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1 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 5TH DAY OF APRIL 2018 PRESENT THE HON’BLE MR. JUSTICE B.S. PATIL AND THE HON’BLE MR. JUSTICE S. SUNIL DUTT YADAV ITA No.187/2017 c/w ITA Nos.188, 189, 190/2017 & ITA No.9/2018
IN ITA No.187/2017:
Between:
Pr. Commissioner of Income
Tax (Exemptions),
Unity Building Annexxe, 6th Floor, Mission Road,
Bangalore.
The Deputy Commissioner of Income Tax, Circle 1, Bangalore. ... Appellants
(By Sri E.I. Sanmathi, Advocate)
And:
Poorna Prajana Vidya Peetha Prathisthana, Kathriguppa Main Road, Vidyapeetha, Bangalore - 560 028.
...Respondent
(By Sri Dr. C. P. Ramaswamy a/w Sri Balaram R. Rao, Advocates)
2 This ITA is filed under Section 260-A of Income Tax Act 1961, arising out of order dated 21.10.2016 passed in ITA No.531/Bang/2015, for the Assessment Year 2008-2009 is praying to decide the foregoing question of law and/or such other questions of law as may be formulated by the Hon’ble Court as deemed fit and set aside the appellate order dated:21/10/2016 passed by the ITAT, ‘A’ Bench, Bengaluru, in appeal proceedings No.ITA No.531/Bang/2015 for Assessment Year 2008-2009 as sought for in this appeal; and to grant such other relief as deemed fit, in the interest of justice.
IN ITA No.188/2017:
Between:
Pr. Commissioner of Income
Tax (Exemptions),
Unity Building Annexxe, 6th Floor, Mission Road, Bangalore.
The Deputy Director of Income Tax (E), Circle 1, Bangalore. ... Appellants
(By Sri E.I. Sanmathi, Advocate)
And:
Poorna Prajana Vidya Peetha Prathisthana, Kathriguppa Main Road, Vidyapeetha, Bangalore - 560 028. ...Respondent
(By Sri Dr. C. P. Ramaswamy a/w Sri Balaram R. Rao, Advocates)
This ITA is filed under Section 260-A of Income Tax Act 1961, arising out of order dated 21.10.2016 passed in ITA No.532/Bang/2015, for the Assessment Year 2009-2010 is praying to decide the foregoing question of law and / or such other questions of law as may be formulated by the Hon’ble Court as deemed fit set aside the appellate order dated:21/10/2016 passed by the ITAT, ‘A’ Bench, Bengaluru, in appeal proceedings No.ITA No.532/Bang/2015 for Assessment Year 2009-2010 as sought for in this appeal; and to grant such other relief as deemed fit, in the interest of justice.
IN ITA No.189/2017:
Between:
Pr. Commissioner of Income
Tax (Exemptions),
Unity Building Annexxe, 6th Floor, Mission Road,
Bangalore.
The Deputy Commissioner of Income Tax, Circle 1, Bangalore.
... Appellants
(By Sri E.I. Sanmathi, Advocate)
And:
Poorna Prajana Vidya Peetha Prathisthana, Kathriguppa Main Road, Vidyapeetha, Bangalore - 560 028. ... Respondent
(By Sri Dr. C. P. Ramaswamy a/w Sri Balaram R. Rao, Advocates)
4 This ITA is filed under Section 260-A of Income Tax Act 1961, arising out of order dated 21.10.2016 passed in ITA No.533/Bang/2015, for the Assessment Year 2010-2011 is praying to decide the foregoing question of law and / or such other questions of law as may be formulated by the Hon’ble Court as deemed fit and set aside the appellate order dated:21/10/2016 passed by the ITAT, ‘A’ Bench, Bengaluru, in appeal proceedings No.ITA No.533/Bang/2015 for Assessment Year 2010-2011 as sought for in this appeal; and to grant such other relief as deemed fit, in the interest of justice.
IN ITA No.190/2017:
Between:
Pr. Commissioner of Income
Tax (Exemptions),
Unity Building Annexxe, 6th Floor, Mission Road,
Bangalore.
The Deputy Director of Income Tax (E),
Circle 1, Bangalore. ... Appellants
(By Sri E.I. Sanmathi, Advocate)
And:
Poorna Prajana Vidya Peetha Prathisthana, Kathriguppa Main Road, Vidyapeetha, Bangalore-560 028. ...Respondent
(By Sri Dr. C. P. Ramaswamy a/w Sri Balaram R. Rao, Advocates)
5 This ITA is filed under Section 260-A of Income Tax Act 1961, arising out of order dated 21.10.2016 passed in ITA No.534/Bang/2015, for the Assessment Year 2011-2012 is praying to decide the foregoing question of law and / or such other questions of law as may be formulated by the Hon’ble Court as deemed fit set aside the appellate order dated:21/10/2016 passed by the ITAT, ‘A’ Bench, Bengaluru, in appeal proceedings No.ITA No.534/Bang/2015 for Assessment Year 2011-2012 as sought for in this appeal; and to grant such other relief as deemed fit, in the interest of justice.
