SRI SRI JAGANNATH JEW,KOLKATA vs. ACIT, CIRCLE 43,, KOLKATA

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA ‘D’ BENCH, KOLKATA BEFORE SHRI RAJESH KUMAR, ACCOUNTANT MEMBER AND SHRI PRADIP KUMAR CHOUBEY, JUDICIAL MEMBER I.T.A. Nos.900 to 902/KOL/2026 Assessment Years: (2016-17 to 2018-19) & I.T.A. Nos.903 to 904 & 905/KOL/2026 Assessment Years: (2020-21 to 2022-23 & 2023-24) Sri Sri Jagannath Jew, ACIT, 46, Marble Palace, Mukta Ram Babu Vs. Circle - 45, Street, Jorasanko, Kolkata -700007, Kolkata West Bengal (Now ACIT, Circle – 43, Kolkata) [PAN: AAAAS4720J] (Appellant) .. (Respondent) Appellant by : Shri Soumitra Choudhury, Advocate & Pranabesh Sarkar, Advocate Respondent by: Shri Dheeraj, Sr. DR Date of Hearing 15.06.2026 Date of Pronouncement 21.07.2026

O R D E R PER RAJESH KUMAR, ACCOUNTANT MEMBER:

These are appeals preferred by the assessee against the separate orders of the learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi (hereinafter referred to as the “ld.CIT(A)”],arising out of separate assessment orders passed by the Assessing Officer (In short, ‘AO’) for the different Assessment Years (A.Y.). In all these appeals, the facts are common and grounds of appeals raised by the assessee are also similar. Therefore, all appeals are heard together and are decided by a consolidated order for the sake of convenience and

brevity. We take the appeal in ITA No.900/Kol/2026 for A.Y. 2016-17 as “lead” case.

“1. For that on the facts of the case, the order passed by the Ld. C.I.T.(A)- NFAC on 20.02.2026 which is completely arbitrary, unjustified and illegal. 2. For that on the facts of the case, the Hon'ble Calcutta High Court by its order dated 16.07.2009 has held, 'that the said trust is one under the Charitable and Religious Trust Act, 1920, no leave need be obtained prior to grant of lease and question (b) is answered accordingly. In view of the answers above the Shebaits will have the right to deal with the properties in the best interest of the idol in whom the estate is vested.' 3. For that the facts of the case, the department has been accepted that the assessee is a Charitable Trust and charitable expenses has been allowed till assessment year 2015-16, either assessment made by the A.O. u/s. 143(3) or 143(1) of the I.T. Act, as such the action of the Ld. CIT(A) which is completely arbitrary, unjustified and illegal. 4. For that even u/s. 264 order on 04.03.2011 for the assessment year 2008-09 by the Ld. CIT-XV, Kolkata has held that the said Trust is charitable and religious trust, the main purpose of such assessee is generally non-profit motive and allowed the petition u/s. 264 of the IT Act. 5. For that on the facts of the case, Ld. CIT(Exemption), Kolkata has granted the registration/approval u/s. 12AB and 80G(5) for the assessment years 2025-26 to 2029-30 by its order dated 24.09.2025 after giving reasonable opportunity of hearing and considering the assessee's order of Hon'ble Calcutta High Court order. 6. For that on the facts of the case, the Ld. CIT(A) was not justified in confirming the disallowance of Rs.1,13,18,064/- u/s. 57 of the I'T Act on whole expenses claimed i.e. Art Gallery, feeding of the poor, garden expenses, various maintenance, menagerie, medical allowance, motor car upkeep, trustee allowance, widow allowance and bonus paid made by the A.O. which is completely arbitrary, unjustified and illegal. 7. For that on the facts of the case, the Ld. CIT(A) was not justified in confirming the disallowance of Rs.27,76,193/- [10% of Rs.2,77,61,928/-] u/s. 57 of the IT Act on account of daily fooding to needy person made by

the A.O. on estimate basis which is completely arbitrary, unjustified and illegal. 8. For that on the facts of the case, the A.O. was wrong that the payments were made of daily expenses through bearer cheques handed over to agents or cash payments made in excess of Rs.20,000/- on exceptional circumstances, such payments are covered by proviso to sec. 40A(3)under Rule 6DD(k), as such finding of the Ld. CIT(A) and sustaining the addition of Rs.1,40,94,257/- which is completely arbitrary, unjustified and illegal. 9. For that on the facts of the case, the Ld. CIT(A) ought to have considered that the assessee is an AOP doing religious and charitable work based on directions of an ancient WILL, had discharged its onus by furnishing all the relevant documents regarding ledger copy of various expenses and cash/bearer cheque details, and genuineness of expenses, thus his action is completely arbitrary, unjustified and illegal. 10. For that on the facts of the case, the charging interest u/s. 234B at Rs.7,10,853/- & 234D at Rs.3,72,452/- which are mechanically wrong and illegal. 11. For that the appellant reserves the right to adduce any further ground or grounds, if necessary, at or before the hearing of the appeal.” ITA No.900/Kol/2026 (A.Y. 2016-17):

legal issue qua which all the facts are available in the appeal folder and no further verification of facts are required from any quarter whatsoever. In our considered view the assessee is at liberty to raise any legal issue before any appellate authority for the first time even when the same has not been raised before the lower authorities. The case of the assessee is squarely covered by the decisions of the Apex court in the case of (i) Jute Corporation of India Ltd. Vs CIT in 187 ITR 688, (ii) National Thermal Power Co. Ltd v. CIT [1998] 229 ITR 383 and (iii) also by the decision of Hon’ble Calcutta High Court in PCIT vs. Britannia Industries Ltd. [2017] 396 ITR 677 (Cal).Therefore, we are inclined to admit the same for adjudication.

create a trust in the sense of the English law vesting the whole estate in trustees saddled with obligations to expend the income for godly and philanthropic purposes. The answer to the aforesaid question had correlation with the claim made in income tax proceedings by the Trustees that the remuneration of the trustees and the allowances to the widows of the deceased trustees as provided in the Will created a charge on the income of the trust estate and should, therefore, be treated as diversion of the income of the trust before it accrued in the hands of the trustees. The Assessing Officer (In short, ‘the AO’) rejected that contention. He held from the reading the Will as a whole that it was clear that the remuneration to the shebaits and the allowances to the widows were merely applications of the trust income and as such not deductible. According to the AO, under the Will, the shebaits and trustees were to collect the income of the whole debutter property in the first instance and after paying the Government revenues and taxes and rates and other outgoings, perform the puja and the other ceremonies for the worship of the family deity and, spend amounts on charitable and public purposes and, lastly, to pay the remuneration, allowances and private donations. The AO, therefore, determined the income of the trust estate under sections 9 and 12 of the Income Tax Act, 1922 (1922 Act). On reference, the High Court held that the assessee deity was not the owner of the properties and, therefore, the only income which could be subjected to income-tax in the hands of the assessee would be the beneficial interest of the said deity under the Will, which would be expenses incurred for the seva puja of the deity and for the various religious ceremonies connected with the said deity and the value of the residence of the deity in the temple.

6. Aggrieved by the order of AO, the assessee preferred an appeal before the ld. CIT(A) and ld. CIT(A) dismissed the same.

“For the year under appeal, the Hon'ble Members would kindly agree that the assessment is not complete inasmuch that the same is now pending before the Hon'ble Bench. It is trite law that appeals are continuation of the assessment proceedings and the Courts have consistently characterised an appeal as a continuation or re-hearing of the assessment. 1. Next, the attention of the Hon'ble Members is drawn to the first proviso to section 12A(2) of the Act as existed in relation to the year under appeal (reproduced below) - 12A(2): Where an application has been made on or after the 1st day of June, 2007, the provisions of section 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, them, the provisions of section 11 and 12 shall apply in respect of any income derived from property held under the 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 same for such preceding assessment year:" It is relevant to mention that in the context of the first proviso to section 12A(2) of the Act as it stood for the relevant assessment year, in SNDP Yogam vs. ADIT (E) [161 ITD 1 (Cochin Trib)] it has been inter alia held that "....going by the principle of purposive interpretation of statutes, 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 the term as envisaged under the proviso". Identical views have been taken in the context of the first proviso to section 12A(2) of the Act by the Hon'ble Ahmedabad Bench in Shree Bhanushali Mitra Mandal Trust vs. ITO [68 taxmann.com 50 (Ahmedabad Trib)] so has been the view of the Hon'ble Agra Bench in Somani Charitable Trust vs. ACIT [174 taxmann.com 1246 (Agra - Trib)]. the Hon'ble Bangalore Bench in Magadi Planning Authority vs. IТО [171 taxmann.com 262 (Bangalore - Trib)]. 2. The subject proviso was inserted by the Finance (No. 2) Act, 2014 and in Circular No. 1 of 2015 the CBDT explained the legislative intent behind the amendment as under (also placed at pages ...to.... of the Paper Book) – 8. Applicability of the registration granted to a trust or institution to earlier years. 8.1 The provisions of section 12A of the Income-tax Act, before amendment by the Act, provided that a trust or an institution can claim exemption under sections 11 and 12 only after registration under section 12AA of the said Act has been granted. In case of trusts or institutions which apply for registration after 1st June. 2007, the registration shall be effective only prospectively. 8.2 Non-application of registration for the period prior to the year of registration caused genuine hardship to charitable organizations. Due to absence of registration, tax liability is fastened even though they may otherwise be eligible for exemption and fulfil other substantive conditions. However, the power of condonation of delay in seeking registration was not available. 8.3 In order to provide relief to such trusts and remove hardship in genuine cases, section 12A of the Income-tax Act has been amended to provide that in a case where a trust or institution has been granted registration under section 12AA of the Income-tax Act, the benefit of sections 11 and 12 of the said Act shall be available in respect of any income derived from property held under trust in any assessment proceeding for an earlier assessment year which is pending before the Assessing Officer as on the date of such registration, if the objects and activities of such trust or institution in the relevant earlier assessment year are the same as those on the basis of which such registration has been granted. 8.4 Further, it has been provided that no action for reopening of an assessment under section 147 of the Income-tax Act shall be taken by the Assessing Officer in the case of such trust or institution for

