TaxTMI 
TaxTMI 
2016 (6) TMI 1269
X X X X Extracts X X X X
X X X X Extracts X X X X
....rust. 3. The learned Commissioner of Income Tax(Appeals) , has committed a legal error in concluding that all the three decisions relied on by the appellant viz. i) ITO (Exemptions) vs. Smt.Basanti devi and Shri. ChakhanLal Garg Education Trust (ITA No.5082 (Del) 2010), ii) ITO Vs. Mls.GowdiaGranthAnuved Trust (ITA No.386/Agra/20I2), and iii) High Court of Madras in the case ofCIT Vs. Nagi Reddy Charities reported in 241 ITR 431. are not applicable in the appellant's case since the facts of the case are quite different from appellant's own case. 4. The learned Commissioner of Income Tax(Appeals) , has committed a mistake in relying on the decision by the Hon'ble ITA T Lucknow, in the case of Awadh Public School Academy Vs. Income tax Officer in ITANo.548/LKW/20I2 dated 29/08/2014,since the facts of that case is entirely different from that of the appellant. 5. The learned Commissioner of Income Tax(Appeals) , has erred in relying on the decision of the Hon'ble Supreme Court Of India in the case of UP Forest Corporation and Another Vs. DCIT reported in 297 I SC( 2008),that for a trust or institution to claim benef....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s amounting to Rs. 6,50,000/- was taxed as income in the hands of the assessee trust. The reasoning of the AO was that the assessee Trust was not granted registration u/s 12AA of the I T Act for the AY 2006-07. 5 Aggrieved, the assessee preferred appeal to the first appellate authority. It was contended before the first appellate authority that the sum of Rs. 6,50,000/- was the contributions made by the trustees towards corpus funds of the trust. It was submitted that this amount was a capital receipt and cannot be treated as income u/s 2(24)(iia) of the Act. For the above proposition, the assessee relied on the following judicial pronouncements: i) ITO (Exemptions) vs Smt Basanti Devi & Shri Chakhan Lal Garg Education Trust - ITA No.5082/Del/2010; ii) ITO vs M/s Gowdia Granth Anuved Trust - ITA No.386/Agra/2012; iii)CIT vas Nagi Reddy Charities - 241 ITR 431 6 The CIT, however, rejected the contentions raised by the assessee and held that in the absence of registration u/s 12A, the contributions by various persons, amounting to Rs. 6,50,000/-, is rightly treated by the AO, as income u/s 2(24)(iia) of the Act. The CIT(A) also relied on the order ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....case, the appeal was pending before the CIT(A), when the assessee trust was already granted registration u/s 12AA of the Act and the CIT(A) ought to have taken note of the grant of registration and extended the benefit to the current assessment year also. Therefore, it was submitted that the issue needs reconsideration at the level of the CIT(A) by taking cognizance of the dictum laid down by the Tribunal in the case of SNDP Yogam (supra). The ld DR present was duly heard. The ld DR did not have a serious objection with regard to the appeal being reconsideration de-nova by the CIT(A). 8 We have heard the rival submissions and perused the material on record. The Cochin Bench of the Tribunal in the case of SNDP Yogam (supra) after considering the first proviso to section 12A(2) has held that it has got retrospective effect. The relevant findings of the Tribunal read as follows: "7. We have carefully considered the rival submissions, perused the relevant materials on record and the case law on which the learned AR had placed strong reliance. The primary issue for our consideration is whether the CIT (A) is justified in confirming the AO's action, for all the assessment yea....
X X X X Extracts X X X X
X X X X Extracts X X X X
....able objects in the earlier years and substantive conditions stipulated in section 11 to 13 have been duly fulfilled by the said trust. The benefit of retrospective application alone could be the intention of the legislature and this point is further strengthened by the Explanatory Notes to Finance (No.2) Act, 2014 issued by the Central Board of Direct Taxes vide its Circular No. 01/2015 dated 21.1.2015. Apparently the statute provides that registration once granted in subsequent year, the benefit of the same has to be applied in the earlier assessment years for which assessment proceedings are pending before the ld. A.O., unless the registration granted earlier is cancelled or refused for specific reasons. The statute also goes on to provide that no action u/s147 could be taken by the AO merely for non-registration of trust for earlier years. "7.2 When section 12A of the Act was amended by introducing new provisos to sub-section (2) of s. 12A by Finance Act, 2014 with effect from 01.10.2014, the assessment orders passed by the assessing officer in respect of the present assessee were pending in appeal before the first appellate authority. During such pendency, the a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....iberal interpretation will give effect to the intention of the amendment, thereby removing the hardship in genuine cases like the present assessee under consideration. 7.4. Taking into account the above facts and circumstances of the issue, we are of the view that the AO was not justified in taking a stand that registration u/s 12A was not applicable to the assessee for the AYs under dispute and the condonation petition for delay in filing the application for registration u/s 12A [for the AYs under dispute] has not yet been decided by the CBDT and, therefore, the total incomes of the assessee were to be assessed as per commercial principles. The CIT (A) was also not justified in taking a similar stand that of the AO, without taking cognizance and intention of the amendment to s. 12A of the Act. If no judicious or a liberal view is not taken either by the assessing authority or the appellate authority as in the case under consideration, the very purpose for which such an amendment to s. 12A of the Act enacted,in our view, would be defeated. We are also supported by the order of Kolkata Bench of ITAT in case of Sree Sree Ramkrishna Samity vs. DCIT (ITA No. 1680/2012, order d....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... income of the Trust/Institution shall be examined and decided upon by the Assessing Officer at the time of assessment based on the conduct of the activities, compliance with various statutory and other requirements, etc., as referred to in Sections 2(15), 11, 12 & 13 of the Income Tax Act, 1961, without prejudice to the fact of granting merely in principle registration by DIT(E). ii) With effect from the Assessment Year 2009-10, the advancement of any object of general public utility other than relief of the poor, education and medical relief as defined in section 2(15) of the Income Tax Act shall not be a charitable purpose, if it involves the carrying on of any activity in the nature of trade, commerce or business, or any activity of rendering any service in relation to any trade, commerce or business, for a cess or fee or any other consideration, irrespective of the nature of use or application, or retention, of the income from such activity. iii) Amendments to the Deed/Memorandum, Rules and Regulations, if any, of the Trust / Institution shall be made only with the prior approval of the Commissioner of Income Tax(Exemptions) or any other prescribed authority ....