IN ITA No.09/2018:
Between:
Pr. Commissioner of Income
Tax (Exemptions),
Bengaluru.
The Income Tax Officer,
(Exemptions), Ward-2, Bengaluru.
... Appellants
(By Sri E.I. Sanmathi, Advocate)
And:
Poorna Prajna Vidya Peetha Prathishthana, Kathriguppe Main Road, Vidyapeetha, Bangalore - 560 028.
...Respondent
(By Sri Dr. C. P. Ramaswamy a/w Sri Balaram R. Rao, Advocates)
This ITA is filed under Section 260-A of Income Tax Act 1961, arising out of order dated 04.04.2017 passed in ITA No.1351/Bang/2016, for the Assessment Year 2012-2013 praying to decide the foregoing question of law and / or such other questions of law as may be formulated by the Hon’ble Court as deemed fit and set aside the appellate order dated:04/04/2017 passed by the Income Tax Appellate Tribunal, ‘A’ Bench, Bengaluru, in appeal proceedings No.ITA No.1351/BNG/2016 for Assessment Year 2012-2013, as sought for in this appeal and etc.,
These ITAs coming on for orders, this day, S. Sunil Dutt Yadav, J., delivered the following:
J U D G M E N T
As the orders of the Tribunal impugned herein in I.T.A.Nos.187, 188, 189, 190 of 2017 relate to different assessment years with reference to the same assessee and have raised common questions, all the appeals are clubbed and are disposed of by a common order. The order in I.T.A.No.9/18 relating to assessment year 2012-2013 is a separate order and as the same raises questions considered in I.T.A.Nos.187, 188, 189, 190 of
7 2017, the said appeal is also clubbed with the present appeals.
The revenue has preferred these appeals challenging the order dated 21.10.2016 passed by the Income Tax Appellate Tribunal ‘A’ Bench, Bengaluru, whereby the orders of the Tribunal in I.T.A. Nos. 531/Bang/2015, 532/Bang/2015, 533/Bang/2015, 534/Bang/2015 and the order dated 4.4.2017 passed in ITA.No.9/2018 have been assailed.
The Tribunal has allowed the appeals preferred by the Assessee for the assessment years 2008-2009 up to 2012-2013 and has answered in the affirmative in favour of the assessee the question, as regards eligibility to grant of registration under Section 12A of the Income Tax Act, 1961 (for short ‘the Act’) prior to the amendment by the Finance Act (No.2), 1996. The Tribunal has also held in favour of the assessee as regards the error in description of the assessee-Trust
8 and set aside the denial of exemption of corpus receipts under Section 11(1)(d) of the Act and the denial of exemption as regards voluntary contributions on the ground that the assessee was not registered under Section 12A of the Act as it held that there was no such requirement for grant of registration.
Facts relevant to the present dispute are that the assessee claims to be a charitable Trust running a Gurukula, Sanskrit College and Vedanta institution which was preceded by execution of a trust deed. The assessee had claimed exemption under Section 11 of the Act for the assessment years 2008-2009 to 2012-2013.
The Assessing Authority however denied the benefit of exemption under Section 11 of the Act and treated the assessee in the status of “Association Of Persons” (for short ‘AOP’) on the ground that the assessee was not registered under Section 12(A) of the Act and consequently brought to tax the corpus fund,
9 building fund and other funds received by the assessee. The appeals preferred before the Commissioner of Income Tax (Appeals) came to be dismissed against which, appeals were preferred before the Tribunal. The Tribunal by virtue of the impugned orders after adverting to the contentions of the assessee and the revenue allowed the appeals setting aside the order of the Commissioner of Income Tax (Appeals) holding that the assessee was eligible to the grant of exemption under Section 11, as there was no specific requirement of registration under Section 12A of the Act.
The Tribunal observed that Section 12AA had been inserted by the Finance Act (No.2), 1996 which was effective from 1.4.1997 and hence the procedure prescribed under the amended provision was prospective. However, in the present case, as the Trust of the assessee namely Poorna Prajna Vidyapeetha Pratisthana was registered on 4.11.1990 and Form 10A
10 was filed on 31.12.1993, the requirement for the Commissioner to grant registration under Section 12A was not mandated as per the existing provision of Section 12A, till the insertion of Section 12AA on 1.4.1997. The Tribunal also relied on the judgment in the case of Karnataka Golf Association Vs. Director of Income Tax (Exemption) [2005 (272 ITR (A.T.) 123 ITAT (Bang)].