any assessment year preceding the first assessment year for which the registration applies, merely for the reason that such trust or institution has not obtained the registration under section 12AA for the said assessment year. 8.5 However, the above benefits would not be available in the case of any trust or institution which at any time had applied for registration and the same was refused under section 12AA of the Income-tax Act or a registration once granted was cancelled. 8.6 Applicability: - These amendments take effect from 1st October, 2014. 3. On perusal of Paragraph 8.3 above it would transpire that retrospective applicability of registration u/s. 12AA of the Act was provided in the statute book in order to avoid hardship in genuine cases where assessments were not concluded as on the date of granting registration and the objects are activities of the trust remained identical in such earlier periods. 4. In the present case it is an undisputed fact that the object and activities of the Trust remained unaltered over centuries and as on the date of granting registration u/s. 12AB (erstwhile section 12AA), the assessment proceedings for the years under consideration, were pending in appeal before the Hon'ble Tribunal. In view thereof the aforesaid first proviso to section 12A(2) of the Act applies on all force to the facts of the case and the registration granted should apply from the AY 2016-17 covering all the years under consideration. The retrospective applicability of the registration u/s, 12AB of the Act is well settled by numerous authorities some of which are referred hereinbelow and relied upon -  Sree Sree Ramkrishna Samity [156 ITD 646 (Kolkata - Trib)]  ITO (Exemption) vs. St. Xavier's School, Burdwan [ITA Nos. 2101 to 2105/Kol/2016 dated 11 May 2028]  Punjab Educational Society vs. ITO [168 ITD 109 (Amritsar - Trib)]  SNDP Yogam vs. ADIT (E) [161 ITD 1 (Cochin - Trib)]  CIT (E) v. Shree Shyam Mandir Committee [TS-6480-HC-2017 (Rajasthan)]- The Hon'ble High Court approved ITAT's view that the first proviso to section 12A(2) is retrospective and applicable to years "under appeal, because appeal proceedings are a continuation of assessment. The benefit of newly granted registration was extended to earlier years under dispute.  Chhattisgarh Rajya Open School Madhyamik Siksha Mandal vs. DCIT(E) 176 taxmann.com 49 (Chhattisgarh) On similar facts as the present case, the Hon'ble High Court upheld retrospective

registration by applying the first proviso to section 12(A) from AY 2016-17 where appeal was pending. The order dated judgement delivered on 10th Juhe, 2025 In view of the well settled position in law and given the facts of the case of the appellant as borne out by records, it is humbly prayed before the Hon'ble Members that the Assessing Officer may kindly be directed to compute the income of the appellant for the years abovenamed in accordance with the provisions of section 11 to 13 of the Act.” 8. On the other hand, the ld. Sr. DR for the revenue heavily relied on the orders of authorities below by submitting that the assessee-trust has been granted registration u/s 12A of the Act prior to A.Y. 2025-26 and therefore, the income of the trust has rightly been assessed by the AO and confirmed by ld. CIT(A). The ld. Sr. DR submitted that so far as the facts are concerned, the same are undisputed but submitted that the assessee- trust was never ever having any registration u/s 12AB and therefore income has to be taxed in accordance with law. The ld. Sr. DR submitted that the plea of the assessee is that the registration granted u/s 12AB of the Act may be extrapolated to all the years falling prior to the A.Y. 2025-26, which are pending with the AO for assessment. The ld. Sr. DR submitted that even the plea of the assessee, the assessments are pending is fallacious as the impugned assessments were prior to the A.Y. 2025-26 which were under challenge before the Tribunal and not pending before the AO and now also approval granted u/s 12AB of the Act cannot be applied retrospectively. Therefore, the ld. Sr. DR prayed that additional ground raised by the assessee may be dismissed.

dated 24.09.2025 from A.Y. 2025-26 to 2029-30. Now, the issue before us, whether the assessee is entitled to the benefit of the said registration and the same approval could not applied to all the assessment years, which are under challenge before us and whether the assessee could be given the benefit of said registration in respect of the years which are before us. 10. So far, the pendency of assessments prior to the A.Y.2025-26 is concerned, we note that undisputedly these are under challenged before us and not before AO. So in terms of section 12A(2) of the Act where an application has been made on or after 1st day of June, 2007, the provisions of section 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. Further, the proviso to sub-section (2) provides that where registration has been granted to the trust or institution u/s 12AA, then, the provisions of section 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 the assessment proceedings are pending before the AO as on the date of such registration provided the objects and activities of such trust or institution remain same for such preceding assessment year. In other words, the provisions of section 12A(2) of the Act r.w.s. proviso thereto provides that registration granted by authorities shall apply in relation to income derived from the property held under trust for the years, which are falling prior to the assessment year in which the section 12AA/12AB is granted, provided the objects and activities of the trust or institution are same. Therefore, it has been explicitly provided in the Act/proviso that assessee undisputedly entitled for the benefit u/s 11 and 12 of the Act in respect of income derived from trust properties for which even the registration is not granted by the

authorities provided they are pending for assessment before the Assessing Officer.

“7. We have carefully considered the rival submissions, perused the relevant materials on record and the case law on which the learned AR had placed strong reliance. The primary issue for our consideration is whether the CIT (A) is justified in confirming the AO's action, for all the assessment years under consideration, in assessing the entire incomes of the assessee from all the institutions at the maximum marginal rate. In this context, it is appropriate to refer the amendment to section 12A(2) of the Act and its proviso. For ready reference the same is reproduced below: (Section 12A(2) & its proviso) "[(2) Where an application has been made on or after the 1st 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: 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.]"

7.1 Further it would be relevant to reproduce the explanatory note to the provisions of the Finance (No.,2) Act 2014 as given in CBDT No.1/15 dated 21.1.2015 "Para 8.2 Non-application of registration for the period prior to the year of registration caused genuine hardship to charitable organizations. Due to absence of registration, tax liability is fastened even though they may otherwise be eligible for exemption and fulfill other substantive conditions. However, the power of condonation of delay in seeking registration was not available." 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 ld. 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/s147 could be taken by the AO merely for non- registration of trust for earlier years. 7.2 When section 12A of the Act was amended by introducing new provisos to sub-section (2) of s. 12A by Finance Act, 2014 with effect from 01.10.2014, the assessment orders 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 29.07.2013 w.e.f. the assessment year 2013-14. Those appeals were 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 [ADIT (Exemption) in the present case] 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 11of the Act.

7.3 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 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 with. Moreover, under the Scheme of the Act, sections 11 and 12 are substantive provisions which provide for exemptions to a religious or charitable trust. Sections 12A and 12AA detail the procedural requirements for making an application to claim exemptions under sections 11 and 12 by the assessee and the grant or rejection of such application by the commissioner. Thus, in our view, sections 12A and 12AA are only procedural in nature. Hence, it is not the registration u/s 12AA by itself that offers immunity from taxation. A receipt whether it is revenue or capital in nature is to be decided at the assessment stage. Being procedural in nature, in our view, liberal interpretation will give effect to the intention of the amendment, thereby removing the hardship in genuine cases like the present assessee under consideration. 7.4 Taking into account the above facts and circumstances of the issue, we are of the view that the AO was not justified in taking a stand that registration u/s 12A was not applicable to the assessee for the AYs under dispute and the condonation petition for delay in filing the application for registration u/s 12A [for the AYs under dispute] has not yet been decided by the CBDT and, therefore, the total incomes of the assessee were to be assessed as per commercial principles. The CIT (A) was also not justified in taking a similar stand that of the AO, without taking cognizance and intention of the amendment to s. 12A of the Act. If no judicious or a liberal view is not taken either by the assessing authority or the appellate authority as in the case under consideration, the very purpose for which such an amendment to s. 12A of the Act enacted,in our view, would be defeated. We are also supported by the order of Kolkata Bench of ITAT in case of Sree Sree Ramkrishna Samity v. Dy. CIT [2016] 156 ITD 646/[2015] 64 taxmann.com 330 where it was held that amendment to Section 12A w.e.f. 01.10.2014 is retrospective. The relevant finding of the Hon'ble Kolkata Bench in case of Sree Sree Ramkrishna Samity (supra) read as follows:

