ORDER

Ravish Sood, Judicial Member - The present appeal is directed against the order passed by the CIT(A)-4, Ludhiana, dated 30.06.2016, which in itself arises from the order passed by the A.O under Sec. 143(3) of the Income Tax Act, 1961, (for short 'Act'), dated 30.08.2013. The assessee assailing the order of the CIT (A) had raised before us the following grounds of appeal:—

2. Briefly stated, the facts of the case are that the assessee which is an educational institution had filed its return of income for A.Y 2011-12 on 29.09.2011, declaring total income at Rs. Nil. The return of income filed by the assessee was processed as such under Sec. 143(1) of the 'Act' on 21.08.2012. The case of the assessee was thereafter taken up for scrutiny assessment and a notice under Sec. 143(2), dated 27.09.2012 was issued to the assessee.

3. That during the course of the assessment proceedings it was observed by the A.O that the assessee society during the year under consideration had shown excess of income over expenditure of Rs.34,31,521/-, which was transferred to its Reserve and Surplus account. The A.O observing that the gross receipts of the assessee society, which was neither registered under Sec. 12A nor approved under Sec. 10(23C)(vi) of the 'Act' had during the period 01.04.2010 to 31.03.2011 relevant to A.Y 2011-12 exceeded 1 crore, therefore, called upon the assessee to explain as to why the same may not be brought to tax in its hands. The main thrust of the assessee in its reply to the aforesaid query was that as it was registered under Sec. 12AA(1)(b)(i) of the Income tax 'Act', 1961 with the competent authority, vide the latters order No. CIT III/JB/LDH/12A/292/2011-12, dated 03.04.2012 with effect from AY 2012-13, therefore, it being a charitable society which was running an educational institution, thus, could not be denied exemption for the reason that its gross receipts had exceeded Rs.1 crore in A.Y 2011-12. It was further averred that as the assessee society had applied its income purely for the accomplishment of its objects as per Sec. 11(5), therefore, its income could not be subjected to tax. However, the A.O not finding favour with the contentions of the assessee, therein being of the view that as the assessee society had neither applied for the grant of registration under Sec. 12AA with the prescribed authority i.e. Commissioner of Income Tax, nor was approved under Sec. 10(23C)(vi) or (via) by the Chief Commissioner of Income tax in A.Y 2011-12, therefore, did not find favour with the explanation of the assessee and made an addition of Rs.34,31,521/- to its returned income.

4. Aggrieved, the assessee carried the matter in appeal before the CIT(A). The assessee by way of an additional ground of appeal averred before the CIT(A) that as the assessee society was granted registration under Sec. 12AA by the Commissioner of Income tax- III, Ludhiana on 03.04.2012, and objects and activities of the assessee society during the year under consideration, i.e. AY: 2011- 12 were the same as were there before the A.O at the time of grant of registration, therefore, as per the amended provisions of Sec. 12A/12AA of the Income tax, 1961, as were made available on the statute vide the Finance Act, 2014 with effect from 1st October, 2014, the addition of Rs.34,31,521/- made by the A.O was liable to be deleted. The assessee submitted before the CIT(A) that the first proviso to Sec. 12A(2) was made available on the statute in order to mitigate the hardships cause to the charitable institutions. It was submitted by the assessee that where registration under Sec. 12AA was granted to an assessee under Sec. 12AA, then the assessee would also be entitled for the benefit of Secs. 11 and 12 in the prior years, subject to satisfaction of two fold conditions, viz. (i) that assessment proceedings in such preceding years was pending before the A.O on the date of grant of registration; and (ii) the objects and activities of the assessee during the said year were the same which had been considered by the Commissioner of Income Tax while granting the registration. It was thus submitted by the assessee that as in its case on 03.04.2012 when the registration under Sec. 12AA was granted by the CIT, the assessment proceedings for the year under consideration, viz. A.Y 2011-12 were pending, and the objects and activities of the assessee society had also not witnessed any change, therefore, the first proviso of Sec. 12A(2) was clearly attracted. Thus it was submitted by the ld. A.R that the provisions of Secs. 11 and 12 were clearly applicable to its case, and resultantly the addition of Rs.34,31,521/- made by the A.O was liable to be set aside.

