Leh Nutrition Project Vs DCIT (ITAT Amritsar)
Admittedly, the appellant Trust is continuing the charitable work in Leh region in India and duly granted registration u/s 12AA(1) of the Act, 18-03-11 (APB, Pg.-498). The Ld. AR argued that that the appellant trust having been granted registration u/s 12A vide order dated 21/07/11, therefore, the benefit of such exemption should be granted for the year under consideration also, in view of the amendment in section 12A(2) vide finance Act, 2014.
The ITAT, Pune Bench, in the case of Sansthan Shree Eknath Maharaj Vishwastha Mandal vs. ITO, ITA No. 288/Pun/2020, vide order pronouncement on 03-02-22, vide para 4 and 5, on similar facts observed as under:
4. “I have heard both the sides in Virtual Court and gone through the relevant material on record. There is no dispute on the fact that the assessee filed its return of income on 17.01.2017 for the year under consideration. The approval was granted by the ld. CIT(E) u/s 12AA on 16.05.2017. At this stage, it is relevant to take note of the mandate of sub-section (2) of section 12A granting benefit of exemption to the years prior to the grant of registration, which provides through the second proviso that : `where registration has been granted to the trust or institution under section 12AA or section 12AB, 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 the date of such registration and the objects and activities of such trust or institution remain the same for such preceding assessment year.~ A bare perusal of the proviso amply transpires that where the subsequent registration has been granted u/s 12AA, then the benefit of such registration will also be conferred to earlier years for which assessment proceedings are pending before the AO as on the date of such registration. The crucial words used in the second proviso are the pendency of assessment proceedings. To put it simply, if the assessment proceedings are pending before the AO when the registration is granted by CIT(E), the registration so granted will also have effect and the AO will be obliged to grant exemption u/s 11 in respect of such assessment year. The authorities below have taken note of the mandate of the second proviso but interpreted the term „assessment proceedings LI as commencing with the issuance of notice u/s 143(2) of the Act. That is the raison dieter for denying the benefit of exemption in the extant case on the premise that notice u/s 143(2) was issued on 20.09.2017 and by that time the registration had already been granted by the ld. CIT(E) on 16.5.201 7. In my opinion, the connotation of commencement, continuation and termination of `assessment proceedings is fairly settled by authoritative pronouncement from the highest Court of the land in Auto & Metal Engineers And Ors. Vs. Union of India & Ors. (1998) 229 ITR 399 (SC) in which it has been held by the Hon LI ble Summit Court that the process of assessment commences with the filing of return or by issuance by the AO of notice to file a return and it culminates with the issuance of notice of demand u/s 156 of the Act. It is thus, manifest that the assessment proceedings commence with the filing of return and not when notice is issued for the first time u/s 143(2). Issuance of such a notice and passing of assessment order are parts of entire assessment proceedings which commences with the filing of return.
5. Adverting to the facts of extant case, I find that the assessee filed its return for the year under consideration on 17.01.2017. The approval was granted by the ld. CIT(E) u/s 12AA on 16.05.2017. It is, ergo, glaringly patent that the assessment proceedings for the year under consideration, which commenced with the filing of return on 17.01.2017, were pending on the date of grant of registration by the ld. CIT(E) on 16.05.201 7. I, therefore, hold, in principle, that the assessee is eligible for exemption u/s 11 of the Act.”
On similar facts, the coordinate Bench in the case of ‘Dera Bhai Gurdas Ji Udasin Trust (Regd.) Mansa vs. ITO’, (Supra) directed the Assessing Officer to grant the benefit of Section 11 & 12 to the appellant.
FULL TEXT OF THE ORDER OF ITAT AMRITSAR
This appeal has been filed by the assessee against the impugned order dated 26.03.2014 passed by the Ld. Commissioner of Income Tax (Appeals), Jammu in respect of the Assessment Year 201 0-11.
2. The assessee has raised the following amended grounds of appeal:
“1. That the Id AO wrongly made the assessment u/s 143(3), as well as, addition of Rs. 1,13,26,754 under the head income from other sources, without rejecting the books of accounts of the assessee and also treated the appellant as Public Limited Company.
2. That the Id AO wrongly made the addition of Rs. 1,13,26,754 on the basis of Audited Receipts & Payments Account by ignoring that Receipts & Payments A/c does not show any profits & is a summarized Cash and Bank book for a given period.
3. That both the Id A.O & CIT(A) has to make correct assessment and wrongly ignored that appellant is a NGO, maintaining “Receipts & Payment A/c” and working as “Postman” for different projects with specific grants having execution work for many years, to come, hence there is no surplus of Rs.26, 75,553 available for taxation and also not creating any assets on its own name or doing any revenue expenditure, hence there is no surplus of Rs.26, 75,553 available for Taxation.
4. That the Id. CIT(A) has blown Hot & Cold, as in one hand, he is passing benefit by taxing Receipts, after allowing all Expenditure, On other hand, he is not allowing benefit of specific grants / donations received for work to be executed in many years, to come ahead, as such grants can neither form part of Corpus nor Income of appellant.
5. That the Id CIT(A) has wrongly ignored the following certificates indicating the amount remained unspent in the Receipts & Payments A/c, which will be adjusted towards the grants-in-aid payable in the next A. Y. 2011-12 and shown as Closing Balance of cash-in-hand & Bank and cannot be part of Income of the appellant and is more than the surplus calculated by A. O = Rs.26, 75,553 :-
