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Income Tax Appellate Tribunal, RAIPUR BENCH, RAIPUR
Before: SHRI RAVISH SOOD, JM & SHRI ARUN KHODPIA, AM
आयकर अपीलीय अधिकरण, रायपुर न्यायपीठ, रायपुर IN THE INCOME TAX APPELLATE TRIBUNAL RAIPUR BENCH, RAIPUR श्री रविश सूद, न्याययक सदस्य एवं श्री अरुण खोड़विया, लेखा सदस्य के समक्ष । BEFORE SHRI RAVISH SOOD, JM & SHRI ARUN KHODPIA, AM आयकर अपील सं./ITA Nos.139 to 142/RPR/2019 (Assessment Years: 2009-2010 to 2012-2013) ACIT (Exemption), Raipur Vs Maharshi Mahesh Yogi Vedic Vishwavidyalaya, University Building, Lamti, Vijay Nagar, Jabalpur(M.P.) PAN No. :AAAJM 1070 C (अपीलार्थी /Appellant) .. (प्रत्यर्थी / Respondent) AND Cross Objection Nos.09 to 12/RPR/2019 (Arising out of to 142/RPR/2019) (Assessment Year :2009-2010 to 2012-2013) Maharshi Mahesh Yogi Vedic Vs ACIT (Exemption), Raipur Vishwavidyalaya, University Building, Lamti, Vijay Nagar, Jabalpur(M.P.) PAN No. :AAAJM 1070 C (अपीलार्थी /Appellant) .. (प्रत्यर्थी / Respondent) : Shri Arun Grover & Asheesh Ternain, CAs नििााररती की ओर से /Assessee by राजस्व की ओर से /Revenue by : Smt. Ila M. Parmar, CIT-DR सुनिाई की तारीख / Date of Hearing : 12/04/2023 घोषणा की तारीख/Date of Pronouncement : 20/04/2023 आदेश / O R D E R Per Arun Khodpia, AM :
The revenue has filed four appeals against the separate orders passed by the CIT(A)-1, Jabalpur, all dated 29.03.2019 for the assessment years 2009-2010 to 2012-2013. The assessee has also filed cross objections arising out of the appeals filed by the revenue for the relevant assessment years under consideration.
2. First, we shall decide the appeals of the revenue for the assessment years 2009-2010 to 2012-2013. In all these appeals the revenue has raised common ground except difference in figures. For the sake of convenience, we shall take the grounds mentioned in the appeal of the revenue for A.Y.2009-2010 in 1. "Whether on facts & circumstances of the case and law, the ld. CIT(A) is correct in allowing the benefit of exemption u/s. 11 & 12 of I.T.Act, 1961 and deleting the addition of Rs.1,75,14,517/- made by the AO being the surplus amount on denial of exemption in absence of registration u/s. 11 & 12 or approval u/s.10(23c)(vi) of I.T.Act, 1961 for the year under consideration?" 2. "Whether on facts & circumstances of the case and on the point of law, the Id. CIT(A) is correct in interpreting the amended provision of Section 12A(2) inserted by Finance No.2 Act 2014 w.e.f. 01.10.2014 available from retrospective effect ? 3. "The order of Ld. CIT(A) is erroneous both in law and on facts". 4. "Any other ground may be adduced at the time of hearing".
