The Madras High Court ruled that amendments made to bye-laws for Society would not operate retrospectively while granting registration under section 12AA of the Income Tax Act.
The assessee, Young Women’s Christian Association filed an application under Section 10 on January 19, 2007 for registration under Section 12AA of the Income Tax Act with a delay of 5 years and 10 months without any supporting evidence and instrument of formation of the Society and bye-laws.
There was no response to the letters issued to the Society for production of the instrument of creation for the Society. The Society also did not file the instrument of creation of Society reflecting the bye-laws.
A letter was sent to the assessee seeking the details and the activities of Trust, donations, donors, etc. Since there was no response in spite of the opportunity, the order was passed rejecting the application for registration based on the materials available on record as the Deed/Bye-laws did not have the necessary Clauses, which are mandatory for granting registration under Section 12AA.
On appeal by the assessee, the Tribunal by order dated 12.09.2012, remitted the case back to the CIT for re-consideration of the application of registration. On remittance, the CIT gave another opportunity to the assessee and the assessee filed an instrument of amendment containing amended bye-laws with effect from June 14, 2009. On the assessee’s appeal, the assessee sought for registration with retrospective effect being the original date of creation of the assessee society by condoning the delay and the Tribunal had granted the same.
The Revenue has filed an appeal challenging that order of the ITAT wherein it directed the Commissioner of Income Tax to condone the delay in filing of the application and to grant registration to the assessee Society with retrospective effect from the date from which it was sought.
The revenue further challenged the ITAT wherein it was ruled that rectification or amendments made to the bye-laws for the Society would operate retrospectively while granting registration under Section 12AA of the Income Tax Act.
The division bench of Justices M.Duraiswamy and T.V .Thamilselvi while allowing the appeal of the revenue held that the rectification shall not have retrospective effect and would operate prospectively from the date when the rectification saw the light of the day. However, the Tribunal erroneously allowed the appeal observing that the order passed by the Supreme Court pertains to a Trust and the same is not applicable to the assessee’s case which is a Society.
“The rectification/amendments made to the bye-laws of the Society would only operate prospectively while granting registration under Section 12AA of the Income Tax Act,” the court said.
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