"6.10. We hold that it is an established position in law that a proviso which is inserted to remedy unintended consequences and to make the provision workable, a proviso which supplies an obvious omission in the section and is required to be read into the section to give the section a reasonable interpretation, requires to be treated as retrospective in operation, so that a reasonable interpretation can be given to the section as a whole and accordingly the said insertion of first proviso 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." Further, the Kolkata Tribunal observed as under: "6.11. We also hold that though equity and taxation are often strangers, attempts should be made that these do not remain always so and if a construction results in equity rather than in injustice, then such construction should be preferred to the literal construction. It is only elementary that a statutory provision is to be interpreted ut res magisvaleatquampereat, i.e to make it workable rather than redundant. Applying this legal maxim, it would be just and fair to hold that the amendment in section 12A is brought in the statute to confer benefit of exemption u/s 11 of the Act on the genuine trusts which had not changed its objectives and had carried on the same charitable objects in the past as well as in the current year based on which the registration u/s.12AA is granted by the DIT (Exemptions)." 7.5 In light of the aforesaid reasoning and order of the Tribunal in case of Sree Sree Ramkrishna Samity (supra), we direct the Director of Income-tax (Exemption) to grant registration to the assessee trust for all the assessment years under dispute, subject to the following conditions, namely: "(i) The registration U/S.12AA (1)(b)(i) of the Income Tax Act, 1961 does not automatically exempt the income of the Trust/Institution. The question of taxability of the income of the Trust/Institution shall be examined and decided upon by the Assessing Officer at the time of assessment based on the conduct of the activities, compliance with various statutory and other requirements, etc., as referred to in Sections 2(15), 11, 12 & 13 of the Income Tax Act, 1961, without prejudice to the fact of granting merely in principle registration by DIT(E). (ii) With effect from the Assessment Year 2009-10, the advancement of any object of general public utility other than relief of the poor, education and medical relief as defined in section 2(15) of the Income Tax Act shall not be a charitable purpose, if it involves the carrying on of any activity

in the nature of trade, commerce or business, or any activity of rendering any service in relation to any trade, commerce or business, for a cess or fee or any other consideration, irrespective of the nature of use or application, or retention, of the income from such activity. (iii) Amendments to the Deed/Memorandum, Rules and Regulations, if any, of the Trust/Institution shall be made only with the prior approval of the Commissioner of Income Tax(Exemptions) or any other prescribed authority under the Income Tax Act,1961. (iv) The registration may be withdrawn on violation of any of the stipulations laid down in the Income Tax Act, 1961, (v) The SOCIETY/TRUST shall regularly file its Income Tax Return." 8. In the result, the appeals filed by the assessee are allowed.

“2. At the outset itself ld. Counsel for the assessee pointed out that the short issue for consideration in all the present appeals was the denial of grant of exemption claimed by the assessee u/s. 11 of the Act for the reason that the assessee trust was not registered as a charitable society u/s. 12AA of the Act. Several grounds of appeals were raised before us, but the ld. Counsel stated that he wishes to make arguments with respect to ground Nos. 6, 7 & 8, which were identically worded in all these appeals and read as under: "6. BECAUSE, the 'appellant' was granted registration under section 12AA of the Act vide Certificate dated 15.10.2018 by the Ld. CIT(Exemption) Bhopal in view thereof the Ld. 'CIT(A)' ought to have allowed exemption under section 11 as claimed for A.Y 2006-07 in appellate proceedings in view of revised proviso to sub-section (2) of section 12A w.e.f. 01.04.2013 providing that provisions of section 11 and 12 shall apply to preceding years too where proceedings are pending before the Assessing officer. 7. BECAUSE, the 'CIT(A)' had grossly erred in denying deduction, referring to section 119(2)(b) of the 'Act', under section 11 & 12 of the 'Act' which is available to the 'appellant' in view of revised proviso to subsection (2) of section 12A as appellant was duly Registered under section 12AA w.e.f 01.04.2013.

8. BECAUSE, the proceeding before 'CIT(A)' was extension of assessment proceedings and claim raised before 'CIT(A)', which accrued on 15.10.2018 after passing of the Assessment Order dated 28.02.2013 ought to have been allowed by the 'CIT(A)'." 3. Referring to the same, learned counsel contended that the ld. CIT(Appeals) order denying assessee's claim of exemption u/s. 11 of the Act was not sustainable since he has not properly interpreted the provisions of section 12A of the Act. His contention was that in terms of second proviso to section 12A(2) of the Act, where registration has been granted to a trust or institution u/s. 12AA, the provisions of section 11 & 12 would apply to the preceding assessment years also for which the assessment proceedings were pending before the Assessing Officer as on the date of grant of registration and the objects and activities of the trust remain the same for such preceding years. Our attention was drawn to the second proviso to section 12A(2) of the Act as under: "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:— (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 Principal Commissioner or Commissioner and such trust or institution is registered under section 12AA; (2) Where an application has been made on or after the 1st 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: Second proviso omitted by the Finance Act, 2023, w.e.f. 1.4.2023. Prior to its omission, second proviso, as amended by the Finance Act, 2020 w.e.f. 1.6.2020 and Taxation and Other laws (Relaxation and Amendment of Certain Provisions) Act, 2020, w.e.f. 1.6.2020 and w.e.f. 1.4.2021, read as under - "Provided further that where registration has been granted to the trust or institution under section 12AA or section 12AB, 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."

His contention was that the ld. CIT(Appeals) had ignored this provision of law and had not applied the same to the facts of the case wherein the assessee had been granted registration vide order dated 15.10.2018 w.e.f. 01.04.2013 u/s. 12AA of the Act by the ld. CIT(Exemption), Bhopal and on the date of grant of registration, the appeals of the assessee were pending before the ld. CIT(Appeals), who had passed the first appellate order in all the cases on the same date, i.e., 12.04.2024. It was the contention of the ld. Counsel that the proceedings before the ld. CIT(Appeals) was an extension of assessment proceedings and claim raised before the CIT(Appeals) which accrued on 15.10.2018 after passing of the assessment order dated 28.02.2013 ought to have been allowed by the ld. CIT(Appeals). For the proposition that the proceedings before the ld. CIT(Appeals) was an extension of assessment proceedings and if the proceedings before the ld. CIT(Appeals) were pending on the date of grant of registration u/s. 12AA for any preceding year, the provisions of section proviso to section 12A(2) would apply. The assessee referred several case laws including that of Hon'ble High Court. Brief synopsis in this regard was filed before us, the contents of which are reproduced hereunder : 2. The Ld. CIT(A) had passed similarly worded orders for Assessment Year(s) 2006-07, 2007-08, 2008-09, 2009-10 & 2012-13 rejecting the contention of the appellant that as the appellant is held to be a Charitable Society and in recognition thereof it has been granted registration vide order dated 15.10.2018 with effect from 01.04.2013 under section 12AA of the 'Act' by the Ld. Commissioner of Income Tax (Exemption) Bhopal in pursuance of directions by the Hon'ble ITAT order dated 30.07.2018in view thereof the Ld. 'CIT(A)' ought to have allowed exemption under section 11 as claimed for A.Y 2006- 07, 2007-08, 2008-09, 2009-10 & 2012-13 in appellate proceedings in view of revised proviso to sub-section (2) of section 12A providing that provisions of section 11 and 12 shall apply to preceding years too where proceedings are pending before the Assessing officer and the proceeding before 'CIT(A)' was extension of assessment proceedings and claim raised before 'CIT(A)', which accrued on 15.10.2018 after passing of the Assessment Order dated 28.02.2013 ought to have been allowed by the 'CIT(A)'. 3. The Ld. CIT(A) through the orders impugned held as under: "5.6. I have gone through the facts & circumstances of the case, remand report &rejoinder filed by the appellant. As per the appellant the trust was registered u/s.12AA of the Income Tax Act, 1961 with effect from 01.04.2013 i.e. appellant itself has confirmed that the registration u/s. 12AA was made effective from 01.04.2013 and

hence, the same can't be applied for the year in question being the A.Y. prior to the date of registration u/s. 12AA made effective. 5.7. From the above it is clear that the appellant has not satisfied the conditions laid down under the Act for claiming deduction u/s. 11 & 12 of the Act as mentioned in above paras & therefore the action of AO of disallowing expenditure u/s. 11 & 12 of the Act is upheld particularly because of the fact that as per section 119(2)(b) of the Act the CIT(A) is not authorized to admit application or claim of exemption which says that " the Board may, if it considers it desirable or expedient so to do for avoiding genuine hardship in any case or class of cases, by general or special order, authorise any income-tax authority, not being 30[a Joint Commissioner(Appeals) or] a Commissioner (Appeals) to admit an application or claim for any exemption, deduction, refund or any other relief under this Act after the expiry of the period specified by or under this Act for making such application or claim and deal with the same on merits in accordance with law." 5.8. Further, several case laws relied upon by the appellant are also distinguishable on facts and hence not applicable. Accordingly, grounds of appeal are liable to be dismissed." Cases relied upon (a) CIT v. Shree Shyam Mandir [2018] 400 ITR 466 (Raj) Exemption u/s 11 - trust or institution has been granted registration under section 12AA - Applicability of the registration granted to a trust or institution to earlier years - Non-application of registration for the period prior to the year of registration caused genuine hardship to charitable organisations -ITAT applying the Proviso of Section 12A(2), inserted w.e.f. 01.10.2014, with retrospective effect in spite of the facts that the proviso has no indication of being applied for the earlier years retrospectively - HELD THAT:- At the time of registration, the authority is required to look whether it is registered under the state Act or under any other Act. There is no distinction between private trust and public trust. The contention which has been raised by counsel for the appellant regarding the expenses, diversion or control by the private people will come only when the assessment has taken place. For the purpose of trust registered and the income used is for the charitable purpose or not and whether income from public trust if it is going for any private use will negative the very object of the Trust Act which is the main intention of the legislation, is not to be considered at this stage. As long as the objects were charitable in nature in the earlier years and in the year in which registration u/s 12AA was granted, the 18