Brief facts of the case as culled out from the assessment order are that the assessee university has been created under the State Enactment and is being monitored accordingly. The primary object of the assessee society is to provide education and promotion of research in Vedic learning's and practices. The assessee filed an application dated 29.09.2012 seeking approval u/s.10(23c)(vi) of the Income Tax Act, 1961 was submitted in the O/o CCIT, Bhopal on 01.10.2012 by the assessee university, which was rejected by CCIT, Bhopal's vide order dated 30.10.2013. Against the said order of CCIT, Bhopal, assessee university in November 2013 filed the Writ petition before the Hon’ble High Court of Madhya Pradesh, Principal Seat at Jabalpur vide W.P. No.21193/2013. As per letter dated 04.10.2013, it was communicated by the CCIT, Bhopal to the CIT-1, Jabalpur that no exemption is available to the assessee as on date either u/s12 or sec.10 of the I. T. Act and as such, the surplus is taxable under the normal provisions of the Act. Even the said application u/s. 10(23C)(vi) of the Act was for A.Y.2012-13 onwards. Accordingly, direction was issued to initiate action us.148 of the Act in the relevant A.Yrs. and bring the surplus to tax. Further, an application was filed by the assessee on 18.11.2013 under section 12AA of the Income Tax Act for registration and claiming exemption. This application was also rejected vide order dated 29.05.2014 and against the rejection of this order an appeal was filed by the assessee before the ITAT. Against the said order of rejection, Assessee University filed the Writ petition before the Hon'ble High Court of M.P., Principal Seat at Jabalpur vide W.P. No.3732/2015 which was disposed off on 12/03/2015. Thereafter the Hon’ble M.P. High Court granted stay order on 12/03/2015 in favour of assessee in Writ petition no.3732 of 2015.
Further in the same case for A.Y.2013-14, scrutiny assessment was completed on 30/03/2016, with denial of exemption u/s 10(23c) (vi) of I T Act, 1961 and income of the assessee society was assessed at Rs.22,30,02,090/-. In the meantime, the ITAT, Jabalpur Bench, Jabalpur passed an order on 09/11/2017 and remitted the issue raised in this appeal relating to registration u/s.12AA to the file of the CIT for deciding afresh. Accordingly, the CIT(Exemption), Bhopal vide its order u/s.12AA(1)(b)(i)/254 of the Income Tax Act, 1961 dated 21/12/2018, registration granted to the society w.e.f. 01/04/2013. In view of the above, the AO found that the assessee has not possessed any exemption either u/s.12 or section 10 of I.T.Act, 1961 before A.Y.2014-15. Thereafter, the AO issued a show cause notice on 24/12/2018 and served upon the assessee. The assessee in response to the notice, has filed its reply on 28.12.2018, copy of which is incorporated in the assessment order at page 5 & 6 in para 6. However, the AO found that the assessee has failed to submit any explanation on the show cause notice, but the assessee has requested for adjournment. Accordingly, the AO observed that to explain the issues, proper opportunities have already been granted to the assessee earlier. It is also evident from the record i.e. note sheet entries dated 26/06/2014, 16/07/2014, 04/08/2014, 19/08/2014, 02/09/2014, 09/09/2014, 15/09/2014, 22/09/2014, 25/09/2014, 29/09/2014 and 03/03/2015. Further the AO noted that as per order dated 12/03/2015 of Hon'ble High Court of Madhya Pradesh, direction for passing of final assessment order was stayed only till decision of ITAT order. The observations of the Hon’ble High Court are as under :- "The assessing officer before whom the assessment proceedings are pending may proceed with procedural aspect pertaining the assessment but shall not pass a final order on assessment. The final order shall be passed only after a decision is taken by the Appellate Tribunal in the proceeding challenging non-grant of registration under Section 12-AA of the Act depending upon the order passed by the Appellate Tribunal. The Assessing Authority is granted a liberty for finalize the assessment proceedings."
Thereafter, the Hon'ble ITAT, Jabalpur Bench, Jabalpur vide its order dated 09/11/2017, remitted the issue raised in this appeal relating to registration u/s.12AA of the Act to the file of the CIT for deciding afresh. As such after passing order by the ITAT, stay of Hon'ble High Court is removed. Further, in view of the direction of the ITAT, the CIT(Exemption), Bhopal vide its order u/s.12AA(1)(b)(i)/ 254 of the Income Tax Act, 1961 dated 21/12/2018, has granted registration to the society w.e.f. 01/04/2013. As per Ld AO, it is noteworthy to mention here that registration u/s.12AA of the Act was granted to the assessee society from 01/04/2013 and not from retrospective effect i.e. from A.Y.2008-09. From the above the AO observed that the assessee society has not possessed any exemption either u/s.12 or u/s.10 of the Income Tax act, 1961. As such, it is sufficient for taking action against the assessee society. Accordingly, the AO brought Rs.1,75,14,517/- to tax as per income and expenditure account of the assessee-society under the normal provisions of the Act and assessed the total income of the assessee at Rs.1,75,14,517/- u/s.143(3)/147 of the Act.
