COMMISSIONER OF IT vs. M/S SHREE SHYAM MANDIR COMMITTEE

ITA/234/2016HC RajasthanRJHC02082184201623 October 201728 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that the first proviso to Section 12A(2) of the Income Tax Act is applicable retrospectively. The reasoning was that this proviso was introduced to cure an anomaly and unintended hardship faced by trusts and institutions, making the section more workable and purposive. It was considered a curative proviso, declaratory of the previous law, and aimed at providing relief. The Court, in the absence of any contrary decision cited by the department, respectfully followed decisions in Sree Sree Ramkrishna Samity and SNDP Yogam, which held the proviso to be retrospective. Furthermore, the Court held that appellate proceedings are a continuation of original proceedings and thus, proceedings pending in appeal are deemed to be 'assessment proceedings pending before the Assessing Officer' as contemplated by the proviso. Consequently, the subsequent grant of registration was held to operate retrospectively for all relevant years under consideration. The appeal was dismissed.

What were the facts?

The appellant, Commissioner of Income Tax (Exemptions), challenged the Income Tax Appellate Tribunal's (ITAT) order allowing the assessee's appeal. The assessee is M/s Shree Shyam Mandir Committee. The core dispute revolves around the applicability of the Proviso to Section 12A(2) of the Income Tax Act, 1961, which was inserted effective October 1, 2014. The appellant argued that this proviso should not be applied retrospectively to earlier assessment years. The High Court had admitted the appeal and framed a substantial question of law concerning the retrospective application of this proviso. The judgment references previous High Court decisions in similar matters, including D.B. Income Tax Appeal No. 224/2010, which dealt with related issues concerning registration under Section 12A and the applicability of the Rajasthan Public Trust Act.

What were the issues?

1. Whether, on the facts and circumstances of the case, the Hon'ble ITAT was justified in applying the Proviso of Section 12A(2), inserted w.e.f. 01.10.2014, with retrospective effect, despite the proviso having no indication of retrospective application for earlier years? Assessee's Contention: The assessee, through reliance on various High Court decisions and CBDT Circular No. 1 of 2015, argued that the proviso to Section 12A(2) is curative and declaratory in nature, intended to remove hardship and should be applied retrospectively. They contended that the omission in the original section led to unintended consequences, and the proviso merely made the provision workable and purposive. They also argued that appellate proceedings should be considered as proceedings pending before the Assessing Officer for the purpose of the proviso. Revenue's Contention: The appellant (Revenue) contended that the proviso, being inserted with a prospective effective date, should not be applied retrospectively to earlier assessment years. They argued that the Tribunal was not justified in applying it retrospectively.

Which sections of the Income-tax Act were involved?

Section 12A,Section 12A(2),Section 11,Section 12,Section 13(1)(a),Section 13(3),Section 12AA,Section 147

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Cause title — parties, addresses and appearances
HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR D.B. Income Tax Appeal No. 234 / 2016 Commissioner of Income Tax ( Exemptions), 3rd Floor, Kailash Heights, Lal Kothi, Tonk Road, Jaipur ----Appellant Versus M/s Shree Shyam Mandir Committee, Khatushyam Ji, Distt. Sikar ( Raj.) ----Respondent _____________________________________________________ For Appellant(s) : Mr. Daksh Pareek for Mr. Sameer Jain For Respondent(s) : Mr. Mahendra Gargieya _____________________________________________________ HON'BLE MR. JUSTICE K.S. JHAVERI HON'BLE MR. JUSTICE VIJAY KUMAR VYAS

Order 23/10/2017

1.

By way of this appeal, the appellant has challenged the judgment and order of the Tribunal whereby Tribunal has allowed

the appeal of the assessee.

2.

This Court while admitting the appeal on 07.12.2016 framed following substantial question of law:

“1. Whether on the facts and circumstances of the case the Hon’ble ITAT was justified in 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

The order continues below.

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