existence of trust for charitable purposes in the earlier years cannot be doubted with. Even otherwise, no adverse findings were given by the revenue with regard to the existence of the assessee society for charitable purposes in the assessment years under appeal. A receipt which is by birth, capital in nature, cannot change its character merely for want of registration of society u/s 12AA of the Act. It is not the case of the revenue that the donations received are meant for general functioning of the charitable objects of the society, in which event, the donations received thereon would take the character of revenue receipts requiring to be credited in the income and expenditure account for utilization towards charitable objects thereon. Hence, we hold that in any case, the donations received by the assessee society cannot be brought to tax in the assessment. We hold that since the only reason for denial of exemption u/s 11 was absence of registration u/s 12AA(which was granted to assessee society on 29.10.2010 with effect from 1.4.2010) for the relevant assessment years and on no other ground, the benefit of change in law as above by Finance Act 2014should be available and for all the years, the benefit of exemption should be available on the date of registration as all the assessments were pending as shown above. In this connection, it requires mention specifically that all the receipts of the donation were proved on enquiry to have been received from the claimed donors and utilized for the specific purpose (construction of old age home) for which they were received. In conclusion, we hold that the insertion of the proviso to section 12A(2) of the Act has to be construed as retrospective in operation - This issue stands answered in favour of the assessee by Shree Bhanushali Mitra Mandal Trust [2016 (4) TMI 578 - ITAT Ahmedabad], wherein, it was held that appeal is a continuation of the original proceedings and assessment proceedings pending before an appellate authority should be deemed to be "assessment proceedings pending before the Assessing Officer" within the meaning of Section 12A. -Decided in favour of assessee. (b) Shri Krishnabai Ghat Trust v. ITO (Exemptions) 2019 (5) TMI 618 - ITAT Pune Exemption u/s.11 - deemed registration u/s 12AA - applicability of Proviso to Section 12A sub-section (2)during appeal proceedings or restricted to assessment proceedings - registration granted to the assessee u/s.12AA during the pendency of proceedings before the ld. CIT(A) - HELD THAT:-What AO can do, can be done by CIT(A) in an appeal before him. Even what the AO could have done but failed to do, can also be done by him. It shows that the powers of a CIT(A) in an appeal against an assessment order are almost similar to those of 19

an AO. If extend this analogy to the provisions of section 12A(2), an irresistible conclusion which follows is that the benefit of the proviso is available not only when the assessment proceedings are pending before the AO but also when an appeal against the assessment order is pending before the ld. CIT(A). It is so for the reason that the appeal proceedings are nothing but continuation of the assessment proceedings. As at the time of granting registration by the ld. CIT (Exemptions) to the assessee, the appeal of the assessee was pending before the ld. CIT(A), in my considered opinion, the benefit of first proviso to section 12A(2) ought to have been granted. My view is fortified by the judgment of Hon'ble Rajasthan High Court in CIT (Exemptions) v. Shree Shyam Mandir Committee [2017 (10) TMI 1450 - Rajasthan High Court] in which it has been held that "An assessment proceedings which is pending in appeal before the appellate authority should be deemed to be "assessment proceedings pending before the AO." within the meaning of the term as envisaged under the proviso. It follows there from that the assessee which obtained registration u/s.12AAof the Act during the pending of appeal was entitled for exemption claimed u/s.11. The additional ground thus raised is allowed by holding that the assessee would be entitled to exemption u/ss. 11 and 12 of the Act for the year under consideration on the reason that the registration was, in fact,granted to the assessee u/s.12AA during the pendency of proceedings before the ld. CIT(A). In the light of my above conclusion on the additional ground, the impugned order is set-aside and the matter is restored to the file of AO for framing a de novo assessment as per law after allowing a reasonable opportunity of hearing to the assessee. Needless to say, the assessee in such assessment proceedings would be considered to have been granted registration and the provisions of sections 11 and12 shall apply pro tanto. Appeal is allowed for statistical purposes. (c) ITO(E) v. M/s.Centre For Cellular AndMolecular Platforms 2019 (8) TMI 1717 - ITAT Bangalore Exemption u/s 11 - Applicability of the registration granted to a trust or institution to earlier years -Non-application of registration for the period prior to the year of registration caused genuine hardship to charitable organizations - claim of the assessee that since the registration of the assessee concern has been granted w.e.f. 21.09.2016, it comes into effect during the course of pendency of first appeal proceedings and the proviso to sub-section 2 of section 12A should be construed liberally and the assessee should be granted

exemption u/s. 12A - HELD THAT:- As relying on M/S Shree Shyam Mandir [2017 (10) TMI 1450 - Rajasthan High Court] registration was granted to the assessee u/s. 12AA of the IT Act on 29.07.2013. Under these facts, it was held by Hon'ble Rajasthan High Court that appeal is continuation of original assessment proceedings and proceedings before appellate authorities is covered by the proviso to subsection 2 of section 12A of the IT Act. In the present case also, the facts are similar and hence, respectfully following this judgment of Hon'ble Rajasthan High Court, we decline to interfere in the order of ld. CIT(A). Appeal filed by the revenue is dismissed. (d) Lady KikabaiPremchandIyambail Trust v. ITO 2020 (2) TMI 448 - ITAT Pune Exemption u/s 11 and 12 denied - deemed registration u/s 12AA - registration granted to the assessee u/s.12AA during the pendency of proceedings before the ld. CIT(A) - In the interim, the assessee had applied for fresh registration before the CIT(E) and CIT(E) has granted registration -HELD THAT:- As decided In Shri Krishnabai Ghat Trust Versus ITO (EXEMPTIONS), WARD-1, Pune [2019 (5) TMI 618 - ITAT Pune] what AO can do, can be done by CIT(A) in an appeal before him. Even what the AO could have done but failed to do, can also be done by him. It shows that the powers of a CIT(A) in an appeal against an assessment order are almost similar to those of an AO. If extend this analogy to the provisions of section 12A(2), an irresistible conclusion which follows is that the benefit of the proviso is available not only when the assessment proceedings are pending before the AO but also when an appeal against the assessment order is pending before the ld. CIT(A). It is so for the reason that the appeal proceedings are nothing but continuation of the assessment proceedings. As at the time of granting registration by the ld. CIT (Exemptions) to the assessee, the appeal of the assessee was pending before the ld. CIT(A), in my considered opinion, the benefit of first proviso to section 12A(2) ought to have been granted. Ground thus raised is allowed by holding that the assessee would be entitled to exemption u/ss. 11 and 12of the Act for the year under consideration on the reason that the registration was, in fact, granted to the assessee u/s.12AA during the pendency of proceedings before the ld. CIT(A). -Decided in favour of assessee. (e) Sree Sree Ramkrishna Samity v. DCIT [2015] 44 ITR (Trib) 678 (ITAT [Kolk]) Reopening of assessment - eligibility for exemption under section 11 & 12 denied - existence of the assessee society for charitable

purposes in the assessment years under appeal - Held that:- It is an established position in law that a proviso which is inserted to remedy unintended consequences and to make the provision workable, a proviso which supplies an obvious omission in the section and is required to be read into the section to give the section a reasonable interpretation, requires to be treated as retrospective in operation, so that a reasonable interpretation can be given to the section as a whole and accordingly the said insertion of first proviso 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. A receipt which is by birth, capital in nature, cannot change its character merely for want of registration of society u/s 12AA of the Act. It is not the case of the revenue that the donations received are meant for general functioning of the charitable objects of the society, in which event, the donations received the reonwould take the character of revenue receipts requiring to be credited in the income and expenditure account for utilization towards charitable objects thereon. Hence, we hold that in any case, the donations received by the assessee society cannot be brought to tax in the assessment. We hold that since the only reason for denial of exemption u/s 11 was absence of registration u/s 12AA(which was granted to assessee society on 29.10.2010 with effect from 1.4.2010) for the relevant assessment years and on no other ground, the benefit of change in law as above by Finance Act 2014should be available and for all the years, the benefit of exemption should be available on the date of registration as all the assessments were pending as shown above. In this connection, it requires mention specifically that all the receipts of the donation were proved on enquiry to have been received from the claimed donors and utilized for the specific purpose (construction of old age home) for which they were received.In conclusion, we hold that the insertion of the proviso to section 12A(2) of the Act has to be construed as retrospective in operation. - Decided in favour of assessee. (f) Navsari Malesar Behdin Anjuman v. ITO 2020 (4) TMI 576 - ITAT Surat Exemption u/s.11 denied - assessee trust was not registered u/s.12AA at the time of assessment -HELD THAT:- The benefit of change in Law as above by Finance Act, 2014 should be available and for the year under consideration, the benefit of exemption should be available on the date of registration as the assessment of the year