5. The CIT(A) after deliberating on the contentions of the assessee was however not persuaded to accept the same. The CIT(A) deliberating on the claim of the assessee as regards the applicability of the first proviso of Sec. 12A(2), observed that as the same was made available on the statute by the legislature vide the Finance (No. 2) Act, 2014, with effect from 01.10.2014 and was not given a retrospective effect, therefore, the same was not applicable to the case of the assessee wherein the exemption under Sec. 12AA had been already been granted to the assessee on 03.04.2012 for AY 2012-13 onwards. Thus, on the basis of the aforesaid observations the CIT(A) declined to accept the aforesaid contention of the assessee. The CIT(A) observed that during the year under consideration the assessee as a matter of fact was not covered by the exemption contemplated under Sec. 12A or under Sec. 10(23C)(vi). It was further observed by the CIT(A) that as the assessee society was not registered under Sec. 12AA during the year under consideration, therefore, it was not eligible for claim of exemption under Secs. 11 and 12 of the 'Act'. Thus, on the basis of her aforesaid observations the CIT(A) upheld the addition made by the A.O and dismissed the appeal of the assessee.

6. The assessee being aggrieved with the order of the CIT(A) had carried the matter in appeal before us. That at the very outset of the hearing of the appeal the ld. Authorized Representative (for short 'A.R') for the assessee submitted that though the case of the assessee was squarely covered by the first proviso of Sec. 12A(2) of the 'Act', however, the CIT(A) had wrongly concluded that the same was not applicable to the case of the assessee. The ld. A.R. in order to drive home his aforesaid contention, drew our attention to the first proviso of Sec. 12A(2), which was made available on the statute vide the Finance (No. 2) Act, 2014 with effect from 01.10.2014. The ld. A.R submitted that as the said statutory provision was made available on the statute to mitigate the hardships being faced by charitable institutions, therefore, the same being a beneficial provision was to be accorded a retrospective applicability. The ld. A.R in order to buttress his aforesaid contention took support of the memorandum explaining the provisions of the Finance (No.2) bill, 2014, in context of the incorporation of the first proviso to Sec.12A(2). The ld. A.R in order to fortify his aforesaid claim that retrospective effect was to be given to the aforesaid statutory provision, therein relied on the judgment of the Hon'ble Supreme Court in the case of CIT v. Vatika Township (P.) Ltd. [2014] 367 ITR 466/227 Taxman 121/49 taxmann.com 249 . The ld. A.R submitted that the issue that the first proviso of Sec. 12A(2) was to be given a retrospective effect had already been looked into and adjudicated by the Income Tax Appellate Tribunal, Cochin Bench, Cochin in the following cases:-

