AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2022 (6) TMI 1112
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....zing the assessment. The relevant grounds taken out by the assessee in all these years are extracted here in below paras. 2.1 In ITA No. 275/JP/2021 for A.Y 2016-17, the assessee has taken following grounds of appeal, which is reproduced here in below: "1. That under the facts and circumstances of the case the learned Assessing Officer has erred in denying the exemption available under section 11 and 12 of the Income Tax Act and the Hon'ble Commissioner of Income Tax (Appeals), National Faceless Appeal Centre has further erred in upholding the order of the AO. 2. That under the facts and circumstances of the case the learned Assessing Officer has erred in disallowing the capital expenditure of Rs.3,10,754 and exemption of surplus income under section 11(1)(a) of Rs.5,80,036 against the application of income and further erred in assessing the total net taxable income at Rs.8,90,790 as against the Nil as returned income. Further, the Hon'ble Commissioner of Income Tax (Appeals), National Faceless Appeal Centre has further erred in upholding the order of the AO and confirming the additions made in the assessment order made by the learned Assessing Officer. 3. That under....
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....nces of the case the learned Assessing Officer has erred in disallowing an amount which was accumulated or set apart of Rs. 11,86,765 u/s 11(1)(a) of the Income tax Act and further erred in adding the same to the total taxable income of the appellant. Further, the Hon'ble CIT (Appeals) has further erred in confirming the additions made in the assessment order made by the learned Assessing Order. 3. That under the facts and circumstances of the case the order passed by learned Assessing Officer u/s 143(3) of the Income-tax Act, 1961 is illegal, unlawful and against the principles of natural justice and Hon'ble CIT (Appeals)has further erred in not considering the ground of appeal. 4. That under the facts and circumstances of the case the Hon'ble CIT (Appeals) has erred in not considering the first proviso to Section 12A(2) of the Act which was introduced vide Finance (No.2) Act, 2014. 5. The appellant craves liberty to raise additional ground and to modify/amend the ground of appeal at the time of hearing." 3. Since, the issue in all the years is common, assessment year 2016- 17 is considered as lead case and the relevant facts, as culled out from the record from ....
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....assessee and status of the assessee trust is taken as 'AOPTrust'. 3.3 Due to denial of exemption u/s 11, assessee trust is not entitled to claim surplus u/s 11(1) (a) and 11(2) of the Act. Trust is also not entitled to claim capital expenditure as allowable expenditure. Therefore, Capital expenditure of Rs.3,10,754/- and surplus u/s 11 (1) (a) of Rs.5,80,036/- added back in the income of the assessee. 4. Aggrieved from the order of the assessment the assessee has filed an appeal before the first appellate authority but remain failed. The relevant findings of the Ld. CIT(A)/NFAC is extracted here in below: 7. I have considered the facts and circumstances of the case, submissions of the appellant and material available on record. In this case, AO has disallowed the claim u/s 11(1)(a) and 11(2) of the IT Act, due to absence of u/s 12AA certificate. The appellant has challenged that claiming exemption under section 11 of the Act, issuance of registration is one of the conditions and not the only condition. If Commissioner has granted the registration later than the creation of the Trust, it should be effective for all the years for which the constitution had remained the sa....
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....y of registration certificate granted u/s 80G was also provided. It was also communicated that registration certificate granted u/s 12AA was misplaced. It was also explained that the 80G registration certificate was granted only for those Sansthan who have a registration certificate u/s 12AA of the IT Act. Being as per provisions of section 80G(5)(i), the section applies to donations to the institutions established in India for a charitable purposes and income of such institution would not be liable to inclusion in its total income under the provisions of section 11 and 12 or clause 23AA or clause 23C of section 10. Clearly after producing the certificate under section 80G (copy enclosed as Annexure - 4), it could not be presumed that 12A certificate was later on cancelled or withdrawn. 5. It is also important to note that when it was realized that original certificate granted u/s 12AA was misplaced, the appellant has again applied for registration u/s 12AA of the Income Tax Act and same was granted by the Honourable CIT Exemption, Jaipur vide order No. CIT Exemption Jaipur/12AA/2019-20/A/10933 dated 03.12.2019 (enclosed as Annexure-5) which clearly proves that since beginning th....
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....2AA is applicable from 01.04.2019. 2. Further, It is relevant at this juncture to get into the amendment brought in section 12A by Finance Act 2014 with effect from 1.10.2014 by way of insertion of first proviso to section 12A(2) of the Act which is reproduced below for the sake of convenience : 'Section 12A(2) Where an application has been made on or after the 1st day of June 2007, 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: 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 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 su....