was pending because as per chronology of events the assessee had already applied for registration u/s.12A on 03.03.2016 and the assessment order was passed on 15.03.2016 - the registration u/s.12AA was granted on 28.03.2016 and the same was also produced during the First Appellate Authority. Referring to observations of the Co-ordinate Bench of Tribunal in SNDP Yogam VERSUS Asst Director Of Income Tax (Exemption), Range 4, Kochi [2016 (3) TMI 1110 -ITAT Cochin] we are in agreement with the view taken therein by the Co-ordinate Benches. First proviso of section 12A(2) as had been made available to the statute vide the Finance Act, no.2[2014], being a beneficial provision intended to mitigate the hardship in case of charitable institutions, thus find ourselves to be in agreement with the view taken by the Tribunal in the aforesaid appeals. First proviso of section 12A(2) would be applicable to the case of the present assessee. Therefore, we set-aside the order of the Ld.CIT(A), consequently delete the additions. Therefore, this ground raised by the assessee is allowed. (g) Prajapati Samaj Maroli Bazar, C/o Ganpatbhai Mistri v. DCIT 2023 (1) TMI 414 - ITAT Surat Exemption u/s 11 - Denial of exemption as assessee was not having registration u/s 12AA for the year under consideration - AO held that the assessee was granted registration u/s 12AA on 25/10/2018effective from 24/04/2018 i.e. A.Y. 2019-20, hence, the assessee is not eligible for deduction u/s 11 and 12for the year under consideration - HELD THAT:-Assessee while making submission vehemently relied upon the decision of Navsari Malesar Behdin Anjuman, Agiary Street, Malesar, Navsar 2020 (4) TMI 576 -ITAT SURAT wherein the Coordinate Bench of Tribunal while relying upon the decision of Punjab Educational Society 2017 (12) TMI 989 -ITAT AMRITSAR held that benefit of first proviso to Section12A(2) of the Act would be applicable to the facts of the said case. Benefit of Section 11 is to be given if the registration is obtained even during the pendency of appeal before the ld. CIT(A). Again, coming to the fact of the case,we find that the assessment in the present case was completed on23/02/2021, before that date, the registration was granted vide order dated 25/10/2018. As in SNDP Yogum case 2016 (3) TMI 1110 - ITAT Cochin held that proviso to section 12A(2) inserted from.01.10.2014 has retrospective effect thus, and there should be no denial of relief under section 11 toa trust if it had obtained registration during the pendency of appeal. Similar view was also taken in Shree Bahnushali Mitra Mandal Trust 2016 (4) TMI 578 - ITAT AHMEDABAD Thus, respectfully following the decisions of coordinate benches, find that the assessee 23

is also eligible for first proviso to Section 12A(2) of the Act. Grounds of appeal raised by the assessee is allowed. (h) St. Jude's Convent School and Others v. ACIT 2016 (9) TMI 1382 - ITAT Amritsar Benefit of Section 11 and 12 - amendment to sec 12A(2) - Retrospectivity - whether payment of Education Extension Services to the Diocese of Jalandhar, notified U/s 10(23C)(vi), as well as registered U/s. 12A of the Act and perusing the object of prompting education through running various schools, can be regarded as application of income? - Held that:- The first proviso to section 12A(2) of the Act is applicable retrospectively. Likewise, for the same reasoning, it is also held, regarding the second batch of appeals, that even the second proviso to Section 12A(2) is retrospective in nature and the completed assessments in these cases ought not to have been reopened only for non-registration for the relevant assessment years. Whether the assessment proceeding "pending before the Assessing Officer", as stated in the first proviso to Section 12A(2) can be taken as "pending in appeal"? - Held that:- This issue also stands answered in favour of the assessee by Shree Bhanushali Mitra Mandal Trust [2016 (4) TMI 578 - ITAT AHMEDABAD] wherein, it was held that appeal is a continuation of the original proceedings and assessment proceedings pending before an appellate authority should be deemed to be "assessment proceedings pending before the Assessing Officer" within the meaning of Section 12A. Accordingly, it is held that the appellate proceedings before the appellate authorities are deemed to be assessment proceedings pending before the Assessing Officer Whether payment of Education Extension Services to the Diocese of Jalandhar, notified U/s 10(23C)(vi),as well as registered U/s. 12A of the Act and perusing the object of prompting education through running various schools, can be regarded as application of income - Held that:- ere, it is not in dispute that the Diocese of Jalandhar is not only registered U/s 12A of the Act, it is also notified U/s. 10(23C)(vi) of the Act. Besides, for A.Ys. 2007-08 to-2013-14, vide orders passed U/s 143(3) of the Act (copies on record), its stands taken note of that the Diocese of Jalandhar is running various schools and that exemption U/ss. 11and 12 of the Act has been allowed with regard to its income. Therefore, it has wrongly been held in the impugned order that the payment of education extension services made by the assessee to the Diocese of Jalandhar out of the current year income, as is also available from the income and expenditure account of the relevant financial years, is not allowable as application of income.

The restriction/embargo in donation by one charitable Trust to another is only restricted to accumulations made in excess of 15% of income of the Trust, as referred to in Section 11(2) of the Act; and that the said prohibition does not apply, to current year income, or even to accumulations up to 15% U/s. 11(l)(a) of the Act. It may be reiterated that the Diocese of Jalandhar stands notified U/s. 10(23C)(vi) of the Act. This provision, it may be noted, is applicable to universities and educational institutions, which exist solely for educational purposes and not for purposes of profit. Neither the assessment order/s of the assessee/s, nor the assessment order/s of the Diocese of Jalandhar, carry any finding of the Diocese of Jalandhar pursuing religious objects. Merely having religious objects does not amount to pursuing religious objects, Itis the actual objects perused and the actual activities undertaken, which are of consequence so far as regards our present purposes. Therefore, it cannot be denied that the Diocese of Jalandhar is engaged solely in pursuing the object of education. It runs various schools. Hence, it is but a charitable institution pursuing objects which are similar to those of the assessee. That being so, the amount paid to the Diocese of Jalandhar being out of the current year income and not out of accumulated income, such payment of education extension services to the Diocese of Jalandhar is to be allowed as application of the income. It is so ordered. In view of the above discussion, we hold that (1) the subsequent grant of registration in all the cases respectively operates retrospectively for all the years under consideration; and (2) payment of education extension services to the Diocese of Jalandhar is application of income, duly satisfying the provisions of Sections 11(l)(a) and 11(3)(d) of the Act. - Decided in favour of assessee. (i) St. Joseph's Convent School v. ACIT 2017 (2) TMI 1511 - ITAT Amritsar Exemption u/s 11 - Registration u/s 12AA - amendment to sec 12A(2) - Retrospectivity - scope of amendment made in section 12A vide Finance (No.2) Act, 2014 the Income Tax Act - HELD THAT:- As decided in ST. JUDE'S CONVENT SCHOOL AND OTHERS [2016 (9) TMI 1382 - ITAT AMRITSAR] The first proviso to section 12A(2) of the Act is applicable retrospectively. Likewise, for the same reasoning, it is also held, regarding the second batch of appeals, that even the second proviso to Section 12A(2) is retrospective in nature and the completed assessments in these cases ought not to have been reopened only for non-registration for the relevant assessment years. - Decided in favour of assessee.

(j) M/S Punjab Educational Society v. ITO 2017 (12) TMI 989 - ITAT Amritsar Grant of registration under Sec. 12AA - first proviso of Sec.12A(2) applicability - retrospective effect - Held that:- The first proviso of Sec. 12A(2) as had been made available on the statute vide the Finance (No. 2) Act. 2014, with effect from 01.10.2014, being a beneficial provision intended to mitigate the hardships in case of genuine charitable institutions, thus, find ourselves to be in agreement with the view taken by the Tribunal in the aforesaid appeals. We thus, are of the considered view that the first proviso of Sec. 12A(2) would be applicable to the case of the present assessee. We therefore set aside the order ofthe CIT(A) and consequently delete the addition - Decided in favour of assessee. In the light of above it is submitted that appeals may kindly be allowed." 3. Learned DR was unable to controvert the contention of the ld. Counsel for the assessee either on law or on facts nor was he able to point out any distinction on facts or law in the judicial decisions cited by the ld. Counsel for the assessee before us in support of the proposition that the assessee was entitled to the benefit of second proviso to section 12A(2) of the Act on account of which since the appeal proceedings in the present cases were pending on the date of grant of registration u/s. 12A of the Act for subsequent assessment years, the benefit of section 11 & 12 of the Act would apply to the assessment years pending on the date of granting registration also. The ld. DR could also not bring to our notice any contrary decision of High Court and Supreme Court in this regard. In the light of the same, we have no hesitation in holding that in the facts and circumstances of the present cases, which clearly demonstrate that on the date of grant of registration u/s. 12A of the Act to the assessee w.e.f. 01.04.2013 vide order of CIT(Exemption) dated 15.12.2018, the appeal proceedings for all the impugned years before us were pending before the CIT(Appeals) who in turn had passed order in 2024,the assessee was entitled to claim exemption of its income u/s. 11 of the Act in view of second proviso to section 12A(2) of the Act as per the various judicial decisions cited by the ld. Counsel for the assessee before us. Ground No. 6, 7 & 8, raising above arguments by the ld. Counsel, stand allowed. Remaining grounds were not argued before us and therefore are not being adjudicated by us. 5. All the appeals of the assessee stand allowed in above terms.”