The ld. A.R further submitted that a similar view had also been taken by the ITAT, "B" Bench, Pune in the case of Shri Vishwa Kalyan Jivraksha Pratisthan v. ITO (ITA No. 2013/PN/2014); dated 22/07/2016 and ITAT, Ahmedabad, 'SMC' Bench in the case of Shri Bhanushali Mitra Mandal Trust v. ITO (ITA No. 2515/Ahd/2015; dated 22.02.2016. The ld. A.R in order to support his aforesaid claim took us through the order of the ITAT, Cochin Bench in the case of SNDP Yogam (supra). The ld. A.R drew our attention to Page 10 - Para 7.3 of the order, wherein the Tribunal after deliberating at length on the explanatory notes of the Memorandum to Finance (No. 2) bill, 2014, had therein concluded that the amendment to Sec. 12A with effect from 01.10.2014 was retrospective in nature. It was submitted by the ld. A.R that as the assessee had filed its income tax return on 28.09.2011, which was subjected to summary assessment under Sec. 143(1) on 21.08.2012, thus, in the backdrop of the fact that the assessee was granted registration under Sec. 12AA on 03.04.2012, and the objects and activities of the assessee society had not witnessed any change during the year under consideration, viz. A.Y 2011-12, as against those at the time of grant of registration by the Commissioner of Income tax, therefore, the first proviso of Sec. 12A(2) was clearly applicable to the case of the assessee. It was thus submitted by the ld. A.R. that the CIT(A) by misconceiving the scope and gamut of applicability of the first proviso of Sec. 12A(2) had erred in sustaining the addition of Rs.34.31,521/-, which therein was liable to be struck down. Per contra, the ld. Departmental Representative (for short D.R) placed reliance on the order of the A.O and the CIT(A). It was submitted by the ld. D.R that as the appeal of the assessee did not merit acceptance, therefore, the same was liable to be dismissed.

7. We have heard the authorized representatives for both the parties, perused the orders of the lower authorities and the material available on record. We find that the issue involved in the present appeal lies in a narrow compass. We are of the considered view that our indulgence in the present appeal is sought for adjudicating as to whether the CIT(A) was right in concluding that the first proviso of Sec.12A(2) would be applicable to the facts of the present assessee before us, or not. We find that the first proviso of Sec. 12A(2) had been made available on the statute vide the Finance (No. 2) Act, 2014, with effect from 01.10.2014. That a perusal of the Explanatory notes of the Memorandum to Finance (No. 2) bill, 2014 explaining the objects and reasons for making available the first proviso to Sec. 12A(2) on the statute reveals that it was in order to mitigate the hardships caused to charitable institutions, which despite having satisfied the substantive conditions rendering them eligible for claim of exemption, however, for technical reasons were saddled with tax liability in the prior years, due to absence of registration under Sec. 12AA. We find that the issue before us, as to whether the beneficial provisions made available on the statute by the legislature in all its wisdom, vide the Finance (No. 2) 'Act', 2014 with effect from 01.10.2014 were to be given a retrospective effect, or not, had already deliberated upon and adjudicated by this Tribunal in bunch matters of St. Judes Convent School v. Asstt. CIT [2017] 164 ITD 594/77 taxmann.com 173 (Asr.) . We find that the Tribunal after giving a thoughtful consideration to the issue as regards the retrospective applicability of the aforesaid statutory provision, had therein concluded as under:—

"17. The first issue before us as to whether the two provisos to Section 12A(2) are applicable to all the appeals before us, retrospectively, as contended by the ld. Counsel for the assessee, or whether, since the provisos have been brought in w.e.f. 01.10.2014 and they have not been made applicable retrospectively, the same are not applicable for earlier periods, as submitted by the department.

18. Now, a bare reading of the first proviso Section 12A(2) shows that it has not been made applicable retrospectively. It has been inserted in the Act, w.e.f. 01.10.2014, by virtue of the Finance (No.2) Act, 2014. Thus ordinarily, it ought to be taken as applicable only prospectively, and not retrospectively. However, the law is well settled to the effect that if the proviso brought in as a procedural or beneficial one, intending to remove hardship, it is applicable retrospectively.

19. In C.B Richards Ellis Mauritius Ltd. v. CIT, W.P. © NO. 8359/2010, decided on 25/05/2012 (copy on record), it has been held that "procedural law, when amended or substituted, is generally retrospective and applies from the date of its enforcement and to this extent, it can be retrospective".

20. In 'Allied Motors (P) Ltd. v. ITO, 224 ITR 677 (SC) , it has been held that "a proviso, which is intended 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, is required to be treated as retrospective in operation, so that a reasonable interpretation can be given to the section as a whole". It is, thus, trite that if a provision is curative or merely declaratory of the previous law, retrospective operation thereof is generally intended.

