Supreme Court Dismisses SLP as Withdrawn in Trust’s Section 11 and 12 Exemption Dispute

The Supreme Court of India dismissed as withdrawn the Special Leave Petition filed by Shiv Kumar Sumitra Devi Smarak Shikshan Sansthan after counsel for the petitioner informed the Court that instructions had been received to withdraw the petition and that I.A. No. 57475/2021 had been filed accordingly. The Supreme Court’s order contains no independent examination of the merits, statutory interpretation or reasoning on the underlying income-tax dispute. The withdrawal leaves the related Allahabad High Court judgment undisturbed, without constituting an express affirmation of its reasoning by the Supreme Court.

The underlying dispute concerned the assessee institution’s entitlement to exemption under Sections 11 and 12 of the Income-tax Act, 1961, for Assessment Year 2011-12, despite having applied for registration under Section 12AA only on 15 December 2014 and having obtained registration on 8 June 2015. The Income Tax Appellate Tribunal had allowed the exemption on the ground that the assessment proceedings for AY 2011-12 remained pending in appeal when registration was granted. The Revenue challenged this interpretation before the Allahabad High Court under Section 260A, contending that the Tribunal had incorrectly extended the benefit of the proviso to Section 12A(2) to an earlier assessment year.

The Allahabad High Court held that Section 12A(2) and its proviso must be interpreted harmoniously. It observed that the proviso expressly refers to assessment proceedings pending before the Assessing Officer on the date of registration, whereas the assessee’s proceedings were pending before the Tribunal. The High Court distinguished Commissioner of Income-Tax Vs. Mayur Foundation, (2005) 194 CTR (Guj) 197, and relied on Commissioner of Customs (Import) Vs. Dilip Kumar and Company, (2018) 9 SCC 1, concerning strict interpretation of exemption provisions. It concluded that the Tribunal had incorrectly extended retrospective exemption for AY 2011-12, answered the substantial questions of law in favour of the Revenue, set aside the Tribunal’s order and allowed the Revenue’s appeal. The subsequent Supreme Court order records only withdrawal of the SLP.

Cases Discussed

1. Commissioner of Income-Tax Vs. Mayur Foundation, (2005) 194 CTR (Guj) 197 — Gujarat High Court. Cited by the assessee concerning the continuation of assessment proceedings during appeal. Distinguished by the Allahabad High Court because Section 12A(2)’s proviso specifically refers to proceedings pending before the Assessing Officer.

2. Commissioner of Customs (Import), Mumbai Vs. Dilip Kumar and Company and Others, (2018) 9 SCC 1 — Supreme Court. Relied upon by the Allahabad High Court concerning the interpretation of exemption provisions and the burden of establishing eligibility.