This article provides a comprehensive analysis of the Income Tax Appellate Tribunal’s decision in the case between Shree Khathu Shyam Jangid Brahman Dharamshala and the Income Tax Officer (E) Ward, Faridabad, concerning the assessment year 2016-17. The primary focus is on the Tribunal’s interpretation of the retrospective application of tax exemptions under the Income Tax Act.
The appellant, Shree Khathu Shyam Jangid Brahman Dharamshala, appealed against the order of the CIT(A)-2, Gurgaon, which was related to the denial of benefits under sections 11 and 12 of the Income Tax Act, despite the Dharamshala being granted registration under section 12AA after the initial assessment.
The Tribunal considered several precedents and statutory amendments that clarified the application of these benefits retrospectively to cases where the charitable organization was granted registration after the initial assessment year in question. This was particularly pivotal as the registration significantly impacts the applicability of tax exemptions meant for charitable organizations.
The ITAT, referencing multiple judgments and circulars, confirmed that the retrospective application was intended to alleviate unintended tax burdens on genuine charitable trusts. The Tribunal directed the application of sections 11 and 12 benefits to the Dharamshala, acknowledging the legal registration under section 12AA post the disputed assessment year.
This case sets a significant precedent on how retrospective amendments intended to relieve charitable institutions from procedural lapses in registration are interpreted and applied, ensuring that substantive justice is not overshadowed by procedural technicalities.
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