Income Tax Appellate Tribunal - Amritsar
M/S Baba Educational Society (Regd), ... vs The Income Tax Officer-I,, Moga on 31 January, 2019
IN THE INCOME TAX APPELLATE TRIBUNAL
AMRITSAR BENCH, AMRITSAR
BEFORE SH. SANJAY ARORA, ACCOUNTANT MEMBER AND
SH. N.K.CHOUDHRY, JUDICIAL MEMBER
ITA No.1318(Chd)/2012
Assessment Year:2009-10
Baba Amarnath Educational Vs. Income Tax Officer-I
Society, Moga.
Satya Yog Niwas Gill Road, Moga.
[PAN:AAAAB 7523L]
(Appellant) (Respondent)
ITA No.366(Asr)/2014
Assessment Year:2010-11
Baba Amarnath Educational Vs. Income Tax Officer-I
Society (Regd.) Moga.
Satya Yog Niwas Gill Road, Moga.
[PAN:AAAAB 7523L]
(Appellant) (Respondent)
ITA No.638(Asr)/2014
Assessment Year:2009-10
Income Tax Officer-I Vs. Baba Amarnath Educational
Moga Society (Regd.)
Satya Yog Niwas Gill Road,
Moga.
[PAN:AAAAB 7523L]
(Appellant) (Respondent)
Appellant by: Sh. P.N.Arora (Ld. Adv.)
Respondent by: Sh. Alok Kumar (Ld. DR)
Date of hearing: 16.01.2019
Date of pronouncement: 31.01.2019
ORDER
PER BENCH:
2 ITA Nos.1318/Chd/2012 & 366 /Asr/2014(Asst. Years: 2009-10 & 2010-11) ITA No.638 /Asr/2014 (Asst. Year 2009-10) The assessee trust (hereinafter called as the Appellant) by way of ITA Nos.1318/Chd/2013 & 366/Asr/2014 challenged the orders dated 19.10.2012 & 31.03.2014 passed by the Ld. CIT(A)-I & II, Ludhiana, for Asst. Years: 2009-10 & 2010-11 respectively, whereby the Ld. CIT(A) upheld the addition made by the Assessing Officer.
The Revenue Department also filed an appeal i.e. ITA No.638/Asr/2014 while challenging the action/order dated 21.08.2014 passed by the Ld. CIT(A)-II, Ludhiana, whereby the Ld.CIT(A) deleted the penalty of Rs.1,25,90,681/- for A.Y.2009- 10 imposed by the Assessing Officer.
2. As the ITA No.1318/Chd/2012 & ITA No.366/Asr/2014 involved the similar and identical issue, therefore, for the sake of convenience and brevity, the facts of ITA No.1318 of 2012 have been taken into consideration and decision of the same should also be applicable mutatis mutandis to ITA No.366/Asr/2014.
3. In brief the facts of the case are that the Appellant had filed its return of income declaring taxable income at Rs. (Nil). During the course of assessment proceedings, the Assessing Officer noted that the Appellant had received corpus donations of Rs.3,69,00,000/- which were claimed as exempt u/s 11(1)(d) of the Income Tax Act 1961 (hereinafter called as the Act).The AO asked the Appellant to explain as to why in view of the amended provisions of Sec.2(24) of the Act, corpus donations received by the Appellant may not be treated as income of the Appellant on non-registration u/s 12A of the Act. The Appellant had claimed that the said donations were received from various educational institutions as such were in the nature of capital receipts. The 3 ITA Nos.1318/Chd/2012 & 366 /Asr/2014 (Asst. Years: 2009-10 & 2010-11) ITA No.638 /Asr/2014 (Asst. Year 2009-10) Appellant also enclosed copy of the sanction letters given by the said trusts/societies/institutions in support of their contention, however, the Assessing Officer while relying upon the decision of the Apex Court in the case of U.P. Forest Corporation & Anr. Vs. Deputy Commissioner of Income Tax, declined to give relief to the assessee by referring and relying upon the provision i.e. Sec.2(24), 11(1), 12A and 13 of the Act and further held that corpus donations are in the nature of income under the amended provision of Sec.2(24) of the Act and such corpus donations are eligible for exemptions u/s 11(1)(d) but subject to the condition that the trust or society is registered u/s 12A of the Act. As the Appellant is not registered u/s 12A for the relevant assessment year, therefore, the corpus donations to the tune of Rs.3,70,42,310/- requires to be added in the income of the assessee. The Appellant assailed the assessment order before the Ld. CIT(A), who categorically held that the Appellant is neither registered u/s 12A of the Act, nor yet even applied for registration for the financial year 2008-09, therefore, the exemption as provided in Sec.11(1)(d) would not be available to the voluntary contribution received by the Appellant . Finally the Ld. CIT(A) confirmed the addition on the basis of non- registration of the Appellant u/s 12AA of the Act.
