Income Tax Appellate Tribunal - Amritsar
Income Tax Officer (Exemptions), ... vs M/S Sai Wiranwali Educational Trust,, ... on 11 September, 2018
IN THE INCOME TAX APPELLATE TRIBUNAL
AMRITSAR BENCH, AMRITSAR
BEFORE SH.SANJAY ARORA, ACCOUNTANT MEMBER AND
SH.N.K.CHOUDHRY, JUDICIAL MEMBER
I.T.A. No.104 (Asr)/2015
Assessment Year: 2011-12
Sai Wiran Wali Educational Vs. Dy. CIT,
Trust, Circle-II, Jalandhar
VPO Jadla,
Tehsil Nawanshahr,
Dist:-S.B.S Nagar
[PAN:AAGTS 0719J]
(Appellant) (Respondent)
I.T.A. No.10(Asr)/2017
Assessment Year: 2011-12
Income Tax Officer Vs. Sai Wiran Wali Educational
(Exemptions), Trust,
Ward Jalandhar VPO Jadla,
Tehsil Nawanshahr,
[PAN:AAGTS 0719J]
Dist:-S.B.S Nagar
[PAN:AAGTS 0719J]
(Appellant) (Respondent)
Appellant by: Sh. Nirmal Mahajan (Ld. CA)
Respondent by: Sh. Charan Dass (Ld. DR)
Date of hearing: 23.08.2018
Date of pronouncement: 11.09.2018
ORDER
PER N. K. CHOUDHRY (JM):
The Assessee/Appellant has preferred the appeal i.e., ITA No.104(Asr)/2015 against the order of the ld. CIT(A), Jalandhar, dt. 13.01.2015 for the Asst. Year:2011-12, whereby the ld. CIT(A) has affirmed the addition made by the Assessing Officer. The Revenue Department has also preferred the appeal 2 ITA Nos.104 & 10 (Asr)/2015 & 2017 (A.Y.: 2011-12) Sai Wiran Wali Educational Trust vs. DCIT i.e., ITA No.10(Asr)/2017, on feeling aggrieved against the order dated 01.10.2016 passed by the ld. CIT(A)-2, Jalandhar, whereby he has deleted the penalty imposed by the Assessing Officer.
2. The brief facts of the case as noted in the assessment order are that the assessee society is registered with Registrar of Society under the Societies Registration Act (XXI of 1860) and as amended by Punjab Amendment Act, 1957 vide Regn. No. DIC/542 of 2004 on 25.06.2004, engaged in running of Education Institutions, has filed its return of income for the year under consideration on 30.09.2011 declaring therein 'Nil' income. During the course of assessment proceedings, the Assessing Officer has noticed that although the gross receipts of the assessee society exceeds Rs.1,00,00,000/- but it has not got itself approved under section 10(23C)(vi) of the Act from the competent authority for claiming the exemption under section 10(23C)(iiiad) of the Act. As such the Assessing Officer has concluded that assessee society is not entitled for exemption of its income under section 10(23C)(iiiad) of the Act as was originally being claimed. It was also noticed by the Assessing Officer that the assessee society got registration under section 12A/12AA of the Act with effect from 01.04.2011 only, therefore, the assessee society was also not eligible for exemption of its income under section 11/12 of the Act and the year under consideration. The Assessing Officer, therefore, denied the exemption to the assessee society under section 11/12 as well as under section 10(23C)(iiiad) of the Act and brought to tax the excess of income over expenditure after rejecting the explanation offered by the assessee with regard to gross receipts during the year under consideration. The assessment in this case 3 ITA Nos.104 & 10 (Asr)/2015 & 2017 (A.Y.: 2011-12) Sai Wiran Wali Educational Trust vs. DCIT was ultimately completed by the Assessing Officer under section 143(3) of the Act vide order dated 29.01.2014 at an assessed income of Rs.52,12,072/-.
3. Let us to decide the quantum appeal filed by the assessee first. The assessee has raised the following grounds of appeal.
"1. The Commissioner of Income Tax (A) is wrong in holding, that while calculating receipt under s.10(23C)(iiiad), the fee forming part of corpus, fee pertaining to earlier years and fee received in advance is not to be excluded.
2. Without prejudice to ground 1, the Commissioner of Income Tax (Appeals) is wrong in holding that the newly added proviso to section12A(2) is not applicable in the case of appellant as the proceedings were not pending. Whereas CIT(A) having power to enhance the assessment is having powers co-terminus with AO and as such proceedings are pending before him.
3. Without prejudice to ground 1 & 2, the Commissioner of Income Tax (Appeals) is wrong in holding that in case income is to be computed without giving relief under s.10(23C)(iiiad), it is not to be calculated under mercantile system taking into consideration concept of capital and revenue receipt.
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 appropriate to deal the legal issue first before the going on merit of the case.
