TaxTMI 
TaxTMI 
2024 (2) TMI 687
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....laim of assessee to compute income as per the provisions of sections 11, 12 and 13, thereby wrongly treating receipt minus expenditure as income of the assessee. 2. That on the facts and in the circumstances of the case, the Ld. CIT(A) erred in making addition of Rs. 1,20,34,618/- and wrongly treating as surplus of assessee ignoring the submissions made on record. 3. That, on the facts and in the circumstances of the case and in law, the ld. AO erred in making addition of liability of Rs. 76,36,365/- as income of assessee on wrong basis and ignoring submissions made on record. ITA No. 177/Ind/2022 - A.Y.2017-18: 1. That on facts and in the circumstances of the case and in law, the Ld. AO erred in making addition of Rs. 1,01,77,928/- income of assessee on wrong basis and ignoring submissions made on record. 2. That on the facts and in the circumstances of the case and in law, the Ld. AO erred by wrongly treating the surplus of Rs. 1,01,77,928/- as taxable income, ignoring the submissions made on record." 2. Heard the learned Representatives of both sides at length and case- records perused. 3. The registry has informed that these appeals ....
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....A No. 888/Ind/2018. 5. The assessee filed returns of AY 2016-17 and AY 2017-18, involved in these appeals, on 31.03.2018 declaring total income of Rs. Nil in both Madhya Pradesh Council for Vocational Education & Training, Bhopal returns, after claiming exemption u/s 11/12. The returns were subjected to scrutiny assessments through notices u/s 143(2)/142(1). During scrutiny proceeding, the assessee submitted that its issue of registration u/s 12A was pending before ITAT, Indore; that it was expecting to get registration; and that once registration is granted from 01.04.2017 (i.e. from previous year 2017-18, AY 2018-19), it will also be entitled to exemption u/s 11/12 for preceding AY 2016-17 and 2017-18 on the basis of proviso to section 12A(2). Therefore, the exemption claimed by it ought to be allowed. But, the AO passed assessment-orders of AY 2016-17 and AY 2017-18 on 19.12.2018 and 05.12.2019 respectively without giving exemption u/s 11/12 for want of registration u/s 12A. 6. Aggrieved, the assessee carried matter in first-appeal but the CIT(A) did not grant any relief precisely for the reason, as mentioned in Para No. 5.4.2 / 5.4 of his order, that the assessee's applic....
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....ll not apply in case of any trust or institution which was refused registration or the registration granted to it was cancelled at any time under section 12AA." [Emphasis supplied] 10. Thus, to get the benefit of first proviso for preceding AY 2016-17 and 2017-18 in these appeals, three conditions have to be satisfied viz. (i) the registration must have been granted to assessee, (ii) the preceding year must be such whose assessment-proceedings were pending before the Assessing Officer as on the date of such registration, and (iii) the object and activities of the trust or institution remain the same for such preceding assessment year. Admittedly, the assessee has been granted registration by department w.e.f. 01.04.2017, thus condition (i) is satisfied. With regard to condition (ii), the factual matrix is such the registration was granted vide order dated 15.07.2022 and on that date, the assessee's cases of AY 2016-17 and 2017- 18 were concluded by AO but pending before ITAT, Indore in these appeals. Hence, a question would arise as to whether it can be said that the assessment-proceeding were pending before AO in such a situation? In this regard, there is a direct decision o....
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....nsertion of provisos to Section 12A(2) of the Act which is reproduced below for ready reference: "[(2) Where an application has been made on or after the 1^st 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 the 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 such trust or institution for any assessment year preceding the aforesaid assessment year only for non-registration of such trust or institution for the said assessment year: Pr....
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....rders Asst. Year 2011-12 passed by the assessing officer in respect of the present assessee were pending in appeal before the first appellate authority. During such pendency, the assessee was granted registration u/s. 12AA of the Act on 17.12.2013 w.e.f. the assessment year 2013-14. The appeal is the continuation of the original proceedings and that the power of the Commissioner of Income-tax was co-terminus with that of the assessing officer were two well established principles of law. In view of the above and going by the principle of purposive interpretation of statues, an assessment proceeding which is pending in appeal before the appellate authority should be deemed to be 'assessment proceedings pending before the assessing officer' within the meaning of that term as envisaged under the proviso. It follows there-from that the assessee which obtained registration u/s 12AA of the Act during the pendency of appeal was entitled for exemption claimed u/s 11 of the Act. 7.4 The explanatory Memorandum to Finance (No.2) Bill, 2014, which sought to amend section 12A explains the objects and reasons for making such amendments. The explanation makes it clear that it was ....
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....oviso to section 12A(2) of the Act with effect from 1.10.2014 should be read as retrospective in operation with effect from the date when the condition of eligibility for exemption under section 11 & 12 as mentioned in section 12A provided for registration u/s.12AA as a pre- condition for applicability of section 12A." Ld. AR argued that the assessee is entitled to the benefit of this decision and therefore the assessment-year 2014-15 pending before this Bench in appeal must be construed as an assessment-year for which proceeding is pending before assessing officer. For the sake of completeness, Ld. AR also submitted that the assessee is a university established under the legislation of Madhya Pradesh Govt. and since beginning it is engaged in the very same objects and activities, therefore the objects and activities remained same. With these submissions, the Ld. AR argued that the assessee fully satisfies the requirement of aforesaid Proviso to section 12A(2) and therefore perfectly eligible for exemption u/s 11/12. Hence the Ld. AR requested to direct the Ld. AO to allow exemption u/s 11 / 12 to the assessee, if for any reason the exemption u/s 10(23C)(iiiab) is not allo....
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.... illegal collection of tax from the assessee, which is never an objective of the Income-tax Act, 1961. In view of this position of law, we do not find any difficulty in accepting the alternative claim of assessee to allow exemption u/s 11 / 12. However, the claim of exemption u/s 11 / 12 involves a different type of working based on application and accumulation of income. Therefore, we feel that it would be more appropriate to refer this matter back to Ld. AO who shall give an opportunity to the assessee to provide the necessary information for computation of exemption u/s 11 / 12. Based on such information, the Ld. AO shall allow the exemption as admissible u/s 11 / 12 to the assessee. 12. In the result, this appeal of assessee is allowed for statistical purpose." 11. Thus, the Co-ordinate Bench of ITAT Indore, following the decision of ITAT, Ahmedabad in Shri Bhanushali Mitra Mandal Trust Vs. ITO (Supra), has accepted in principle that going by the purposive interpretation of statues, an assessment proceeding which is pending in appeal before the appellate- authority should be deemed to be 'assessment proceedings pending before the assessing officer' within th....