4. We have heard the rival submissions of the parties and perused the material available on record. It is admitted fact that during the assessment years 2009-10 & 2010-11, the Appellant had no registration u/s 12AA of the Act. It is brought to our knowledge that the Appellant vide application sought registration u/s 12A of the Act on 20.12.2010 (w.e.f. 14.08.2008 being the date of formation of the society) for the A.Ys. 2009-10 2010-11, 4 ITA Nos.1318/Chd/2012 & 366 /Asr/2014 (Asst. Years: 2009-10 & 2010-11) ITA No.638 /Asr/2014 (Asst. Year 2009-10) however the Ld. CIT(E) rejected the request for registration for A.Ys.2009-10 to 2010-11 due to the application being filed beyond the prescribed time limit and thereafter the Appellant approached the CBDT for condonation of delay for consideration of registration for the said assessment years. The CBDT after considering the application of the Appellant vide its order dated 14.11.2014 condoned the delay u/s 119 of the Act for A.Ys. 2009-10 to 2010-11.
4.1 It also emerged that the Appellant has already been granted registration u/s 12AA of the act vide order dated 09.02.2012 passed by the Ld. CIT(E), Ludhiana w.e.f. A.Y.2011 - 12 and on 09.02.2012, appeals qua additions for the A.Ys. 2009- 10 & 2010-11 were pending before the Ld. CIT(A) and are still pending for adjudication before this Bench, therefore, the question arise as to whether the same can be treated as continuation of the assessment proceedings or not.
4.2 As in the instant case, the legal ground is involved qua applicability of proviso of Sec.12A (2) which was inserted w.e.f 1st October, 2014, therefore, we feel it imperative to deal the legal issue first. For the sake of convenience and clarity the provisions of Sec.12A are reproduced herein below.
"Sec.12A(1). 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:--
(a) the person in receipt of the income has made an application for registration of the trust or institution in the prescribed form and in the prescribed manner to the [***] Commissioner before the 1st day of July, 1973, or before the expiry of a period of one year from the date of the creation of the trust or the establishment of the institution, [whichever is later and such trust or institution is registered under section 12AA ] :5 ITA Nos.1318/Chd/2012 & 366 /Asr/2014
(Asst. Years: 2009-10 & 2010-11) ITA No.638 /Asr/2014 (Asst. Year 2009-10) [Provided that where an application for registration of the trust or institution is made after the expiry of the period aforesaid, the provisions of sections 11 and 12 shall apply in relation to the income of such trust or institution,--
(i) from the date of the creation of the trust or the establishment of the institution if the [***] Commissioner is, for reasons to be recorded in writing, satisfied that the person in receipt of the income was prevented from making the application before the expiry of the period aforesaid for sufficient reasons;
(ii) from the 1st day of the financial year in which the application is made, if the [***] Commissioner is not so satisfied:] [Provided further that the provisions of this clause shall not apply in relation to any application made on or after the 1st day of June, 2007;] [(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 Commissioner and such trust or institution is registered under section 12AA;]
(b) where the total income of the trust or institution as computed under this Act without giving effect to [the provisions of section 11 and section 12 exceeds the maximum amount which is not chargeable to income-tax in any previous year], the accounts of the trust or institution for that year have been audited by an accountant as defined in the Explanation below sub-section (2) of section 288 and the person in receipt of the income furnishes along with the return of income for the relevant assessment year the report of such audit in the pres-cribed form duly signed and verified by such accountant and setting forth such particulars as may be prescribed.]
(c)[******] (2) Where an application has been made on or after the 1st day of June, 2007 the provisions of sections 11 & 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 section 11 & 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 6 ITA Nos.1318/Chd/2012 & 366 /Asr/2014 (Asst. Years: 2009-10 & 2010-11) ITA No.638 /Asr/2014 (Asst. Year 2009-10) assessment year preceding the aforesaid assessment year only for non-registration of such trust or institution for the said assessment year:
Provided also that provisions contained in the first and second proviso 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.]"
4.3 The similar and identical issue has also been dealt by Co-
ordinate Benches in the below mentioned cases.
(i) Sai Wiran Wali Educational Trust Vs Dy. CIT, Circle-
II, Jalandhar (I.T.A No.10 (Asr)/2017, decided on 11/08/2018)
(ii) Tilla Baba Farid Religious & Charitable Society v.