Aggrieved with the above order of the AO, the assessee preferred appeal before the ld. CIT(A) and the ld. CIT(A) considering the amended provision of Section 12A(2) of the Act and following the judicial pronouncements in this regard, directed the AO to compute the income of the assessee as per Sections 11 & 12 of the Act after taking into the consideration of exemption u/s.12AA of the Act. It was also observed by the ld. CIT(A) that the AO has not allowed the benefit of amended provision of Section 123A(2) of the Act, which is available for retrospective years and the same should be allowed in the present assessment year. Further the ld. CIT(A) held that the insertion of the proviso to section 12A(2) of the Act has to be construed as retrospective in operation and the society is eligible to claim exemption u/s.11 of the Act.
7. Now, the revenue is in appeals against the above observations of the CIT(A).
Ld. CIT-DR before us drew our attention to the order of the ld. CIT(E), dated 21.12.2018, which is available at pages 20-22 of the paper book of the assessee. According to the said order, the registration of the society u/s.12AA of the Act is granted w.e.f. 1st April, 2013. Therefore, it was the contention of the department that since the registration u/s.12AA of the Act was not granted for the year under consideration, the AO has rightly assessed the income of the assessee as per the directions of the Hon’ble High Court of M.P., Jabalpur and made the addition of surplus of income over expenditure for the respective assessment years under consideration. It was also submitted that the ld. CIT(A) has not appreciated the facts of the case correctly and has erred in deleting the addition made on account of denial of exemption by the AO, in absence of registration u/s. 12AA or approval u/s.10(23C)(vi) of the Act. It was also contended that the reliance of the assessee on the amended provision of Section 12A(2) inserted by the Finance No.2 Act, 2014 w.e.f. 01.04.2014 available to the assessee retrospectively, was misinterpreted by not reading this provision in its entirety while the proviso to the amendment itself shows 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.”, It was the submission of the ld. CIT-DR that since the application for registration u/s.12AA of the Act was refused earlier by the ld. CIT(E), the last limb of the amended provisions shall apply in the present case and exemption for the years under consideration for which the registration u/s.12AA was not available being refused, should not be allowed to the assessee. It was, therefore, the prayer that the order of the ld. CIT(A) on this issue shall be set aside and the disallowance made by the AO shall be restored.
To rebut the contention of the department, the ld. AR of the assessee drew our attention to the chronology of the events took placed during the proceedings in the present case. Chronology demonstrating that benefit of amended provisions of Section 12A(2) w.e.f.01.10.2014 of the Income Tax Act, 1961 is available for preceding assessment year(s) where assessment case(s) are pending on the date of grant of section 12AA Registration. Ld. AR produced before us the chronology of events in the form of paper book at pages 2 to 9, which is extracted hereunder for better understanding of the matter :-
CHRONOLOGY DEMONSTRATING THAT BENEFIT OF AMENDED PROVISIONS OF SECTION 12A(2) W.E.F. 01.10.2014 OF THE ACT IS AVAILABLE FOR PRECEEDING ASSESSMENT YEAR(S) Maharishi Mahesh Yogi Vedic Vishwavidyalaya Sr. Date Particulars/Proceedi ng Note Annexure / No Page No. 1. 29.11.1995 That the assessee The Act Annexure- respondent is a University received the 1 /Page No.-l created assent of the under the state Governor on enactment by way of statute 25.11.1995 and namely was published in Maharishi Mahesh the Madhya Yogi Vedic Pradesh Gazette Vishwavidyalaya Adhiniyam, dated 1995. 29.11.1995.Co py of First Page of Act attached. 2. 29.05.2014 That the assessee applied Being aggrieved Annexure- first time seeking registration with the Order of 2/Page Nos. u/s 12AA before the CIT-II, CIT-II, Jabalpur on 18.11.2013 in Jabalpur assessee Form lOA.That CIT-II, filed an appeal Jabalpur refused petition before the registration for the reasons Hon’ble mentioned in the Order dated ITAT,Jabalpur Copy 29.05.2014. of CIT-II Order enclosed. 3. 09.11.2017 That the Hon’ble ITAT, That thus the issue Annexure - Jabalpur Bench vide Order raised in the 3/Page Nos. dated appeal 09.11.2017 remitted relating to back the matter to CIT for registration u/s 12 de novo AA was adjudication. remitted back for deciding afresh (Thus Original Rejection Order of CIT- II, Jabalpur dt. 29.05.2014 refusing registration u/s 12AA has been cancelled and has become null and void of which no party can take shelter.)ITAT Order Copy enclosed.