“7. I have heard the rival submissions and perused the material on record. The issue that arise for my consideration are of two folds, namely, (i) Whether the assessee trust is entitled to registration u/s.12AA of the Act for the relevant assessment year, (ii) if the assessee trust is not entitled for registration u/s.12AA of the Act whether surplus according to assessee trust which is corpus donation is liable to be taxed. 7.1 To examine the first issue, necessarily I have to analyze the relevant provision, namely, the amendment to Section 12A by Finance Act, 2014 w.e.f. 01.10.2014 by way of insertion 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 1st 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: 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.]” 7.2 It is also relevant to reproduce the explanatory notes to the provisions of Finance (No.2) Act, 2014 as given in CBDT Circular No.01/2015 dated 21.01.2015 in reference F. No.142/13/2014-TPL, which read as follows:

“Para 8.2 Non-application of registration for the period prior to the year of registration caused genuine hardship to charitable organizations. Due to absence of registration, tax liability is fastened even though they may otherwise be eligible for exemption and fulfill other substantive conditions. However, the power of condonation of delay in seeking registration was not available.” 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 ld. 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/s147 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 orderspassed 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 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 with. Moreover, under the Scheme of the Act, sections 11 and 12 are substantive provisions which provide for exemptions to a religious or charitable trust. Sections 12A and 12AA detail the procedural requirements for making an application to claim exemptions under sections 11 and 12 by the assessee and the grant or rejection of such application by the commissioner. Thus, in my view, sections 12A and 12AA are only procedural in nature. Hence, it is not the registration u/s 12AA by itself that offers immunity from taxation. A receipt whether it is revenue or capital in nature is to be decided at the assessment stage.Being procedural in nature, in my view, liberal interpretation will give effect to the intention of the amendment, thereby removing the hardship in genuine cases like the present assessee under consideration. 7.5 I am also supported by the order of Kolkata Bench of ITAT in case of Sree Sree Ramkrishna Samity vs. DCIT (ITA No. 1680/2012, order dated 09.10.2015) where it was held that amendment to Section 12A w.e.f. 01.10.2014 is retrospective. The relevant funding of the Hon’ble Kolkata Bench in case of Sree Sree Ramkrishna Samity vs. DCIT (supra) read as follows: “6.10. We hold that it is an established position in law that a proviso which is inserted to remedy unintended consequences and to make the provision workable, a proviso which supplies an obvious omission in the section and is required to be read into the section to give the section a reasonable interpretation, requires to be treated as retrospective in operation, so that a reasonable interpretation can be given to the section as a whole and accordingly the said insertion of first proviso 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.” 7.6 Further, the Kolkata Tribunal observed as under:

“6.11. We also hold that though equity and taxation are often strangers, attempts should be made that these do not remain always so and if a construction results in equity rather than in injustice, then such construction should be preferred to the literal construction. It is only elementary that a statutory provision is to be interpreted ut res magis valeat quampereat, i.e to make it workable rather than redundant. Applying this legal maxim, it would be just and fair to hold that the amendment in section 12A is brought in the statute to confer benefit of exemption u/s 11 of the Act on the genuine trusts which had not changed its objectives and had carried on the same charitable objects in the past as well as in the current year based on which the registration u/s.12AA is granted by the DIT (Exemptions).” 7.7 In view of the aforesaid reasoning and the order of Kolkata Bench of the Tribunal in case of Sree Sree Ramkrishna Samity vs. DCIT (supra), I direct the Director of Income-tax (Exemption) to grant registration to the assessee trust for the assessment year under dispute, subject to the following conditions, namely; “i) The registration U/S.12AA (1)(b)(i) of the Income Tax Act, 1961 does not automatically exempt the income of the Trust/Institution. The question of taxability of the income of the Trust/Institution shall be examined and decided upon by the Assessing Officer at the time of assessment based on the conduct of the activities, compliance with various statutory and other requirements, etc., as referred to in Sections 2(15), 11, 12 & 13 of the Income Tax Act, 1961, without prejudice to the fact of granting merely in principle registration by DIT(E). ii) With effect from the Assessment Year 2009-10, the advancement of any object of general public utility other than relief of the poor, education and medical relief as defined in section 2(15) of the Income Tax Act shall not be a charitable purpose, if it involves the carrying on of any activity in the nature of trade, commerce or business, or any activity of rendering any service in relation to any trade, commerce or business, for a cess or fee or any other consideration, irrespective of the nature of use or application, or retention, of the income from such activity. iii) Amendments to the Deed/Memorandum, Rules and Regulations, if any, of the Trust / Institution shall be made only with the prior approval of the Commissioner of Income Tax(Exemptions) or any other prescribed authority under the Income Tax Act,1961.

iv) The registration may be withdrawn on violation of any of the stipulations laid down in the Income Tax Act, 1961, v) The SOCIETY/TRUST shall regularly file its Income Tax Return.” 8. In the result, the appeal filed by assessee is allowed. 14. The Hon'ble High Court of Chhattisgarh in case of Chhattisgarh Rajya Open School Madhyamik Siksha Mandal vs. DCIT (2025) 176 taxmann.com 49, wherein it was held as under:

“7. We have heard learned counsel for the parties and considered their rival submissions made hereinabove and also went through the record with utmost circumspection. 8. It is not in dispute that assessment proceeding under Section 143(2) of the IT Act was adjudicated by the Assessing Officer on 12-122018 and on that day, though the appellant/ assessee made application under Section 12AA of the IT Act, it was rejected on 29-7-2019 and after assessment by the Assessing Officer, on second round, ultimately, exemption was granted on 14-7-2023 with effect from 1-4-2019 and thereafter, assessment proceeding was subjected to appeal by the CIT (Appeals) and the CIT (Appeals) also dismissed the appeal on 17-102019, as such, on the date of registration i.e. on 14-7-2023, appeal under Section 253 of the IT Act was pending before the ITAT, but the ITAT rejected the contention of the appellant herein holding that first proviso to Section 12A(2) of the IT Act would not be applicable as the assessment proceedings were not pending as on the date of registration and therefore first proviso to Section 12A(2) would not be applicable to the appellant herein. 9. In order to decide the substantial question of law, it would be appropriate to notice first proviso to Section 12A(2) of the IT Act, which states as under: - "Provided further that where registration has been granted to the trust or institution under section 12AA or section 12AB, 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."

First proviso to Section 12A(2) of the IT Act has been inserted with effect from 1-10-2014. Section 12A(2) of the IT Act was brought into the statute book by the Legislature to prevent genuine hardship that could be caused on the assessee due to non-registration under Section 12AA of the IT Act and accordingly, the provisos to Section 12A(2) is to be construed as retrospective in nature. 10.At this stage, it would also be appropriate to notice the CBDT Circular No.01/2015 dated 21-52015 which has been made applicable with effect from 1-10-2014 in order to remove hardships to charitable organizations due to non-application for registration for the period prior to the year of registration, relevant portion of which states as under: - "8.2 Non-application of registration for the period prior to the year of registration caused genuine hardship to charitable organizations. Due to absence of registration, tax liability is fastened even though they may otherwise be eligible for exemption and fulfill other substantive conditions. However, the power of condonation of delay in seeking registration was not available." 11.A careful perusal of the aforesaid circular would show that it mandates that registration will have the effect for the period prior to the year of registration or in respect of which the assessment proceedings are pending and the provisions of Section 12A of the IT Act entailed unintended consequences of non-application of registration for the period prior to the year of registration and, thereby, non-grant of exemption under Sections 11 and 12 up to grant of registration. This position was also recognized by the Central Board of Direct Taxes while issuing the Explanatory Notes to the provisions of the Finance (No.2) Act, 2014, vide Central Board of Direct Taxes Circular No.1 of 2015, dated January 21, 2015. It is, thus, a curative proviso, which is but merely declaratory of the previous law. It has, by removal of the hardship, rendered the procedure more relief-oriented. It adequately complies with the natural justice principle of fairness to all. Hence, it has to be presumed and construed as retrospective in nature, in order to give the section a purposive interpretation. (See Shree Shyam Mandir Committee's case (supra), paragraph 26.) 12. In the instant case, admittedly, on the date of registration i.e. 14-7- 2023, the assessment proceeding which has been affirmed by the Commissioner of Income Tax (Appeals), was pending before the ITAT, which came to be dismissed on 79-2023. The question for consideration would be, whether the assessment proceeding as stated in first proviso to Section 12A(2) of the IT Act can be taken as pending appeal, in other words, whether the assessment proceeding pending in appeal can be taken to be the proceeding pending before the Assessing Officer? Since appeal was pending before the ITAT under Section 253 of the IT Act, though it

was second appeal, but in that appeal, substantial question of law was not required to be formulated which was required to be formulated in appeal under Section 260A of the IT Act, as such, that appeal pending before the ITAT against the assessment order affirmed by the CIT (Appeals) is the continuation of original assessment proceedings by the Assessing Officer. 13. It is a settled position of law that an appeal is a continuation of the proceedings of the original court. Ordinarily, the appellate jurisdiction involves a rehearing on law as well as on fact and is invoked by an aggrieved person. The first appeal is a valuable right of the appellant and therein all questions of fact and law decided by the trial court are open for reconsideration. Therefore, the first appellate court is required to address itself to all the issues and decide the case by giving reasons. The court of first appeal must record its findings only after dealing with all issues of law as well as fact and with the evidence, oral as well as documentary, led by the parties. The judgment of the first appellate court must display conscious application of mind and record findings supported by reasons on all issues and contentions [see: Santosh Hazari v. Purushottam Tiwari (2001) 3 SCC 179 followed in Madhukar v. Sangram (2001) 4 SCC 756, B.M. Narayana Gowda v. Shanthamma (2011) 15 SCC 476, H.K.N. Swami v. Irshad Basith (2005) 10 SCC 243 and Sri Raja Lakshmi Dyeing Works v. Rangaswamy Chettiar (1980) 4 SCC 259. 14. It is held that appeal pending before the ITAT against the order of the CIT (Appeals) affirming the order of the Assessing Officer is the continuation of the original proceedings of the Assessing Officer and thus, the assessment proceeding in appeal pending before the appellate Court i.e. ITAT is deemed to be the assessment proceeding before the Assessing Officer within the meaning of first proviso to Section 12A(2) of the IT Act and we accordingly hold that appeal proceedings pending before the ITAT are deemed to be the assessment proceeding before the Assessing Officer within the meaning of Section 12A of the IT Act. The impugned order so passed after the effective date of grant of registration and subsequent grant of registration on 14-7-2023 operates retrospectively for all relevant years in the present case, assessment year 2016-17, though registration was granted with effect from 1-4-2019, as we find that the object of the appellant Society is charitable in nature within the meaning of Section 12A(2) of the IT Act and on which there is absolutely no dispute. Accordingly, we are unable to sustain the impugned order and set aside the same. The appellant Society is entitled for exemption under Sections 11 & 12 of the IT Act. The Assessing Officer is directed to pas consequential order as stated above for the assessment year 2016-17, expeditiously. 15. The substantial question of law is answered in favour of the assessee and against the Revenue.”

