Commissioner of Income-tax (Exemption), Lucknow v. Shiv Kumar Sumitra Devi Smarak Shikshan Sansthan
[Citation -2019-LL-0806-68]

Citation 2019-LL-0806-68
Appellant Name Commissioner of Income-tax (Exemption), Lucknow
Respondent Name Shiv Kumar Sumitra Devi Smarak Shikshan Sansthan
Court HIGH COURT OF ALLAHABAD AT LUCKNOW
Relevant Act Income-tax
Date of Order 06/08/2019
Assessment Year 2011-12
Judgment View Judgment
Keyword Tags application for registration • benefit of registration • eligible for exemption • registration of trust • benefit of exemption • retrospective applicability
Bot Summary: Learned counsel appearing for the revenue submits that benefit of Section 11 and 12 of the Income Tax Act, 1961 has been given to the assessee for the assessment year prior to the application for registration of the Trust under Section 12 AA, though not provided and permissible. Coming to the facts of the case, it is stated that for the assessment year 2011-12, the benefit of section 11 and 12 has been given to the assessee through application for registration under Section 12 AA of the Act, 1961, was submitted in the assessment year 2015-16. Section 12 A of the Act, 1961 provide that whenever application has been made for registration of trust or institution is made under Section 12AA of the Act on or after first date of 2007, the provision of Section 11 and 12 of the Act, 1961 shall apply in relation to income of such Trust or Institution from the assessment year immediately following the financial year in which application is made. The proviso provides that if registration has been given to the Trust or the Institution under Section 12 AA of the Act, 1961, then provisions of Section 11 12 of the Act, 1961 shall apply in respect of any income derived from the property held under the Trust or the institution for any assessment year proceeding, for which assessment is pending before the Assessing Authority as on the date of registration. Section 12A extends benefit of exemption under Section 11 12 of the Act at the first instance to the cases referred under sub- section 1 of Section 12 A. Sub-section 2 of section 12 A extends benefit even when application for registration of Trust or Institution has been made on or after first day of June 2007. If the benefit of Section 11 and 12 is extended for the assessment year 2011-12, despite submission of the application for registration on 15.12.2014, it would be in contravention of sub-section 2 of Section 12. If for one or the other reason, the proceedings in reference to the assessment years 1998-99 remains pending and the application for registration under Section 12AA of the Act, 1961 is filed in the year 2014-15 followed by registration, if the proviso is applied, then benefit of Section 11 and 12 of the Act, 1961 would be given to the Trust or the Institution even for the year 1998- 99, though the legislatures have not provided such arrangement or to extend the benefit in such cases.


INCOME TAX APPEAL No. - 11 of 2019 Appellant :- Commissioner Of Income Tax (Exemption) Lucknow Respondent :- M/S Shiv Kumar Sumitra Devi Smarak Shikshan Sansthan Counsel for Appellant :- Manish Misra Counsel for Respondent :- Anand Prakash Sinha Hon'ble Munishwar Nath Bhandari,J. Hon'ble Alok Mathur,J. 1. Heard Sri Manish Misra, learned counsel for appellant as well as Sri Anand Prakash Sinha, learned counsel representing respondent. 2. This appeal has been preferred under Section 260-A of Income Tax Act- 1961. Challenge has been made to order dated 26.11.2018 passed by Learned Income Tax Appellate Tribunal (hereinafter referred to as "the Tribunal") . 3. appeal was admitted by this Court on following substantial questions of law, which are quoted for ready reference:- 1. Whether Income Tax Appellate Tribunal was justified in allowing retrospective coverage to assessee U/s 11 and 12 of Act, 1961 by holding that appellate proceeding can be regarded as assessment proceeding ? 2. Whether Income Tax Appellate Tribunal has rightly applied proviso of Sec. 12A (2) for A.Y. 2011-12 in case of assessee when admittedly assessee got registration U/s 12AA from A.Y. 15-16 ? 3. Whether Income Tax Appellate Tribunal was justified in holding that assessee is eligible for exemption U/s 11 of 2 Act even when assessee was not registered U/s 12AA of Act at time of passing of assessment order? 4. Learned counsel appearing for revenue submits that benefit of Section 11 and 12 of Income Tax Act, 1961 (hereinafter referred to as "the Act, 1961") has been given to assessee for assessment year prior to application for registration of Trust under Section 12 AA, though not provided and permissible. 5. Tribunal, has extended benefit of Section 11 and 12 of Act, 1961 to assessee by taking erroneous interpretation of proviso to Section 12A(2) of Act, 1961. 6. Coming to facts of case, it is stated that for assessment year 2011-12, benefit of section 11 and 12 has been given to assessee through application for registration under Section 12 AA of Act, 1961, was submitted in assessment year 2015-16. It is by taking erroneous interpretation of proviso to Section 12 A(2) of Act, 1961, ignoring main provision. It is submitted that benefit of exemption under Section 11 and 12 of Act, 1961 is not permissible to assessee for assessment prior to date of application for registration of Trust. Tribunal has extended benefit on ground that assessment for year 2011- 12 was pending either before Appellate Tribunal. 