting education to children of all castes and creeds, without any discrimination. It was granted approval/registration under section 10(23C)(vi) of the Act by the CCIT, vide order dated 29.01.2008, applicable from assessment year 2007-08 and onwards (paper book, page- 54), which is applicable to "any university or educational institution existing solely for educational purposes and not for purposes of profit. . . . ". On the basis of the Notification under section 10(23C)(vi) in force at the relevant time, the assessee filed returns of income for assessment years 2006-07 to 2012-13 at 'nil', considering:- (i) the payment of 'Education Extension Services' to the Diocese of Jalandhar, notified under section 10(23C)(vi), as well as registered under section 12A of the Act and pursuing the object of promoting 'education' through running various schools, as application of income; and (ii) that the surplus reflected in the Income and Expenditure Accoun....
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....3)(vi) cannot be withdrawn retrospectively) does not arise from the assessment order. 2. That on facts and circumstances of the case, the income of the assessee is exempt u/s. 10(23C)(vi). 3. That on facts and circumstances of the case, payment of Education Extension Services to another society, M/s. Diocese of Jalandhar of Rs. 85,00,000/- is not disallowable, especially when the nature and veracity of such expense had been verified by the Ld CCIT, as well as the Ld. AO. 4. That without prejudice to Ground 3 above, payment made to the Diocese of Jalandhar should be considered for use of land for the school being run by the assessee society. 5. That the dominant object of the society is to run school and is therefore outside the ambit of taxation. 6. That the observations of the Ld. CIT(A) are patently wrong and are challenged. 7. That the authority below has tailed to consider the explanation filed by the assessee in proper context and the findings of the authority below are not sustainable in law." 8. The following Additional Ground has also been taken: "1. That on the facts and circumstances of the case and in law, the appellant having been granted registration und....
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....bmitted that in any case, the said first proviso has been inserted by Finance (No. 2) Act, 2014 w.e.f. 01/4/2014 and as such, it is not applicable retrospectively. 14. For this, the ld. Counsel for the assessee has, again, cited the decision in the case of SNDP Yogam (supra). 15. We have heard the rival contentions of both the parties with reference to the merits of the additional ground. The relevant portion of Section 12A of the Act is as follows:- "Section 12A- CONDITIONS as to registration of trusts, etc. (1) The provisions of section 11 and section 12 shall not apply in relation to the income of any trust or institution unless the following conditions are fulfilled, namely :- ** ** ** (aa) the person in receipt of the income has made an application for registration of the trust or institution on or after the 1st day of June, 2007 in the prescribed form and manner to the Principal Commissioner or Commissioner and such trust or institution is registered under section 12AA; ** ** ** (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 inst....
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....he first proviso to Section 12A(2) shows that it has not been made applicable retrospectively. It has been inserted in the Act w.e.f. 01/10/2014, by virtue of the Finance (No. 2) Act, 2014. Thus, ordinarily, it ought to be taken as applicable only prospectively, and not retrospectively. However, the law is well settled to the effect that if the proviso brought in as a procedural or beneficial one, intending to remove hardship, it is applicable retrospectively. 19. In C.B. Richards Ellis Mauritius Ltd. v. Asstt. DIT [2012] 208 Taxman 322 (Delhi) (copy on record), it has been held that "procedural law, when amended" or substituted, is generally retrospective and applies from the date of its enforcement and to this extent, it can be retrospective". 20. In Allied Motors (P.) Ltd. v. CIT [1997] 224 ITR 677 (SC), it has been held that a proviso, which is intended to intended to remedy unintended consequences and to make the provision workable, a proviso which supplies an obvious omission in the section and is required to be read into the section to give the section a reasonable interpretation, is required to be treated as retrospective in operation, so that a reasonable interpretation ....
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....that in a case where a Trust or Institution has been granted registration U/s 12AA of the Act, the benefit of Section 11 and 12 shall be available in respect of any income derived from property held under Trust in any assessment proceedings for any earlier assessment year, which is pending before the Assessing Officer as on the date of such registration, if the objects and activities of such Trust or Institution in the relevant earlier assessment year are the same as those on the basis of which such registration has been granted. 26. Thus, clearly, the provisions of Section 12A of the Act entailed -unintended consequences of non-application of registration for the period prior to the year of registration and, thereby, non-grant of exemption U/ss. 11 and 12 up to grant of registration. This position was also recognized by the CBDT while issuing the Explanatory Notes to the provisions of the Finance (No. 2) Act, 2014, vide CBDT circular No. 1 of 2015, dated 21/1/2015. It was this anomaly, which was cured by brining in the first proviso to Section 12A(2), This proviso, even as avowed by the above-quoted Memorandum explaining the provisions of the Finance (No. 2) Bill, has sought to r....
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....proceedings pending before the Assessing Officer. 31. In all these cases, the impugned orders were passed after the respective dates of grant of registration. Thus, we hold that subsequent grant of registration in all these cases operates retrospectively for all the relevant years under consideration. 32. Now, apropos the merits, the question is whether payment of Education Extension Services to the Diocese of Jalandhar, notified U/s 10(23C)(vi), as well as registered U/s. 12A of the Act and persuing the object of prompting education through running various schools, can be regarded as application of income. 33. Here, it is not in dispute that the Diocese of Jalandhar is not only registered U/s 12A of the Act, it is also notified U/s. 10(23C)(vi) of the Act. Besides, for A.Ys. 2007-08 to-2013-14, vide orders passed U/s 143(3) of the Act (copies on record), its stands taken note of that the Diocese of Jalandhar is running various schools and that exemption U/ss. 11 and 12 of the Act has been allowed with regard to its income. Therefore, it has wrongly been held in the impugned order that the payment of education extension services made by the assessee to the Diocese of Jalandhar o....