21. In 'CIT v. Vatika Township Pvt. Ltd., 367 ITR 466 (SC) , the Constitutional Bench of the Hon'ble Supreme Court held that "if a legislation confers a benefit on some persons but without inflicting a corresponding detriment on some other person or on the public generally, and where to confer such benefit appears to have been the legislators' object, then the presumption would be that such a legislation, giving it a purposive construction, would warrant it to be given a retrospective effect".

22. In 'Government of India v. Indian Tobacco Association, [2005] 7 SCC 396, the doctrine of fairness was held to be a relevant factor to construe a statute conferring a benefit, in the context of it to be given a retrospective operations.

23. In 'Vijay v. State of Maharashtra', [2006] 6 SCC 286, the Hon'ble Supreme Court went to the extent of holding that where a law is enacted for the benefit of the community as a whole, even in the absence of a provision, the statute may be held to be retrospective in nature."

24. Now, undeniably, the assessment of income is a matter of procedure. Even the heading of Chapter (xiv) of the Act, which deals with assessment, itself is 'PROCEDURE FOR ASSESSMENT". Likewise, grant of registration is also a procedural aspect, since registration is but a step in aid for exemption u/s 11. As such, the provisos to Sec. 12A(2) are also procedural.

25. So far as regards the bringing in of the first proviso to Section 12A(2), the Memorandum explaining the provisions of the Finance (No.2) Bill, 365 ITR (statute) 175 itself elaborates the intention of the Legislature behind insertion thereof in the statute book. It states, inter alia, that "non- application of registration for the period prior to the year of registration causes genuine hardship to charitable organization. Due to absence of registration, tax liability gets attached even though they may otherwise be eligible for exemption and fulfill the other substantive conditions. The power of condonation of delay is not available under the section. In order to provide relief to such Trusts and remove hardship in genuine cases, it is proposed to amend section 12A of the Act to provide that in a case where a Trust or Institution has been granted registration U/s 12AA of the Act, the benefit of Sections 11 and 12 shall be available in respect of any income derived from property held under Trust in any assessment proceedings for any 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."

26. Thus, clearly, the provision of Sec. 12A of the Act entailed unintended consequences of non-application of registration for the period prior to the year of registration and, thereby, non-grant of exemption U/Ss 11 and 12 up to grant of registration. This position was also recognized by the CBDT while issuing the Explanatory Notes to the provisions of the Finance (No.2) Act, 2014 vide CBDT circular No. 1 of 2015, dated 21/1/2015. It was this anomaly which was cured by brining in the first proviso to Sec.12A(2). This proviso, even as avowed by the above quoted Memorandum explaining the provisions of the Finance (No.2) Bill, has sought to remedy the said unintended hardship visiting Trusts and Institutions. It has supplied the aforesaid omission in the section and has thereby made the provision of the section workable, providing a reasonable interpretation to it by providing the benefit mandated by it. It is, thus a curative proviso, which is but merely declaratory of the previous law. It has, by removal of the hardship, rendered the procedure more relief-oriented. It adequately complies with the natural justice principle of fairness to all. Hence, it has to be presumed and constituted as retrospective in nature, in order to give the section a purposive interpretation.

27. In 'Shree Shree Ramkrishna Samity Vs. Dy. CIT, [2016] 156 ITD 646 (Kol) , the above position has elaborately been considered to hold the first proviso to Section 12A(2) to be retrospectively applicable. The said decision has been followed in 'SNDP Yogum', (supra).

28. In view of the above discussion and respectfully following these decisions, in the absence of any decision to the contrary having been cited before us by the department, we hold that the first proviso to section 12A(2) of the Act is applicable retrospectively."

8. 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 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 Nos. 1 to 3 raised by the assessee before us is allowed in terms of our aforesaid observations.

9. The appeal of the assessee is allowed in terms of our aforesaid observations.

TANVI