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.... 12AA of the Act at all. We, therefore, emphasise that the registration of trust under section 12A of the Act once done is a fait accompli and the AO cannot thereafter make further probe into the objects of the trust. 6. It will be relevant to get into the Explanatory Notes to the Provisions of the Finance (No. 2), 2014 as given in CBDT Circular No. 01 / 2015 dated 21.1.2015 in reference F.No. 142 / 13 /2014-TPL (enclosed as Annexure-6) which is reproduced herein below for the sake of convenience:- Para 8 - Applicability of the registration granted to a trust or institution to earlier years Para 8.2Non-application of registration for the period prior to the year of registration caused genuine hardship to charitable organizations. Due to absence of registration, tax liability is fastened even though they may otherwise be eligible for exemption and fulfill other substantive conditions. However, the power of condonation of delay in seeking registration was not available. This clearly goes to prove that the first proviso to section 12A(2) was brought in the statute only as a retrospective effect with a view not to affect genuine charitable trusts and societies carrying on g....
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.... to which such exemption should apply was also within his powers. The Tribunal, however, found that the assessee was entitled to exemption for all the years once it was found to be eligible for the same. The date of registration was immaterial. The important point for consideration is that once a trust is found registrable, registration is effective from the date of inception. 3. Thus, Firstly, availability of 80G certificate itself sufficient to prove that appellant was registered u/s 12AA of the Income-tax Act in A.Y. 2016-17. Secondly, as explained above, the registration granted later on shall also apply in the AY 2016-17 to grant the exemption u/s 11 & 12 of Income-tax Act. 4. Further, we would like to bring to your kind consideration that there are various pronouncements which specifically dealt with the similar issue and has considered the first proviso of Section 12A(2) of the Act and allowed the exemption under section 12AA even if the registration certificate was issuer after the relevant assessment year in which exemption has been claimed. 5. The following landmark pronouncements have been stated for your ready reference: (i) Sree Sree Ramkrishna Samity vs. DCIT,....
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.... Act. (v) In CIT Vs. Vatika Township Pvt. Ltd. 367 ITR 466 (Supreme Court), the Constitutional Bench of the Hon'ble Supreme Court held that "if a legislation confers a benefit on some persons but without inflicting a corresponding detriment on some other person or on the public generally; and where to confer such benefit appears to have been the legislators' object, then the presumption would be that such a legislation, giving it a purposive construction, would warrant it to be given a retrospective effect". In view of the above, the appellant request your honour to accede to the above request and allow the exemption under section 11 and 12 of the Act. Further allow the capital expenditure of Rs. 3,10,754 and the exemption of surplus income u/s 11(1)(a) of Rs. 5,80,036 accumulated or set apart and delete the addition of the same made to the total income of the appellant. Kindly considered our written submission to finalize the appeal in the recent scenario of virtual hearing before the Bench." 6. During the course of hearing the bench asked the ld. AR that whether in support of their contentions that the assessee enjoys the benefit of section 80(G) of the Act and for that 12....
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....ontentions before the AO that the assessee has produced 80G certificate before the ld. Assessing Officer and alternatively argued that once the certificate u/s 80G is issued the absence of the 12A registration cannot be a question and it is the pre-requisite as before provisions of section 80G(5)(i) of the Act. The ld. AR of the assessee further submitted that even after the assessment they have applied afresh before the ld. CIT(E) for issue of registration certificate u/s 12AA of the Act which was granted vide order dated 3rd December, 2019. The ld. AR further submitted that the department did not prove that the assessee exemption u/s 80G(5)(i) has been withdrawn as merely the assessee could not find that the original certificate exemption cannot be denied even subsequently the activities of the trust has been confirmed as the charitable and the registration has been granted. 8. On the contrary ld. DR did not controvert the plea of the ld. AR of the assessee and has not placed anything contrary that there was cancellation of recognition 80G(5) or 12A by the department for which the hearing was also adjourned to give sufficient time to find out the fact. But the ld. DR did not bri....
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....r 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. 8.4 Further, it has been provided that no action for reopening of an assessment under section 147 of the Income-tax Act shall be taken by the Assessing Officer in the case of such trust or institution for any assessment year preceding the first assessment year for which the registration applies, merely for the reason that such trust or institution has not obtained the registration under section 12AA for the said assessment year. 8.5 However, the above benefits would not be available in the case of any trust or institution which at any time had applied for registration and the same was refused under section 12AA of the Income-tax Act or a registration once granted was cancelled. 8.6 Applicability: - These amendments take effect from 1st October, 2014. 11. Relying on intention of the board that once the registration has been granted and there is no contrary finding on record about the rejection of the trust registration the benefit of section 11 and 12 of the Act....