TaxTMI 
TaxTMI 
2022 (6) TMI 1112
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....A of the Income Tax Act, 1961 [ here in after referred as Act ] by the assessing officer while finalizing 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 th....
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....e CIT (Appeals) has further erred in confirming the rejection of exemption available under section 11 and 12 of the Act to the appellant. 2. That under the facts and circumstances 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 t....
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....e IT Act, 1961, so even till today, it is having valid registration u/s 12AA of the Act is merely an assumption and claim of exemption is not a matter of assumption. Therefore, claim of exemption u/s 11 of the Act, denied to 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 ....
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....tution along with registration certificate enclosed as Annexure-2 & 3. 3. The case was selected for limited scrutiny By CASS and during the course of assessment proceedings the appellant has filed all the required documents as are available with him before the learned AO. 4. The copy 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 ....
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....ome derived from the property held under Trust for any assessment year preceding A.Y. for which assessment proceeding are pending before the Assessing Officer." Being since inception the objects of the Society were not changed, therefore, provisions of Section 11 and 12 shall apply in the AY 2016-17 too, though the certificate of registration u/s 12AA 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 assessmen....
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....) of the Act also provides that the first and second proviso shall not be applicable if the trust or institution had been refused registration earlier or the registration granted earlier is cancelled by the Commissioner u/s 12AA of the Act. This also goes to prove that the first and second proviso shall be made applicable for the trusts for earlier assessment years also who had not applied for registration u/s 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 abse....
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....with the pronouncement made by the Rajasthan High Court in the case of CIT vs. Vasu Puziya Jain Derashar Pedi Undri [1997] 228 ITR 247, where the assessee asked for condonation of delay in filing the application for registration, which was granted with reference to the date of application. The assessee has claimed exemption for an earlier period as well. The argument of the Revenue was that since it was the privilege of the Commissioner to condone or not to condone the delay, the date with reference 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.....
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....ere applicable for the preceding Assessment Years. Once Ld. CIT (Exemption) grants the registration certificate u/s 12AA of the Act w.e.f. 13.8.1973 the assessee shall have liberty to move application before Ld. A.O for rectification of the assessment orders for various Assessment Years in order to avail the benefit of Section 11 of the Act available for charitable trust registered u/s 12AA of the Act so that the Ld. A.O. could decide accordingly for various assessment years where in assessee have been denied the benefit of exemption u/s 11 of the 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 unde....
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.....12A and 80(G)(5) is cancelled subsequently and in the absence of the this facts placed on record merely the same was not made available the benefit of section 12A cannot be denied. He also submitted that there is no change in the object of the society and the registration is already obtained and granted by the CIT(E) the assessee in the absence of any adverse finding the benefit cannot be denied. For this contention the ld. AR of the assessee relied upon the written submission and the judgement quoted in his submission. The ld. AR further submitted that they have already raised this contentions 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 pr....
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....l 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 Income-tax Act, the benefit of sections 11 and 12 of the said Act shall be available in respect of any income derived from property held under trust in any assessment proceeding for an 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. 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 instituti....