4. 21.12.2018 That in pursuance to Hon’ble That thus the Annexure- ITAT Order, Ld. CIT assessee has been 4/Page Nos. (Exemption), Bhopal granted registration granted u/s 12AA on basis registration u/s 12AA w.e.f. of First 01.04.2013 i.e. from date of Application seeking Original First Application registration made in of the assessee dt. FY 2013-14 w.e.f. 18.11.2013 (made in FY 01.04.2013. 2013-14) seeking Order Copy registration u/s 12AA. enclosed. 5. 28.12.2018 That Ld. That in pending Scrutiny That the A.O. assessment u/s 143(3) r.w.s. assessee as per Assessment 147 of the Act Ld. A.O. law is entitled to Order is on (ACIT-Exemption), Raipur benefit of Section record in the passed the assessment 12AA for present order earlier department al making additions year(s) in appeal and denying benefit of amended pending in provisions of Section 12A(2) assessment cases Paper Book . as per amended filed by the provisions of assessee vide Section 12A(2) of Pg. the Act. Nos. 78-89 of P.B. 6. 29.03.2019 That against the That Ld. Assessment Order dt. CIT(A)-1, 28.12.2018 assessee filed JabalpurAp First Appeal on 10.01.2019 peliate Order is before the Ld. CIT on record in the (Appeals)-1, Jabalpur which present has been adjudicated in department al favour of the assessee vide appeal and That thus the Ld. CIT(A) Order dated in CIT(A)-1, Jabalpur 29.03.2019. Paper Book has concluded that filed by the benefit of of assessee vide amended provisions Pg. of Section 12A(2) is Nos. 41-63 of available for P.B. retrospective year(s) and has directed the A.O. to compute the income as per section 11 and 12 after taking into consideration exemption u/ s 12AA (Page 21 of CIT(A) Order annexed on Pg. 61 of P.B.)
7. 24.06.2019 —N.A.— —N.A.— That against the CIT(Appeals)-l Order A.O. in Form 36 dt. 24.06.2019 has preferred second appeal before this Hon’ble ITAT Bench which is pending for adjudication. 8. 12.07.2019 —N.A.— —N.A.— That the assessee respondent has filed the C.O. in Form 36A against the second appeal preferred by the department. 9. 05.09.2022 —N.A.— —N.A.— That Paper Book (Pg. Nos. 01-89) on the hearing of the case on 05.09.2022 has been filed by the assessee in support of CIT(A) Order That In continuation to the chronology as stated above and Paper Book submitted earlier containing submissions and case laws relied upon, the assessee hereby most humbly begs to submit as under- That as at present four Department Appeals viz. ITA Nos.- 1. 139/RPR/2019, 140/RPR/2019, 141/RPR/2019 and 142/RPR/2019 are pending for adjudication before the Hon’ble ITAT. That as the common issues are involved in all these present four Department Appeal therefore by this present submission in assessee requests to cover the issues involved in other three department appeals also for the purposes of adjudication. That the Honourable CIT Exemption vide its Order under 2. section 12AA dated 21.12.2018 has granted registration under section 12AA to the Assessee vide Registration Number AAAJM1070C.03.2018- 19.S.254 w.e.f. 01.04.2013. That the Ld. A.O.-ACIT (Exemption), Raipur has framed the assessment vide his Order dated 28.12.2018, not extending/providing benefit of amended provisions of Section 12A(2) inserted by Finance No.2 Act 2014 w.e.f. 01.10.2014 which as per law is available to the assessee as assessment proceedings for earlier year(s) were pending on the date of grant of Section 12AA Registration. That the same benefit to which the assessee is entitled for retrospective year(s) has been allowed upon first appeal preferred by the assessee by Commissioner of Income Tax (Appeals)-1, Jabalpur. That assessee hereby supports the Order passed by Ld. CIT(A)-1, Jabalpur.
