TaxTMI 
TaxTMI 
2019 (8) TMI 1717
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....age no. 8 of his order that during the course of appellate proceedings, the assessee has raised this ground regarding benefit u/s. 11 and 12 of the IT Act and this ground was raised on 11.04.2017 for the first time. It is noted by ld. CIT(A) that report was called for from the AO and he reproduced the relevant portion of the remand report from the AO dated 07.08.2017. As per the relevant portion of the remand report reproduced by him, it is noted that assessee has made an application for registration u/s. 12AA of the IT Act on 30.03.2016 and was granted 12AA registration by CIT(E) on 21.09.2016. It is further reported by the AO in the remand report that the provisions of sub-section 2 of section 12A clearly states that the provisions of section 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 and since in the present case, the assessee has made the application for registration u/s. 12AA on 30.03.2016, the assessee can claim benefit of section 11 and 12 from A. Y. 2017-18. Before the ld. CIT(A), this was the claim of the assessee that since the registr....
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....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 orders of the assessing authority, by narrowly interpreting the term, 'pending before the assessing officer' so as to exclude its pendency before the appellate authority, will be doing violence to the provisions of the Statute and, as such, liable to be interfered with. Moreover, under the Scheme of the Act, sections 11 and 12 are substantive provisions which provide for exemptions to a religious or charitable trust. Sections 12A and 12AA detail the procedural requirements for making an application to claim exemptions under sections 11 and 12 by the assessee and the grant or rejection of such application by the commissioner. Thus, in our view, sections 12A and 12AA are only procedural in nature. Hence, it is not the registration u/s. 12AA by itself that offers immunity from taxation. A receipt whether it is revenue or capital in nature is to be decided at the assessment stage. Being procedural in nature, in our view, liberal interpretation will ....
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....ain always so and if a construction results in equity rather than in injustice, then such construction should be preferred to the literal construction. It is only elementary that a statutory provision is to be interpreted ut res magis valeat quam pereat, i.e. to make it workable rather than redundant. Applying this legal maxim, it would be just and fair to hold that the amendment in section 12A is brought in the statute to confer benefit of exemption u/s. 11 of the Act on the genuine trusts which had not changed its objectives and had carried on the same charitable objects in the past as well as in the current year based on which the registration u/s. 12AA is granted by the DIT (Exemptions)." 7.5 In light of the aforesaid reasoning and order of the Tribunal in case of Sree Sree Ramkrishna Samity (supra), we direct the Director of Income-tax (Exemption) to grant registration to the assessee trust for all the assessment years under dispute, subject to the following conditions, namely: "i) The registration U/s. 12AA (1)(b)(i) of the Income Tax Act, 1961 does not automatically exempt the income of the Trust/Institution. The question of taxability of the income of the ....
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....n 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, requires to be treated as retrospective in operation so that a reasonable interpretation can be given to the section as a whole. 9. This view has been accepted by a number of High Courts. In the case of Commissioner of Income-Tax v. Chandulal Venichand [1994] 118 CTR (Guj) 257: (1994) 209 ITR 7(Guj): TC 19R.748, the Gujarat High Court has held that the first proviso to Section 43B is retrospective and sales-tax for the last quarter paid before the filing of the return for the assessment year is deductible. This decision deals with assessment year 1984-85. The Calcutta High Court in the case of Commissioner of Income-Tax v. Sri Jagannath Steel Corporation [1991]191ITR676(Cal), has taken a similar view holding that the statutory liability for sales-tax actually discharged after the expiry of the accounting year in compliance with the relevant statute is entitled to deduction under Section 43B. The High Court has held the amendment to be clarificatory and, therefore, retrospective. The Gujarat High Court in the ab....
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.... - (1) Conditions as to registration of trusts, etc.- 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 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 ....
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....able retrospectively. 19. In C.B. Richards Ellis Mauritius Ltd. v. Asstt. DIT [2012] 208 Taxman 322/21 taxmann.com 535 (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 677/91 Taxman 205 (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 can be given to the section as a whole. It is, thus, trite that if a provision is curative or merely declaratory of the previous law, retrospective operation thereof is generally intended. 21. In CIT (Central) v. Vatika Township (P.) Ltd. [2014] 367 ITR 466/227 Taxman 121/49 taxmann.com 249 (SC), the Constitutional Bench of the Hon'ble Supreme Court held that "if a legislat....
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....essing 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 bringing 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 remedy the said unintended hardship visiting Trusts and Institutions. It has supplied the aforesaid omission in the section and has thereby made the provision of the section workable, providing a reasonable interpretation to it by providing the benefit mandated by it. It is, thus, a curative pro....
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....hese cases operates retrospectively for all the relevant years under consideration." 5. CBDT Circular No. 1/2015, dated 21.1.2015, reads as under:- "8.1 The provisions of section 12A of the Income-tax Act, before amendment by the Act, provided that a trust or an institution can claim exemption under sections 11 and 12 only after registration under section 12AA of the said Act has been granted. In case of trusts or institutions which apply for registration after 1st June, 2007, the registration shall be effective only prospectively. 8.2 Non-application of registration for the period prior to the year of registration caused genuine hardship to charitable organisations. Due to absence of registration, tax liability is fastened even though they may otherwise be eligible for exemption and fulfil other substantive conditions. However, the power of condonation of delay in seeking registration was not available. 8.3 In order to provide relief to such trusts and remove hardship in genuine cases, section 12A of the Income-tax Act has been amended to provide that in a case where a trust or institution has been granted registration under section 12AA of the ....