The benefit of Sec. 11/12 as well as 10(23C)(iiad) of the Act was denied to the assessee society on the ground that the assessee is not registered u/s. 12AA of the Act, however, it is the claim of the assessee society that the assessee society got registration u/s 12A of the Act w.e.f. 1st April, 2011, therefore, as on that date assessment proceeding were pending and hence, the assessee society is entitled to get the benefit of the same.4 ITA Nos.104 & 10 (Asr)/2015 & 2017 (A.Y.: 2011-12)
Sai Wiran Wali Educational Trust vs. DCIT In the instant case, the assessment order was passed on 29th January, 2014 and the amendment was made in Sec.12A by Finance Act, 2014 by inserting a provision with effect from 1st October, 2014. For the sake of convenience and clarity the provisions of Sec. 12A is reproduced herein below.
"Sec.12A. 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 ] :
[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 5 ITA Nos.104 & 10 (Asr)/2015 & 2017 (A.Y.: 2011-12) Sai Wiran Wali Educational Trust vs. DCIT 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 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.]"
In the instant case registration was granted on dated 09- 04-2012 which was effective from 01-04-2011 and the assessment order was passed on 29-01-2014, therefore, admittedly in the instant case the assessment proceedings can be construed as pending as on the date of the order under section 12AA of the act. The similar and identical issue has also 6 ITA Nos.104 & 10 (Asr)/2015 & 2017 (A.Y.: 2011-12) Sai Wiran Wali Educational Trust vs. DCIT been arisen in various cases before the Co-ordinate Benches in the below mention cases.
(i) St. Judes Convent School, Nakodar vs. ACIT, ITA No.749(Asr)/2013 (ITAT, Amritsar)
(ii) Sree Sree Ramkrishna Samity vs. DCIT, Circle-2, Siliguri, ITA No.1680-1685/2012 (ITAT, Kolkata)
(iii) Shyam Mandir Committee, Khatushyam Ji vs. ACIT, Circle Sikar (ITAT, Jaipur)
(iv) SNDP Yogam vs. ADIT (Exemption), Range-4, Kochi, ITA No.503-506 & 569/Coch/2014 (ITAT, Coch) And specifically before this particular Bench itself in ITA NO.621(Asr)/ 2015 & 91(Asr)/2017 in the case of Tilla Baba Farid Religious & Charitable Society v. ITO (Exemptions), for A.Y.2012-13. The crux part of the order in ITA No.621(Asr)/2015 & 91(Asr)/2017 is reproduced herein below.
"With regard to the legal issue, we, again, find the assessee's claim acceptable. No doubt registration is a condition precedent for sections 11 and 12 to apply (refer section 12A(1); UP Forest Corporation & Ors. v. CIT [2008] 297 ITR 1 (SC)). However, even where granted subsequent to the assessment, as in the present case, an assessee cannot, given the scheme of the Act, be denied the benefit of sections 11 and 12.
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 legislator in its wisdom has brought this proviso to prevent genuine hardship which could be caused on the assessee due to non-registration u/s 12A of the Act.
Even otherwise the Apex Court in the case of 'CIT vs. Vatika Township Pvt. Ltd. [2014] 236 ITR 466(SC) clearly held 7 ITA Nos.104 & 10 (Asr)/2015 & 2017 (A.Y.: 2011-12) Sai Wiran Wali Educational Trust vs. DCIT "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 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".
Consequently, considering the dictum of the Apex Court as well as the Co-ordinate Benches, the issue is squarely covered by the aforesaid decisions, therefore, we do not have any hesitation to hold that proviso to Sec.12A(2) which was added by Finance Act, 2014 shall be retrospective in operation. Hence, the assessee shall be entitled to get the benefit of registration, therefore, we are inclined to set aside the impugned order passed by the ld. CIT(A) as well as assessment order and remand the case to the file of the Assessing Officer to decide afresh, in view of the observations made in this order after giving proper and reasonable opportunities of being heard to the assessee.
4. In the result, the appeal filed by the assessee is allowed for statistical purposes.
ITA No.10(Asr)/2017 while disposing appeal of the assessee i.e. ITA No.104(Asr)/2015, the orders passed by the authorities below are set aside, hence, consequently, the penalty order cannot survive and resultantly the appeal of Revenue is also liable to be dismissed.
8 ITA Nos.104 & 10 (Asr)/2015 & 2017 (A.Y.: 2011-12)Sai Wiran Wali Educational Trust vs. DCIT
6. In the result, the assessee's appeal is allowed for statistical purpose and the Revenue's appeal is dismissed.
Order pronounced in the open Court on 11 .09.2018.
Sd/- Sd/-
(SANJAY ARORA) (N.K.CHOUDHRY)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Dated: 11.09.2018
/PK/ Ps.
Copy of the order forwarded to:
(1) Sai Wiran Wali Educational Trust, VPO Jadla, Tehsil Nawanshahr, Dist:-S.B.S Nagar (2) The Dy. CIT, Circle-II, Jalandhar (3) The CIT(A),1, Jalndhar (4) The CIT concerned (5) The SR DR, I.T.A.T., Amritsar True copy By order