MODERN ENGLISH SCHOOL EDUCATION SOCIETY,KORAPUT vs. ITO (EXEMPTION WARD), BERHAMPUR

IN THE INCOME TAX APPELLATE TRIBUNAL, IN THE INCOME TAX APPELLATE TRIBUNAL, IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK ‘SMC’ BENCH, CUTTACK , CUTTACK BEFORE BEFORE SHRI GEORGE MATHAN, JUDICIAL JUDICIAL MEMBER Assessment Year : 2015-16 Modern Modern English English School School Vs. ITO (Exemption Ward) ITO (Exemption Ward) Education Education Society, Society, Berhampur Berhampur Parabeda, Parabeda, Jeypore, Jeypore, Dist: Dist: Koraput PAN/GIR No. PAN/GIR No.AACAM 7223 Q (Appellant (Appellant) .. ( Respondent Respondent) Assessee by Assessee by : S/Shri P.K.Mishra, Adv/Kailash Panigrahi, CA P.K.Mishra, Adv/Kailash Panigrahi, CA Revenue by : Shri S.C.Mohanty, Sr DR S.C.Mohanty, Sr DR Date of Hearing : 18 /0 04/2023 Date of Pronouncement : 18 /0 /04/2023 O R D E R

This is an appeal filed by the assessee against the order of the ld This is an appeal filed by the assessee against the order of the ld This is an appeal filed by the assessee against the order of the ld CIT(A), , NFAC, NFAC, Delhi, Delhi, dated 26.11.2021 in Appeal No. ITBA/NFAC/S/250/2021 ITBA/NFAC/S/250/2021-22/1037251859(1) for the assessment year for the assessment year 2016- 16.

“13. We find that the first proviso to sub-section (2) of Section 12 reads as under: “Provided that where registration has been granted to the trust or “institution under section 12AA, then, the provisions of sections 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.”

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This clearly goes to prove that the first proviso to section 12A(2) was brought in the statute only as a retrospective effect with a view not to affect genuine charitable trusts and societies carrying on genuine charitable objects in the earlier years and substantive conditions stipulated in section 11 to 13 have been duly fulfilled by the said trust. The benefit of retrospective application alone could be the intention of the legislature and this point is further strengthened by the Explanatory Notes to Finance (No.2) Act, 2014 issued by the Central Board of Direct Taxes vide its Circular No. 01/2015 dated 21.1.2015. Apparently the statute provides that registration once granted in subsequent year, the benefit of the same has to be applied in the earlier assessment years for which assessment proceedings are pending before the Id. A.O., unless the registration granted earlier is cancelled or refused for specific reasons. The statute also goes on to provide that no action u/s 147 could be taken by the AO merely for ' non- registration of trust for earlier years. 7.3 In the instant case, it is not in dispute that registration was granted w.e.f. 17.12.2013 by the order of CIT(A) dated 08.05.2014. It is also not in dispute that objects and activities of the assessee trust are charitable in nature during the relevant financial year. When Section 12A of the Act was amended by introducing new provisos to sub-section (2) of Section 12A by Finance Act, 2014 with effect from 01.10.2014, the assessment orders 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 in order to provide relief to such trusts in respect of which, due to absence of registration u/s 12AA tax liability got P a g e 5 | 7 attached though otherwise they were eligible for exemption by fulfilling other substantive conditions that the amendment was brought in. That being so, denying such benefit to a trust like the assessee who had obtained registration u/s 12AA during the pendency of the appeals filed against the orders of the assessing authority, by narrowly interpreting the term, 'pending before the assessing officer' so as to exclude its pendency before the appellate authority, will be doing violence to the provisions of the Statute and, as such, liable to be interfered.”

of the assessee are allowed.

8. The issue decided in the assessee’s own case for the assessment year 2014-15 is on the basis of the same set of facts granting registration u/s.12AA of the Act. In these circumstances, as there is no change in the facts in the present assessment year, respectfully following the decision of the Co-ordinate Bench in assessee’s own case for the assessment year

P a g e 6 | 7 2014-15(supra) on identical findings, the issue is restored to the file of the AO to recompute the income of the assessee afresh after allowing exemption u/s 11 & 12 of the Act. I also clarify that the claim of depreciation as claimed by the assesse is covered once the registration u/s.12AA is granted.

Order dictated and pronounced in the open court on 18/04/2023.