7. Section 12 A(2) of Act, 1961 permits benefits of exemption in following financial year to date of application for registration and not for previous year. 8. Learned Tribunal has ignored main provision of Section 12 A(2) of Act, 1961, while passing order and accordingly substantial question of law was framed in reference to it. It is well settled that substantive provision cannot be nullified by proviso. By virtue of order of Tribunal, substantive provision of 3 Section 12A (2) of Act, 1961 has been nullified by giving erroneous interpretation to proviso appended to it. prayer is accordingly to set-aside order of Tribunal while allowing appeal. 9. Learned counsel for assessee has contest appeal preferred by Revenue. They have supported order passed by Tribunal. It is submitted that pendency of assessment remains not only when it is pending with Assessing Officer, but even before Tribunal. In view of above and taking note of fact that appeal was pending for assessment year 2011-12 while application for registration was accepted in favour of assessee, thus benefit of exemption under Section 11 and 12 of Act, 1961 has rightly been allowed by Tribunal. 10. Reference of judgment of Gujarat High Court in case of Commissioner of Income-Tax Vs. Mayur Foundation, reported in (2005) 194 CTR Gujarat 197 has been given. It is to demonstrate meaning of word pendency of assessment . It has been held that assessment proceedings remain pending till appeal is heard and disposed of by Tribunal and accordingly interpretation of proviso appended to Section 12A(2) of Act, 1961 has been given by Tribunal. prayer is accordingly to maintain order passed by Tribunal and accordingly appeal be dismissed. 11. We have heard rival submissions of parties and perused record. 12. substantial question of law before us is in reference of Section 12 of Act, 1961 thus it is quoted herein below for ready reference:- "12A. [[1] provisions of section 11 and section 12 shall not apply in relation to income of any trust 4 or institution unless following conditions are fulfilled, namely: (a) person in receipt of income has made application for registration of trust or institution in prescribed form and in prescribed manner to [Principal Commissioner or Commissioner] before 1st day of July, 1973, or before expiry of period of one year from date of creation of trust or establishment of institution whichever is later and such trust or institution is registered under section 12AA: Provided that where application for registration of trust or institution is made after expiry of period aforesaid, provisions of section 11 and section 12 shall apply in relation to income of such trust or institution, (i) from date of creation of trust or establishment of institution if [Principal Commissioner or Commissioner] is, for reasons to be recorded in writing, satisfied that person in receipt of income was prevented from making application before expiry of period aforesaid for sufficient reasons; (ii) from 1st day of financial year in which application is made, if [Principal Commissioner or Commissioner] is not so satisfied: [Provided further that provisions of this clause shall not apply in relation to any application made on or after 1st day of June, 2007;] [(aa) person in receipt of income has made application for registration of trust or institution on or after 1st day of June, 2007 in prescribed form and manner to [Principal Commissioner or Commissioner] and such trust or institution is registered under section 12AA;] 5 [(ab) person in receipt of income has made application for registration of trust or institution, in case where trust or institution has been granted registration under section 12AA or has obtained registration at any time under section 12A [as it stood before its amendment by Finance (No. 2) Act, 1996 (33 of 1996)], and, subsequently, it has adopted or undertaken modifications of objects which do not conform to conditions of registration, in prescribed form and manner, within period of thirty days from date of said adoption or modification, to Principal Commissioner or Commissioner and such trust or institution is registered under section 12AA;] (b) where total income of trust or institution as computed under this Act without giving effect to [the provisions of section 11 and section 12 exceeds maximum amount which is not chargeable to income-tax in any previous year], accounts of trust or institution for that year have been audited by accountant as defined in Explanation below sub- section (2) of section 288 and person in receipt of income furnishes along with return of income for relevant assessment year report of such audit in prescribed form duly signed and verified by such accountant and setting forth such particulars as may be prescribed. (ba) person in receipt of income has furnished return of income for previous year in accordance with provisions of sub-section (4A) of section 139, within time allowed under that section.] (c)[Omitted by Finance Act, 2002, with effect from 1st April, 2002.] [(2) Where application has been made on or after 1st day of June, 2007, provisions of sections 11 and 12 shall