Section 11 & 12 of the income tax Act, 1961 — Trust — Registration of trust — On registration of the Trust, benefit under Section 11 and 12 would be available to the assessee from the assessment year following the financial year in which application was given and not any previous year.[2019] 51 ITCD 90 (ALL)
Facts: For the A.Y. 2011-12, the benefit of section 11 and 12 has been given to the assessee through application for registration under Section 12AA was submitted in the assessment year 2015-16. It is by taking erroneous interpretation of the proviso to Section 12A(2), ignoring the main provision. It is submitted that the benefit of exemption under Section 11 and 12 is not permissible to an assessee for the assessment prior to the date of application for registration of the Trust. The Tribunal has extended the benefit on the ground that assessment for the year 2011-12 was pending either before the Appellate Tribunal. Learned Tribunal has ignored the main provision of Section 12A(2) while passing the order and accordingly the substantial question of law"Whether the Income Tax Appellate Tribunal was justified in allowing retrospective coverage to the assessee u/s 11 and 12 of the Act, 1961 by holding that the appellate proceeding can be regarded as assessment proceeding ?"
Held, that in the instant case, the application for registration was then submitted on 15.12.2014. The registration was given on 08.06.2015. Since registration has been given on 08.06.2015, the benefit of Section 11 & 12 would be available for the following financial year in which application was made if the assessment proceedings for the relevant assessment year was pending till the date of registration. It cannot be for the assessment year 2011-12 due to pendency of the appeal before the Tribunal. 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 Section12. By virtue of the interpretation taken by the Tribunal the main provision has been made redundant on the facts of the case, though not permissible. The proviso has to be read along with main proviso and not in isolation and contradiction. The Tribunal even ignored the fact that proviso not only require registration of the Trust or the Institution while the assessment proceedings are pending, but it refers to assessment proceedings before the assessing authority and not elsewhere. In a common parlance, whenever matter is pending before the Tribunal in appeal, considered to be pendency of the assessment proceedings. The aforesaid principle would be applicable in the instant case is another question because proviso qualifies not only pendency of the assessment proceedings, but should before the Assessing Officer not else where, if in the proviso words “pendency of the assessment proceedings”, would have been used then pendency of the appeal against the assessment could have been considered to be pendency of the assessment proceedings, but in the instant case the words used are “pendency of the assessment proceedings before the Assessing Officer”. The assessment proceedings of the year 2011-12 was not pending before the Assessing Officer, but before the Tribunal. The observation aforesaid is relevant on the facts of this case. This Court has otherwise given proper interpretation to the substantive provision as well as the proviso. 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 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. The provision is candid to govern only those cases where the application for registration is submitted followed by registration, to extend the benefit to the assessee from the following financial year of the date of application. Taking aforesaid into mind, we find reasons to allow the appeal preferred by the revenue and the substantial questions of law framed herein above are answered in favour of the Revenue and thereby we set-aside the order passed by the Tribunal.