The said orders of the Income Tax Appellate Tribunal have been assailed before this Court by the Revenue on the principal contention that the Tribunal has erred in holding that the assessee was eligible for grant of exemption under Section 12A of the Act even before the amendment by the Finance Act (No.2), 1996 by holding that there was no requirement for the Commissioner to grant registration under Section 12A of the Act before 1.4.1997. It is also argued that mentioning of the wrong name of the Trust in the
11 records could not be held against the assessee was an erroneous finding and reliance on the earlier order of the Tribunal in the case of Karnataka Golf Association V/s. Director of Income Tax (Exemptions) reported in 272 ITR(A.T) page 123 (ITAT Bangalore) was erroneous.
The substantial questions of law that had been framed are as follows:
(1) “Whether on the facts and in the circumstances of the case, the Tribunal was correct in holding that the assessee is entitled for 12A registration by holding that there was no requirement for granting 12A registration by the Commissioner of Income Tax for period under consideration?”
(2) “Whether on the facts and in the circumstances of the case, the Tribunal was correct in holding that the assessee is eligible for grant of exemption by following its earlier order in the case of Karnataka Golf Association V/s. Director of Income Tax
12 (Exemptions) reported in 272 ITR(A.T) page 123(ITAT Bangalore)?”
(3) “Whether on the facts and in the circumstances of the case, the Tribunal was correct in not adjudicating on the issue of scope of section 12AA(2) raised by the Department?”
(4) “Whether on the facts and in the circumstances of the case, the Tribunal was right in holding that non-disposal of an application for registration, by granting or refusing registration, before the expiry of 6 months as provided under section 12AA(2) of Income Tax Act, 1961, would result in deemed grant of registration when there is no such concept of deemed registration under the provisions of section 12AA of the Act?”
The consideration of the appeals would require laying down the law as in force as regards the
13 processing of returns of trust or institutions such as the assessee with respect to the relevant assessment years.
For the relevant assessment years, Section 12A of the Act as it then stood provided that benefit under Sections 11 and 12 of the Act could be claimed only if an application was made for registration of the Trust or institution in the prescribed form before the appropriate authority prior to 1.7.1973 or before the expiry of a period of one year from the date of the creation of the Trust or the establishment of the institution whichever was later.
Section 12 AA which provides for procedure of registration was introduced by way of Finance Act (No.2), 1996 with effect from 1.4.1997 which provided that the Principal Commissioner or Commissioner on receipt of the application for registration of Trust or institution made under the provisions of Section 12A would have to pass an order in writing registering the
14 Trust or institution or refusing to register the Trust or institution. It was further provided that applications would have to be decided either way before the expiry of six months from the end of the month in which the application was received under the provisions of Section 12A.
It is thus clear that the application filed by the assessee in the present case was on 31.12.1993 which was before the introduction of Section 12AA which came into effect only from 1.4.1997. As per the substantive law applicable to the present case in force at the relevant point of time, the only condition mandated under Section 12A to claim benefit of exemption under Section 11 would be to have filed the application for registration of the trust in the prescribed manner before 1.7.1973 or before expiry of period of one year from the date of creation of the Trust or the establishment of the institution whichever was later. There is no mandate in
15 the law as it then stood to have applied and obtained registration to claim exemption. Mere filing of application in terms of Section 12A was sufficient to claim the benefit of exemption. The CBDT Circular No.762 dated 18.2.1998 which provides for an explanatory note relating to the amendment stipulates that the amendment relating to exemption from income tax in respect of income from a charitable or religious Trust or institution would take effect from 1.4.1997 which seeks to re-emphasize that the provisions of Section 12AA which provides that registration is mandatory to claim exemption would come into force with prospective effect.
As regards the finding of the Tribunal that the omission of the word ‘Prathisthana’ in the name of the assessee-Trust was the fault of the Department and not of the assessee for which the assessee cannot be penalized, the same being a finding of fact and not
16 requiring any interference, no ground is made to entertain the appeals on the said finding.
Hence it is clear that the appeals were disposed of in accordance with the law in force and the impugned orders do not suffer from any illegality nor is any substantial questions of law made out for admission of these appeals.
In view of the above, the appeals preferred against the orders of the Tribunal for the assessment years from 2008-2009 up to 2012-2013 are dismissed.
Sd/- JUDGE
Sd/- JUDGE RS/* ct:am