apply in relation to income of such trust or institution from assessment year immediately 6 following financial year in which such application is made.] [Provided that where registration has been granted to trust or institution under section 12AA, then, provisions of sections 11 and 12 shall apply in respect of any income derived from property held under trust of any assessment year preceding aforesaid assessment year, for which assessment proceedings are pending before Assessing Officer as on date of such registration and objects and activities of such trust or institution remain same for such preceding assessment year: Provided further that no action under section 147 shall be taken by Assessing Officer in case of such trust or institution for any assessment year preceding aforesaid assessment year only for non-registration of such trust or institution for said assessment year: Provided also that provisions contained in first and second proviso shall not apply in case of any trust or institution which was refused registration or registration granted to it was cancelled at any time under section 12AA.]" 13. We need to consider Section 12 (2) of Act, 1961 along with proviso to determine issue raised before us. Section 12 (2) of Act, 1961 provide that whenever application has been made for registration of trust or institution is made under Section 12AA of Act on or after first date of 2007, provision of Section 11 and 12 of Act, 1961 shall apply in relation to income of such Trust or Institution from assessment year immediately following financial year in which application is made. If we go with provisions of Section 12 A(2) of Act, 1961, question raised before us can be answered holding that benefit of Sections 11 & 12 of Act, 1961 can be given from following financial year in 7 which application for registration is made and registration was subsequently granted. 14. If facts of this case are taken into consideration then assessee made application for registration on 15.12.2014 i.e. in assessment year 2015-16. assessment in question is of year 2011-12. In view of above, whether subsequent registration pursuant to application dated 15.12.2014 would make assessee entitled for benefit of Section 11 & 12. It is in respect of assessment year prior to date of application. It is in circumstances that registration was finally given on 08.06.2015. We are required to consider proviso below sub-Section 2 of Section 12 of Act, 1961. proviso provides that if registration has been given to Trust or Institution under Section 12 AA of Act, 1961, then provisions of Section 11 & 12 of Act, 1961 shall apply in respect of any income derived from property held under Trust or institution for any assessment year proceeding, for which assessment is pending before Assessing Authority as on date of registration. Tribunal has given interpretation to proviso to hold that irrespective of date of application, benefit of Section 11 & 12 of Act, 1961 would be available to assessee retrospectively, if assessment proceedings were pending and pendency of such proceedings may be not only before Assessing Office, but even before Tribunal. 15. According to us, interpretation of proviso has been given in ignorance of main provision of Section 12A(2) of Act, 1961. Whenever interpretation of statutes has to be given it should be after making harmonious construction of statute. For purpose of proper interpretation of Section 12A of Act, 1961, Tribunal was required to make interpretation after taking into consideration 8 main provision along with proviso and not by giving meaning to proviso in ignorance of substantive provision. 16. Tribunal has even ignored basic principle of law in giving interpretation in charging provisions, benefit is to be given to assessee but same principle is not applicable for exemption notification or exemption clause, where benefit of ambiguity must be given to Revenue/State. It is also that burden to prove applicability of exemption would be on assessee that it comes squarely within parameters of exemption notification or exemption clause. Tribunal was required to make distinction between charging provision where benefit of ambiguity is given to assessee and exemption notification or clause where interpretation is to be given in form of Revenue. issue aforesaid has been recently considered and decided by Apex Court in Case of Commissioner of Customs (Import) Mumbai Vs. Dilip Kumar and Company and Others, 2018 (9) SCC 1. 17. Section 12A extends benefit of exemption under Section 11 & 12 of Act at first instance to cases referred under sub- section 1 of Section 12 A. Sub-section 2 of section 12 extends benefit even when application for registration of Trust or Institution has been made on or after first day of June 2007. It would however be in relation to income of Trust or Institution from assessment year immediately following financial year in which application for registration was made. If simple meaning of provision of section 12A(2) is to be given, it governs those cases where application was moved for registration after first day of June, 2007. benefit of Section 11 and 12 would be extended from assessment year immediately following financial year in which application was given. In instant case application for registration was given on 15.12.2014 i.e. in financial year 2014- 9 15. On registration of Trust, benefit under Section 11 and 12 would be available to assessee from assessment year following financial year in which application was given and not any previous year. benefit of registration could not have been extended for assessment year 2011-12, even if matter was pending before Tribunal when application for registration was submitted on 15.12.2014. 