ITO (Exemptions), ITA No.621 (Asr)/2015 & 91(Asr)/2017, decided on 20-04-2018
(iii) St. Judes Convent School, Nokadar vs. ACIT, ITA No.749(Asr)/2013 (ITAT, Amritsar)
(iv) Sree Sree Ramkrishna Samity vs. DCIT, Circle-2, Siliguri, ITA No.1680-1685/2012 (ITAT, Kolkata)
(v) Shyam Mandir Committee, Khatushyam Ji vs. ACIT, Circle Sikar (ITAT, Jaipur)
(vi) SNDP Yogam vs. ADIT (Exemption), Range-4, Kochi, I ITA No.503-506 & 569/Coch/2014 (ITAT, Coch) 4.4 All the Co-ordinate Benches in the aforesaid cases categorically held that amendment made by Finance Act, 2014 by inserting a proviso in Sec.12A of the Act shall be construed retrospectively in operation because the legislators in their wisdom have brought this proviso to prevent genuine hardship which could be caused on the assessee(s) due to non- registration u/s 12A of the Act.
4.5 Even otherwise the Apex Court in the case of 'CIT vs. Vatika Township Pvt. Ltd. [2014] 236 ITR 466(SC) clearly held "if a legislation confers a benefit on some persons but without 7 ITA Nos.1318/Chd/2012 & 366 /Asr/2014 (Asst. Years: 2009-10 & 2010-11) ITA No.638 /Asr/2014 (Asst. Year 2009-10) inflicting a corresponding detriment on some other person or on the public generally, and where to confer such benefit appears to have been the legislator's, object, then the presumption would be that such a legislation, giving it a purposive construction, would warrant it to be given a retrospective effect".
4.6 The benefit of Sec. 11/12 as well as 10(23C)(iii ad) of the Act was denied to the assessee society on the ground that the assessee is not registered u/s. 12AA of the Act. We have already observed that the Appellant got registration u/s 12AA of the Act w.e.f. 09-02-2012 and as on that date the appeal against the quantum was pending before the Ld. CIT(A) which was decided on 10-10-2012 and against which the appeal is still pending for adjudication before this bench and hence the assessment proceedings can be construed as continuing and pending.
4.7 While respectfully following the dictum of the Apex Court as well as the Co-ordinate Benches, we are of the considered opinion that the issue is squarely covered by the aforesaid decisions, therefore, we do not have any hesitation to held that proviso to Sec.l2A(2) which was added by Finance Act, 2014 shall be retrospective in operation. There is nothing either on record or otherwise brought on record by the Ld. DR to the effect that there is any change in the objects and activities of Assesse/Trust for the preceding assessment years involved. Hence, we are inclined to held that registration granted to the assessee by the CIT(E) vide letter dated 09-02-2012 shall be effective from 10-08-2008 being the date of formation of society and the assessee shall be entitled to get the benefit of registration for A.Ys. 2009-10 and 2010-2011 as well, against 8 ITA Nos.1318/Chd/2012 & 366 /Asr/2014 (Asst. Years: 2009-10 & 2010-11) ITA No.638 /Asr/2014 (Asst. Year 2009-10) which appeals are under consideration. Consequently we set aside the impugned order passed by the Id. CIT(A) as well as assessment order and delete the addition, by allowing the assessee's appeal.
5.. In view of the order passed in ITA no. 1318/Chd/2012, ITA No.366/Asr/2014 also stands allowed.
6. ITA No. 638/Asr/2014, While disposing appeal of the assessee i.e. ITA 1318/Chd/2012, the orders passed by the authorities below are set aside, consequently the penalty order cannot survive and therefore the appeal of Revenue filed against the deletion of penalty order, is also liable to be dismissed, hence stands dismissed.
7. In the result, assessee's appeals are allowed and Revenue's appeal is dismissed.
Order pronounced in the open Court on 31.01.2019.
Sd/- Sd/-
(SANJAY ARORA) (N.K.CHOUDHRY)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Dated: 31.01.2019
/PK/ Ps.
Copy of the order forwarded to:
(1) Baba Amarnath Educational Society,
Satya Yog Niwas Gill Road, Moga)
(2) The ITO-1, Moga
(3) The CIT(A)-I & II Ludhiana
(4) The CIT concerned
(5) The SR DR, I.T.A.T., Amritsar
True copy
By order
Filename: Baba Amarnath Educational Society, 1318, 366 & 638 -14
Directory: D:\DOCUMENT\NKC Orders 2018
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