Union Budget 2023-24 + FINANCE Bill, 2023

4. Omission of redundant provisions related to roll back of exemption

4.1 There are roll back provisions for the trust or institutions under the second regime. Subsection (2) of section 12A of the Act provides that where an application for registration under section 12AB of the Act has been made, the exemption shall be available with respect to the assessment year relevant to the financial year in which the application is made and subsequent assessment years.

4.2 Second proviso to sub-section (2) of section 12A of the Act provides that where registration has been granted to the trust or institution under section 12AA or section 12AB of the Act, then, the provisions of sections 11 and 12 of the Act 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 if the objects and activities of such trust or institution remain the same for such preceding assessment year.

4.3 Third proviso to sub-section (2) of section 12A of the Act provides that that no action under section 147 of the Act 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 nonregistration of such trust or institution for the said assessment year.

4.4 Fourth proviso to sub-section (2) of section 12A of the Act provides that provisions contained in the second and third proviso to sub-section (2) of section 12A of the Act shall 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 of the Act or section 12AB of the Act.

4.5 Second, third and fourth proviso to sub-section (2) of section 12A of the Act discussed above have become redundant after the amendment of section 12A of the Act by the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020. Now the trusts and institutions under the second regime are required to apply for provisional registration before the commencement of their activities and therefore there is no need of roll back provisions provided in second and third proviso to sub-section (2) of section 12A of the Act.

4.6 With a view to rationalise the provisions, it is proposed to omit the second, third and fourth proviso to sub-section (2) of section 12A of the Act.

4.7 These amendments will take effect from 1st April, 2023.

[clause 8]

 

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Full Text:

Union Budget 2023-24 + FINANCE Bill, 2023

Roll-back provisions removed from section 12A(2), eliminating retrospective exemption and reassessment protection after later registration. The Finance Bill proposes to omit the second, third and fourth provisos to section 12A(2), which previously permitted retrospective application of sections 11 and 12 and barred reassessment under section 147 for certain prior years upon later registration; these provisos are deemed redundant after 2020 amendments requiring provisional registration before commencing activities, and the omission takes effect from 1st April, 2023.