18. proviso to sub-section 2 applies in given circumstances, but cannot by making main provision of section 12 as redundant. In instant case, application for registration was then submitted on 15.12.2014. registration was given on 08.06.2015. Since registration has been given on 08.06.2015, benefit of Section 11 & 12 would be available for following financial year in which application was made if assessment proceedings for relevant assessment year was pending till date of registration. It cannot be for assessment year 2011-12 due to pendency of appeal before Tribunal. If benefit of Section 11 and 12 is extended for assessment year 2011-12, despite submission of application for registration on 15.12.2014, it would be in contravention of sub-section 2 of Section 12. By virtue of interpretation taken by Tribunal main provision has been made redundant on facts of case, though not permissible. proviso has to be read along with main proviso and not in isolation and contradiction. 19. Tribunal even ignored fact that proviso not only require registration of Trust or Institution while assessment proceedings are pending, but it refers to assessment proceedings before assessing authority and not elsewhere. In common parlance, whenever matter is pending before Tribunal in appeal, considered to be pendency of assessment proceedings. aforesaid principle would be applicable in instant case is another 10 question because proviso qualifies not only pendency of assessment proceedings, but should before Assessing Officer not else where, if in proviso words pendency of assessment proceedings , would have been used then pendency of appeal against assessment could have been considered to be pendency of assessment proceedings, but in instant case words used are pendency of assessment proceedings before Assessing Officer . assessment proceedings of year 2011-12 was not pending before Assessing Officer, but before Tribunal. observation aforesaid is relevant on facts of this case. This Court has otherwise given proper interpretation to substantive provision as well as proviso. 20. We have further gone through instruction of CBDT and find it to be contrary to proviso to Section 12 of Act, 1961. instruction of CBDT cannot be forfeited, if it is against statutory provisions. provision is not to extend benefit in case assessment is pending but it should be before Assessing Officer. In that case, pendency of assessment can be treated to be pending before Assessing Officer though pending before Tribunal in Appeal. It cannot be in those cases where provision is very specific, because proviso not only refers to pendency of assessment when it is pending before Assessing Officer. In few cases, assessment proceedings is considered to be pending before Tribunal due to pendency of appeal but it is applicable in those cases where words used are pendency of assessment proceedings and not with words pending before Assessing Officer . interpretation therein is in reference to words pendency of assessment and not in reference to pendency of assessment before Assessment Officer. instruction of CBDT can not be applied if seems counter statue. 11 21. Accordingly judgment of Gujarat High Court in Commissioner of Income-Tax Vs. Mayur Foundation (supra), would not apply. view expressed therein cannot be applied to facts of this case, otherwise anomalous situation may emerge in given case where for one or other reason assessment proceedings before Tribunal remain pending for years together or on remand or for any other reason it comes before Assessing Officer and such cases also subsequent application for registration and acceptance would result to extend benefit of Section 11 and 12 creating anomalous position if not meant for. This was not object sought to be achieved by legislature. If for one or other reason, proceedings in reference to assessment years 1998-99 remains pending and application for registration under Section 12AA of Act, 1961 is filed in year 2014-15 followed by registration, if proviso is applied, then benefit of Section 11 and 12 of Act, 1961 would be given to Trust or Institution even for year 1998- 99, though legislatures have not provided such arrangement or to extend benefit in such cases. provision is candid to govern only those cases where application for registration is submitted followed by registration, to extend benefit to assessee from following financial year of date of application. Taking aforesaid into mind, we find reasons to allow appeal preferred by revenue and substantial questions of law framed herein above are answered in favour of Revenue and thereby we set-aside order passed by Tribunal. 22. appeal is accordingly allowed with aforesaid. Order Date :- 6.8.2019 A.K. Singh Commissioner of Income-tax (Exemption), Lucknow v. Shiv Kumar Sumitra Devi Smarak Shikshan Sansthan
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