3. That further as per wordings of the amended provisions of Section 12A(2) inserted by Finance Act, 2014 with effect from 01.10.2014 the benefit is available to the assessee. That the benefit of amended provisions of section 12A(2) is available for preceding assessment years on grant of 12AA registration in cases of pending assessment proceedings is also clearly established and supported by Explanatory Notes to the provisions of Finance (No. 2) Act, 2014 as given in CBDT Circular No. 01/2015 dated 21.01.2015. (Copy of Explanatory Circular submitted, earlier marked as Annexure-2 Pg. Nos. 16-19 of PB filed in the earlier hearing of the case ) That the assessee fulfils all conditions as stipulated in the 4. Explanatory Notes to the Provisions of Finance (No. 2) Act, 2014 as given in CBDT Circular No. 01/2015dated 21.01.2015m reference F.No. 142/ 13/2014-TPL which clearly clarifies that if the conditions are fulfilled benefit of 12AA Registration is available for earlier years, therefore the appeal of the department is liable to be dismissed. 5. That the Explanatory Notes Circular conditions and its adherence by the assessee point wise is hereby submitted as hereunder vide Point No. 6 submission in support of Point No. 4 submission submitted above for allowing of benefit of amended provision of Section 12A(2). Point No. 8.1 to 8.6 as given in Explanatory Notes-CBDT 6. Circular No. 01/2015 dated 21.01.2015 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. -8.2Non-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. (a) That Point No. 8.1 &8.2 of the Circular are self-explanatory. (b) That Point No. 8.3 requirements have been complied by the assessee as assessment was pending on the date of grant of Section 12AA Registration as submitted in Point No. 2 submission as above, further the objects of the assessee(created through state enactment) are the same as on date of grant of Section 12AA Registration and in the pending relevant case assessment year. (c) That Point No. 8.4 is self-explanatory regarding no action for reopening of the case. (d) That Point No. 8.5 requirements have also been complied upon by the assessee as assessee has applied only once seeking registration u/s 12AAon 10.11.2013 in FY 2013-14 seeking approval as per law w.e.f. 01.04.2013. That although assessee first application has been rejected by CIT-II, Jabalpur on 29.05.2014 but upon the appeal against the rejection before the Hon’ble ITAT, Hon’ble ITAT vide Order dated 09.11.2017 has remitted the matter back to CIT and CIT(Exemption) has granted registration vide order dated 21.12.2018 w.e.f. 01.04.2013 on the basis of assessee first application only. (e) That as the First Order of Rejection has been cancelled by Hon’ble ITAT therefore there is no rejection in the eyes of law as cancellation order of ITAT has attained finality, also after Order of the Hon’ble ITAT no party to the order can take its shelter as the same has become null and void (having no legal validity)with no consequence (deemed to have never been passed as cancelled by appellate authority) and the CIT (Exemption) has granted registration w.e.f. 01.04.2013 only as was requested by the assessee in its original first application made in FY 2013-14. That if the CIT (Exemption) has granted approval from any other subsequent date/year or on basis of another application other then original first application then only adverse view against the assessee can be taken. (f) That assessee in this context also rely upon the decision of the Coordinate bench of this Tribunal-ITAT Jaipur Bench (DB) passed ON 02.06.2016 in for AY 2007-08 in the case of M/s. Shyam Mandir Committee, Khatushyam Ji, District Sikar Vs. The ACIT, Circle, Sikar. That in the said case Trust applied for registration on 16.03.2009 (FY 2008-09) and upon appeal by the assessee before the Hon’ble ITAT (i.e. original assessee application has been rejected which is clearly inferred from the dates)Hon’ble ITAT vide Order dated 28.01.2010(FY 2009-10)has directed to grant registration to the appellant trust with effect from 1.4.2008 (FY 2008-09).Thus as per judgement delivered by Hon’ble ITAT in this case Rejection Order has been cancelled and approval has been granted from the date of Original Application clearly inferring thereby that Point No. 8.5 requirement of the Circular to Explanatory Notes have been complied with. That assessee places reliance upon the said case as it is identical to assessee case facts.
