Under
the existing provisions of aforesaid section 12A, conditions to be fulfilled by
a trust or an institution before it can claim exemption have been provided
under sections 11 and 12 of the Act. It is provided that before any benefit of
exemption is claimed, the trust or institution should apply for registration
under section 12AA and only after such registration has been granted such trust
or institution shall be eligible to claim the benefit of such exemption. In
case of trusts or institutions which apply for registration after the 1st day
of June, 2007, the registration shall be effective only for the assessment
years following the financial year in which application has been made.
It
is proposed to amend the said section so as to provide that once a registration
under section 12AA is granted to a charitable organisation in a financial year,
then, such registration would also entitle the entity for the benefits of
sections 11 and 12 in cases for prior years where the assessment proceedings
are pending before the Assessing Officer on the date of registration, if the
objects and the activities are the same which have been considered by the
Commissioner while granting registration.
No
action under section 147 shall be taken by the Assessing Officer in case of
such trust or institution for any assessment year preceding first assessment
year for which the registration applies, merely for the reason that such trust
or institution has not obtained registration under section 12AA for the said assessment
year.
Further,
the above benefits would not be available where the registration to the trust
or institution has been refused or cancelled by the Commissioner at any time.
It would be a great
relief for NGOs and Trusts getting registration under section 12AA. Hitherto
they were allowed tax exemptions only from the Financial Year in which the
application for registration was made and the assessments of the earlier years
were re-opened to deny the deductions under Sections 11 and 12 on the grounds
of non-availability of the registration in those year.
In CIT v. Jaipur Stock Exchange Ltd. [1995] 82 Taxman 49 (Raj.) it was
held that once a trust is registered, it is eligible for exemption,
irrespective of the date from which the registration is granted.
The Finance Act, 2007 inserted section 12A(2) whereby in respect
of applications made on or after 1-6-2007, the provisions of sections 11 and 12
were applicable to the trust or institution only from the assessment year
immediately following the financial year in which such application was made.
Thus, the amendment proposed in the Finance Bill, 2014 will come
in the way of the Revenue from reopening the tax assessments for the preceding
years if the objects and activities of the applicant were the same even for the
prior years preceding the year of seeking registration under section 12AA.
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