15. The case of the assessee is squarely covered by the decisions as cited supra. Further in the case of Sree Sree Ramkrishna Samity, 156 ITR 646 (Kolkata – Trib.) held as under:

“6. We have heard the rival submissions and perused the materials available on record. We find that the first two grounds raised by the assessee is on jurisdiction and sanction for issue of notice u/s 148 of the Act and non supply of reasons recorded for reopening the assessment. On specific query from the Bench during the course of hearing, the Learned AR stated that those grounds are not pressed which is taken as a statement from the Bar. Accordingly, the ground nos. 1 & 2 raised by the assessee are dismissed as not pressed. 6.1 We find that the assessee trust was in receipt of donations from various philanthropists including Siliguri Municipal Corporation and these donations were admittedly utilized by the assessee trust towards construction of old age home under the name and style of "Shesh Basanta". On these facts, there is absolutely no dispute. All the donors had filed confirmations before the Learned AO and the genuinity of these donations are proved beyond doubt by the assessee. The Learned AO has accepted the same in the remand proceedings. 6.2 We find that the objects of the assessee society are charitable in nature within the meaning of section 2(15) of the Act on which fact there is absolutely no dispute. It is pertinent to note that the registration u/s 12AA of the Act was granted to the assessee on 29.10.2010 with effect from 1.4.2010. Admittedly, the notice u/s 148 of the Act was issued by the DCIT, Circle 2 Siliguri for the Asst Years 2003-04 to 2008- 09 on 30.3.2010. Even for the earlier years, the assessee society was carrying on the same charitable objects as per the trust deed on which fact also there is absolutely no dispute. The receipts were brought to tax only on the pretext that the assessee society is not having registration u/s 12AA of the Act in the Asst Years 2003-04 to 2008-09. 6.3 It is relevant at this juncture to get into the amendment brought in section 12A by Finance Act 2014 with effect from 1.10.2014 by way of insertion of first proviso to section 12A(2) of the Act which is reproduced below for the sake of convenience :— "Section 12 A (2) Where an application has been made on or after the 1st day of June 2007, the provisions of section 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 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." 6.4 Admittedly, the reassessment proceedings were pending before the Learned AO for the Asst Years 2003-04 to 2008-09 as on the date of granting registration u/s 12AA of the Act on 29.10.2010 with effect from 1.4.2010 as reassessment proceedings got commenced pursuant to issuance of notice u/s 148 on 30.3.2010 as stated supra. Admittedly, the objects and activities of the trust had remained the same in preceding assessment years also i.e Asst Years 2003-04 to 2008-09. Though this first proviso to section 12A(2) talks about pendency of assessment proceedings, it is relevant to get into the definition of the term 'assessment' in section 2(8) of the Act, wherein it is defined as "assessment includes reassessment". Hence even reassessment proceedings that were pending would also come under the ambit of the first proviso to section 12A(2) of the Act. 6.5 The second proviso to section 12A(2) also provides that no action u/s 147 of the Act shall be taken merely for non-registration of trust or institution. Reading this proviso with the first proviso to section 12A(2) and applying the Rule of Harmonious Construction, it could safely be concluded that the legislature in its wisdom had only brought this proviso to prevent genuine hardship that could be caused on the assessee due to non- registration u/s 12AA of the Act and accordingly in our opinion, the provisos to section 12A(2) of the Act is to be construed as retrospective in operation.

6.6 The third proviso to section 12A(2) of the Act also provides that the first and second proviso shall not be applicable if the trust or institution had been refused registration earlier or the registration granted earlier is cancelled by the Commissioner u/s 12AA of the Act. This also goes to prove that the first and second proviso shall be made applicable for the trusts for earlier assessment years also who had not applied for registration u/s 12AA of the Act at all. 6.7 We hold that the registration of trust under section 12A of the Act once done is a fait accompli and the AO cannot thereafter make further probe into the objects of the trust. Reliance in this regard is placed on the decision of the Hon'ble Apex Court rendered in the case of Asstt. CIT v.Surat City Gymkhana [2008] 300 ITR 214/170 Taxman 612. Drawing analogy from this judgement, the logical inference could be that as long as the objects were charitable in nature in the earlier years and in the year in which registration u/s 12AA was granted, the existence of trust for charitable purposes in the earlier years cannot be doubted with. Even otherwise, no adverse findings were given by the revenue with regard to the existence of the assessee society for charitable purposes in the assessment years under appeal. 6.8 It will be relevant to get into the Explanatory Notes to the Provisions of the Finance (No. 2), 2014 as given in CBDT Circular No. 01/2015 dated 21.1.2015 in reference F.No. 142/13/2014-TPL which is reproduced hereinbelow for the sake of convenience :— Para 8 - Applicability of the registration granted to a trust or institution to earlier years Para 8.2

Non-application of registration for the period prior to the year of registration caused genuine hardship to charitable organizations. Due to absence of registration, tax liability is fastened even though they may otherwise be eligible for exemption and fulfill other substantive conditions. However, the power of condonation of delay in seeking registration was not available. 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 36

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 Learned AO, 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. 6.9 With regard to the arguments of the Learned DR that donations received by assessee falls under the definition of income u/s 2(24)(iia) of the Act, we would like to state that income definition is an inclusive definition. An inclusive definition extends the specific meaning given in the stated items by the general meaning as commonly understood by the said expression which is defined in a statute. The word income as is commonly understood does not include any donation specifically meant for utilization for acquiring, constructing a capital asset, as is the case here. Further section 2(24) had undergone amendment by way of insertion of clause (iia) by Finance Act, 1972 with effect from 1.4.1973. In this connection, it will be relevant to get into the Memorandum explaining the provisions in Finance Act 1972 reported in 83 ITR (St.) 173, wherein Paragraphs 24 and 25 clearly define the scope of the amendment wherein in paragraph 25(i) , the concluding sentence is as under:— "contributions received with a specific direction that they will form part of the corpus of the trust or distribution will, however, not be regarded as income." Thus the relevant clause defining income in section 2(24)(iia) as introduced with effect from 1.4.1973 was clearly not intended to cover contributions/donations received with a specific direction that they will form part of the corpus of the trust for utilization in acquisition/construction of a capital asset. Thus what is not income as per the definition of the word income in the Act cannot be brought to tax under any other provision of the Act. We find that the order of the Learned CITA failed to distinguish between a case where a receipt is not an income at the stage of its receipt and a case where it is not so but is claimed to be exempt because of any exemption provision granting exemption from taxation to receipts which are liable to taxation but for the provision granting exemption.

6.10 We hold that it is an established position in law that a proviso which is inserted to remedy unintended consequences and to make the provision workable, a proviso which supplies an obvious omission in the section and is required to be read into the section to give the section a reasonable interpretation, requires to be treated as retrospective in operation, so that a reasonable interpretation can be given to the section as a whole and accordingly the said insertion of first proviso 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. Reliance in this regard is placed on the following decisions :— Allied Motors (P.) Ltd. v. CIT [1997] 224 ITR 677/91 Taxman 205 (SC) - Judgement by three judges of the Supreme Court - "The departmental understanding also appears to be that section 43B, the proviso and Explanation 2 have to be read together as expressing the true intention of section 43B. Explanation 2 has been expressly made retrospective. The first proviso, however, cannot be isolated from Explanation 2 and the main body of section 43B. Without the first proviso, Explanation 2 would not obviate the hardship or the unintended consequences of section 43B. The proviso supplies an obvious omission. But for this proviso the ambit of section 43B become unduly wide bringing within its scope those payments, which were not intended to be prohibited from the category of permissible deductions. In the case of Goodyear India Ltd. v. State of Haryana (1991) 188 ITR 402, Supreme Court said that the rule of reasonable construction must be applied while construing a statute. Literal construction should be avoided if it defeats the manifest object and purpose of the Act. As observed by G.P. Singh in his Principles of Statutory Interpretation, 4th Edn., Page 291, "It is well settled that if a statute is curative or merely declaratory of the previous law, retrospective operation is generally intended". In fact the amendment would not serve its object in such a situation, unless it is construed as retrospective. The view, therefore, taken by the Delhi High Court cannot be sustained." CIT v. Virgin Creations in ITAT No. 302 of 2011 in GA 3200/2011 dated 23.11.2011, the Hon'ble Calcutta High Court in the context of retrospective applicability of amendment to section 40(a)(ia) of the Act held as below:— "The supreme court in the case of Allied Motors P ltd and also in the case of Alom Extrusions Ltd has already decided that the aforesaid provision has retrospective application. Again, in the case reported in 82 ITR 570, the Supreme Court held that the provision, which has

inserted the remedy to make the provision workable, requires to be treated with retrospective operation so that reasonable deduction can be given to the section as well".