That assessee also places reliance upon the decision delivered by Honourable Amritsar Bench in case of Punjab Educational Society v/s ITO-2, Moga in ITA No. 459/ASR/2016 Order dated 20.11.2017 8. That assessee in continuation to the detailed submission (P.B. Pg. Nos.2-11) filed earlier place reliance on the said submissions along with case laws relied upon as under- (i) M/s. Shyam Mandir Committee, KhatushyamJi, District Sikar Vs. The ACIT, Circle, Sikar(Copy Enclosed) (ii) SreeSree Ramakrishna Samiti v/s DCIT-2, Siliguri (ITA No. 1685/2012 for A.Y. 2003-04 to 2008-09 decided by I.T.A.T., Kolkata, Date of decision- 09.10.2015(Copy submitted earlier vide PB Pg. Nos. 20-33) (iii) Punjab Educational Society v/s. ITO-2, Moga in ITA No.459/ASR/2016 Order dated 20.11.2017 (copy enclosed)
9. Thus, on basis of the above submitted departmental appeal on basis of facts as per law and judicial decisions in this context is liable to be dismissed.
Ld. AR of the assessee further drew our attention to the paper book at page No.18 para 8.3, which is the extraction of the explanatory notes to the provisions of the Finance (No.2) Act, 2014. The relevant clause 8 is 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 organisations. 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.
Ld. AR of the assessee further placed reliance and emphasis on para 8.3 of the above amendment brought w.e.f.1st October, 2014, which shows 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. It was the contention of the ld. AR that the AO was duly informed by the assessee that the assessee was granted registration u/s.12AA of the Act effective from 01.04.2013 and copy of the order of the ld. CIT(E) dated 21.12.2018 was also placed before the AO, however, the AO has rejected the contention of the assessee only on the ground that the registration u/s.12AA of the Act was not available with the assessee for the impugned assessment year i.e. the year under consideration in this appeal. Ld. AO has grossly disregarded the intention of the law which was brought in for the benefit of the assessee by way of amendment by Finance (No.2), Act, 2014. Ld. AR of the assessee relied upon the following cases laws :-
i) M/s Shyam Mandir Committee, order dated 02.06.2016 passed in for A.Y.2007-2008, wherein the Tribunal has held as under :- 5.4. We have heard the rival parties and perused the material available on record. In our view, it is admitted case that the assessee was incorporated in the year 1986 and thereafter has been continued to discharge its function as registered trust and was looking after the affairs of Khatu Shyamji. By virtue of order of the Tribunal dated 28/1/2010 the registration was granted with effect from 1.4.2008, however have held that the assessee, though was not registered and the application was not processed but the benefit of being the registered trust were required to be extended to the assessee u/s 11 & 12 of the IT Act. In view thereof, the assessee is required to be treated as registered trust with effect from 1.4.2007. Since we have already held that the assessee is required to be treated as registered trust w.e.f. 1.4.2007, therefore, in our view, if we read the second proviso to sub-section (2) of section 12A, then it is clear that the reopening u/s 147/148 is not permitted. For ready reference, we are reproducing herein below second proviso to sub-section (2) of section 12A :- 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: A bare reading of the above said provision though inserted with effect from 1.10.2014, in our view, clearly mandates that no reopening can be made on account of non registration of the trust. In view thereof, we hold that the reopening made by the AO u/s 147/148 of the Act was ill founded and was not in accordance with law. In view thereof this ground is decided in favour of the assessee and against the revenue. 5.5. Since we have held that the reopening under section 147/148 was bad in law, therefore, we do not find it appropriate to examine the other grounds mentioned by the assessee as the other grounds originates from reopening of the assessment proceedings. Since we have held that the reopening was bad in law, therefore, all the other grounds are also decided in favour of the assessee and against the revenue. ii) M/s Punjab Educational Society, order dated 20.11.2017, passed in wherein the Tribunal has held as under :- 7. We have given a thoughtful consideration to the aforesaid observations of the Tribunal and are persuaded to be in agreement with the view taken therein. We thus finding no reason to take a different view, thus, are of the considered view 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 Punjab Education Society, Moga Vs. ITO 13 ITA No. 459/ASR/2016 AY: 2011-12 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 of the CIT(A) and consequently delete the addition of Rs.34,31,521/- sustained by her. The Ground of appeal
No. 1 to 3 raised by the assessee before us is allowed in terms of our aforesaid observations.
12. We have considered the rival contentions, perused the material available on record and analysed the judicial pronouncements placed before us to define the contentions by the respective parties. On perusal of the order of the ld. CIT(A), wherein the decision on the issue was given in para 7.2.3 to 7.2.7 reads as under :- 3 DECISION: I have carefully considered the submission put forth & the documents furnished on behalf of the appellant, perused the facts of the case and the observation of the AO in the impugned assessment order and other material brought on record. The Appellant is an University created by way of a statute namely Maharishi Mahesh Yogi Vedic Vishwavidyalaya Adhiniyam 1995. The object of the University is providing education and promotion of research in Vedic learning and practises. The appellant claimed the benefit of section 11 and 12 of the LT Act. The CIT (Exemption) vide order dtd. 21.12.2018 granted the registration u/s 12AA to the appellant vide Registration Number AAAJM1070C. 03.2018- 19.S.254 w.e.f. 01.04.2013. The AO while framing the order dtd. 28.12.2018 has not granted the benefit of 12AA exemption order dtd. 21.12.2018. The appellant claimed the benefit of amended provisions of section 12A (2) inserted by finance no. 2 act, 2014 with effect from 01.10.2014 to the appellant with retrospective effect for which the appellant is eligible.
4. The AO has brought entire surplus/receipts of the appellant to tax without extending benefits of section 11 and 12 on the pretext that the appellant is not having registration u/s 12AA of the Act in the A.Y. 2009-10. The A.O. has not formed any adverse view about the genuineness of the activities of the appellant and has accepted the charitable and religious activities on the basis of documents and financial statements submitted during the assessment proceedings. The only reason for not extending benefits of section 11 and 12 by the A.O. is that exemption has been granted w.e.f. 01.04.2013. The AO has not considered the fact that retrospective benefit is available for availing the benefits of section 11 and 12 as per amended provisions of law i.e. as per provisions of Section 12A(2). The relevant amendment brought in Section 12A by Finance Act, 2014 with effect from 01.10.2014 by way of insertion of first proviso to Section 12A(2) of the Act which is reproduced below.- Section 12 A (1) 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. 7.2.5. The benefit of amended provisions Section 12A (2) inserted by Finance No.2 Act 2014 w.e.f. 01.10.2014 has not been given in the assessment order passed. The section states:
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 for which assessment proceedings are pending before the Assessing Officer as on the date of such registration. That the section also specifies- 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. 7.2.6. The benefit of amended provision of Section 12A(2) inserted by Finance No.2 Act 2014 w.e.f. 01.10.2014 is available for retrospective years, that benefits are available to the appellant for claim of deduction/exemption under section 11 and 12 as per law and judicial pronouncements. The following judicial pronouncement were relied upon for the purpose of extending benefit of amended provision of section 12A (2) for retrospective year(s).
Sree Sree Ramakrishna Samiti v/s DCIT-2, Siliquri (ITA No. 1685/2012 for A.Y. 2003-04 to 2008-09 decided by I.T.A.T., Kolkata, Date of decision- 09.10.2015. That the Honhle Tribunal has observed-" 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.” "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. “The benefit of retrospective exemption should be available on the date of registration as all the assessments were pending as shown above. 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 and the society is eligible to claim exemption u/s 11 of the Act.