CIT v. Vatika Township (P.) Ltd. [2014] 367 ITR 466/227 Taxman 121/49 taxmann.com 249 (SC) - Five Judges decision of the Supreme Court :— "We would also like to point out, for the sake of completeness, that where a benefit is conferred by a legislation, the rule against a retrospective construction is different. 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 legislators object, then the presumption would be that such a legislation, giving it a purposive construction, would warrant it to be given a retrospective effect. This exactly is the justification to treat procedural provisions as retrospective. In Government of India v. Indian Tobacco Association reported in (2005) 7 SCC 396, the doctrine of fairness was held to be relevant factor to construe a statute conferring a benefit, in the context of it to be given a retrospective operation. The same doctrine of fairness, to hold that a statute was retrospective in nature, was applied in the case of Vijay v. State of Maharashtra reported in (2006) 6 SCC 289. It was held that where a law is enacted for the benefit of community as a whole, even in the absence of a provision the statute may be held to be retrospective in nature. However, we are confronted with any such situation here. In such cases, retrospectivity is attached to benefit the persons in contradistinction to the provision imposing some burden or liability where the presumption attaches towards prospectivity. In the instant case, the proviso added to section 113 of the Act is not beneficial to the assessee. On the contrary, it is a provision which is onerous to the assessee. Therefore, in a case like this, we have to proceed with the normal rule of presumption against retrospective operation. Thus, the rule against retrospective operation is a fundamental rule of law that no statute shall be construed to have a retrospective operation unless such a construction appears very clearly in the terms of the Act or arises by necessary and distinct implication. Dogmatically framed, the rule is no more than a presumption, and thus could be displaced by out weighing factors." CIT v. J.H. Gotla[1985] 156 ITR 323/23 Taxman 141 (SC)

"If the purpose of a particular provision is easily discernible from the whole of the scheme of the Act which in this case, is to counteract the effect of transfer of assets so far as computation of income of the assessee is concerned, then bearing that purpose in mind, we should find out the intention from the language used by the legislature and if strict literal construction leads to an absurd result, i.e., result not intended to be subserved by the object of the legislation found in the manner indicated before, then another construction is possible apart from strict literal construction then that construction should be preferred to the strict literal construction." 6.11 We also hold that though equity and taxation are often strangers, attempts should be made that these do not remain always so and if a construction results in equity rather than in injustice,then such construction should be preferred to the literal construction. It is only elementary that a statutory provision is to be interpreted ut res magis valeat quampereat, i.e to make it workable rather than redundant. Applying this legal maxim, it would be just and fair to hold that the amendment in section 12A is brought in the statute to confer benefit of exemption u/s 11 of the Act on the genuine trusts which had not changed its objectives and had carried on the same charitable objects in the past as well as in the current year based on which the registration u/s 12AA is granted by the DIT(Exemptions). 6.12 We hold that the arguments of the Learned AR that, even assuming without conceding, in the worst scenario, the assessee society could only be taxed in the status of an AOP does not require any adjudication as we hold that the assessee society to be construed as a public charitable trust and eligible to claim exemption u/s 11 of the Act for the earlier assessment years, more especially, Asst Years 2003-04 to 2008-09 , the donations received from various donors for construction of an old age home would take the character of corpus donations as they are meant for specific purposes and accordingly would be exempt u/s 11(1)(d) of the Act. Even otherwise, the said donation receipts are only capital in nature as it is received for construction of an old age home on which fact there is absolutely no dispute. The Learned AO also had duly accepted the nature of donations, genuinity of the donors and its utilization in the remand proceedings. Hence in any case, a receipt which is by birth, capital in nature, cannot change its character merely for want of registration of society u/s 12AA of the Act. It is not the case of the revenue that the donations received are meant for general functioning of the charitable objects of the society, in which event, the donations received thereon would take the character of revenue receipts requiring to be credited in the income and expenditure account for utilization towards charitable objects

thereon. Hence, we hold that in any case, the donations received by the assessee society cannot be brought to tax in the assessment. 6.13 We hold that since the only reason for denial of exemption u/s 11 was absence of registration u/s 12AA (which was granted to assessee society on 29.10.2010 with effect from 1.4.2010) for the relevant assessment years and on no other ground, the benefit of change in law as above by Finance Act 2014 should be available and for all the years, the benefit of exemption should be available on the date of registration as all the assessments were pending as shown above. In this connection, it requires mention specifically that all the receipts of the donation were proved on enquiry to have been received from the claimed donors and utilized for the specific purpose (construction of old age home) for which they were received. In conclusion, we hold that the insertion of the proviso to section 12A(2) of the Act has to be construed as retrospective in operation. Respectfully following the various judicial precedents relied upon and in the facts and circumstances of the case, we allow the ground nos. 3 to 8 raised by the assessee. 6.14 In view of the finding given by us hereinabove with regard to the status of the assessee society and its eligibility to claim exemption u/s 11 of the Act, the adjudication of ground no. 9 becomes infructuous. The expenditure incurred by the assessee society would anyway be treated as application of income for charitable objects as the incurrence of expenditure for charitable objects has not been disputed by the revenue in any of the assessment years under appeal. Hence the ground no. 9 of the assessee is dismissed as infructuous. 7. In the result, the appeals of the assessee are partly allowed.” 16. We note that in all the decisions passed by the Co-ordinate Benches cited supra, it has been held that the appeal before the appellate authority should be deemed to be the assessment proceedings pending before AO within the meaning of terms as envisaged under the proviso to section 12A(2) of the Act.

17. We have also perused the subject proviso which was inserted by Finance (No.2) Act, 2014 and in Circular No.1 of 2015, the CBDT explained the legislative intent behind the amendment as under:

“8. Applicability of the registration granted to a trust or institution to earlier years.

8.1 The provisions of section 12A of the Income-tax Act, before amendment by the Act, provided that a trust or an institution can claim exemption under sections 11 and 12 only after registration under section 12AA of the said Act has been granted. In case of trusts or institutions which apply for registration after 1st June. 2007, the registration shall be effective only prospectively. 8.2 Non-application of registration for the period prior to the year of registration caused genuine hardship to charitable organizations. Due to absence of registration, tax liability is fastened even though they may otherwise be eligible for exemption and fulfil other substantive conditions. However, the power of condonation of delay in seeking registration was not available. 8.3 In order to provide relief to such trusts and remove hardship in genuine cases, section 12A of the Income-tax Act has been amended to provide that in a case where a trust or institution has been granted registration under section 12AA of the Income-tax Act, the benefit of sections 11 and 12 of the said Act shall be available in respect of any income derived from property held under trust in any assessment proceeding for an earlier assessment year which is pending before the Assessing Officer as on the date of such registration, if the objects and activities of such trust or institution in the relevant earlier assessment year are the same as those on the basis of which such registration has been granted. 8.4 Further, it has been provided that no action for reopening of an assessment under section 147 of the Income-tax Act shall be taken by the Assessing Officer in the case of such trust or institution for any assessment year preceding the first assessment year for which the registration applies, merely for the reason that such trust or institution has not obtained the registration under section 12AA for the said assessment year. 8.5 However, the above benefits would not be available in the case of any trust or institution which at any time had applied for registration and the

same was refused under section 12AA of the Income-tax Act or a registration once granted was cancelled. 8.6 Applicability: - These amendments take effect from 1st October, 2014.” 18. Therefore, it is clear from the above that retrospective application in the statute book to avoid hardship in genuine cases where assessments were not concluded as on the date of granting registration provided the objects and activities of the trust remained identical in such earlier periods.

24. In the result, the appeal of the assessee in ITA No.900/Kol/2026 for A.Y. 2016-17 is allowed.

ITA Nos. 901 to 905/Kol/2026:

The orders are pronounced in the open Court on 21/07/2026.

Sd/- Sd/- (Pradip Kumar Choubey) (Rajesh Kumar) JUDICIAL MEMBER ACCOUNTANT MEMBER

Kolkata, Dated: 21/07/2026 SAMANTA आदेश �ȧ ĤǓ�ͧ �ͪ �\ Ē ȯͪ��/Copy of the Order forwarded to: 1. \ �Ȣ�ȡ�ȸ/ The Appellant 2. Ĥ×��ȸ/ The Respondent. 3. Ȳ�Ȳͬ��आयकर] �ǕÈ�/ Concerned CIT 4. आयकर] �ǕÈ�(अपील) / The CIT(A) 5. ��ȡ�Ȣ�ĤǓ�Ǔ�ͬ �, आयकर\ �Ȣ�ȣ�\ͬ ����/ DR, ITAT, Kolkata 6. �ȡ�[ फाईल/ Guard file.

BY ORDER, // TRUE COPY //

Asstt.Registrar, ITAT, Kolkata