The same view as in case of Sree Sree Ramakrishna Samiti has also been upheld in the Hon hie Tribunal decisions in the case of- Shree Halar Deshodhharak Vifammrusurji Smarak Trust v/s ITO (Exemption), Bhavnagar in decided by ITAT, Ahmedabad Bench, Date of decision- 11.10.2017. That further the retrospective benefit of Section 12A(2) for previous (earlier) year(s) has also been extended where no assessment proceedings were pending on the date of grant of registration u/s 12AA by the Hon hie Commissioner of Income Tax (Appeals) and confirmed by ITAT in favour of the assessee in the departmental appeal. Case law /S in this context: D.C.LT.(E), Circle-2, Kolkata v/s Karmapa Charitable Trust in ITA No. 953/Kol/2015 decided by I.T.A.T., Kolkata Bench, Date of decision- 10.01.2018. 7.2.7. The A.O. has not allowed the benefit of amended provision of Section 12A(2) of the Income Tax Act, 1961 which is available for retrospective years should be allowed in the present Assessment Year. The insertion of the proviso to section 12A(2) of the Act has to be construed as retrospective in operation and the society is eligible to claim exemption u/s 11 of the Act. Therefore, the AO is directed to compute the income of the appellant as per section 11& 12 after taking into the consideration, exemption u/s 12AA of the I.T. Act. Therefore, the appeal on these grounds is Allowed.
On perusal of the observations of the ld. CIT(A), admittedly the assessee has made an application for grant of registration u/s.12AA of the Act, which was refused by the ld. CIT-II, Jabalpur vide its order dated 29.05.2014 giving the reason that the applicant is generating huge surpluses year after year even after considering the deficits as claimed by the assessee and managing its affairs with a motive to generate huge profits and the surplus/profits are not at all incidental to the running of a charitable institute as claimed by the assessee because if they are incidental, they must not be in such huge form and must not occur year after year. The reason given by the CIT-II, Jabalpur while refusing the application of the assessee-university was disregarded by the coordinate bench of the Tribunal in its order dated 09.11.2017 passed in wherein the Tribunal has observed that the rejection of application u/s.12AA was without considering the relevant facts, financial statements, gazette notification of the State Government and examining the activities carried out by the assessee in detail. Therefore, the appeal of the assessee was allowed and the matter was remitted back to the file of the CIT for de novo adjudication.
On the basis of the order of the Jabalpur Bench of the Tribunal, ld. CIT(E), Bhopal granted registration to the assessee vide its order dated 21.12.2018. In view of these facts, department’s contention that proviso to amended provisions of Section 12AA(2) of the Act 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.”, cannot be accepted in the present case since the refusal of registration proposed by the ld. CIT-II Jabalpur was vacated by the ITAT by remitting the matter back to the CIT for de novo adjudication. The Hon’ble High Court of Madhya Pradesh has also directed that the final assessment order shall be passed only after the decision is taken by the appellate tribunal in the proceedings challenging non-grant of registration u/s.12AA of the Act depending on the order passed by the appellate tribunal. In the present case, since the matter was remanded back to the file of CIT-II by the Tribunal and finally the CIT(E), Bhopal, who in turn has granted registration u/s.12AA of the Act to the assessee based on its original application dated 18.11.2013, therefore, the refusal of the grant of registration u/s.12AA of the Act became non est and, therefore, the last limb of amended provision of the beneficial proviso shall not apply in the case of a trust or institution which was refused registration or the registration granted to it was cancelled at any time under section 12AA of the Act, which is available for retrospective years, subject to satisfaction of all other conditions of section 12A(2) of the Act.
Ld. CIT(A) has rightly observed that The A.O. has not allowed the benefit of amended provision of Section 12A(2) of the Income Tax Act, 1961 which is available for retrospective years should be allowed in the present Assessment Year. The insertion of the proviso to section 12A(2) of the Act has to be construed as retrospective in operation and the society is eligible to claim exemption u/s 11 of the Act. however, It was also the fact coming out from the perusal of the assessment order, that the amendment brought in section 12A(2) by Finance (No.2) Act 2014 was neither discussed nor examined by the Ld AO, more over the same contention was not even raised by the assessee before the AO, therefore following the principle of natural justice the allowability of exemption in terms of amendment in 2014 needs to be looked into by the AO in the present case in terms of our observations herein above, accordingly, we restore the matter to the file of Ld AO with the direction to consider applicability of the amendment in provisions of section 12A(2) by Finance (No.2) Act 2014