2013 (7) TMI 384 - HC - Income Tax

Cancellation of registration u/s 12AA - Exemption u/s 10(23C)(vi) - Whether the Tribunal was justified in law that registration under section 12AA cannot be cancelled by taking into consideration an order passed under section 10(23C)(vi) by the CC as both the proceedings are independent proceeding - the Tribunal was justified or not in law in not appreciating the fact that the assessee was not doing any charitable activity as found by the AO - Held that - exemption under section 10(23C)(vi) of the Act can be claimed by an assessee without applying for registration under section 12A of the Act as it is not required to fulfil the conditions mentioned under section 11 of the Act while claiming the exemption under section 10(23C)(vi) - Tribunal had rightly restored the registration on the ground that in the A.Y. 2004-05 and 2006-07 the benefit of exemption/deduction under section 11 of the Act was allowed to the assesse - the order passed by the CIT there is no doubt that the assessee has not fulfilled any of the conditions of section 11 for claiming it to be a charitable institution appeal decided against revenue.

Summary

Issues:
1. Interpretation of cancellation of registration under section 12AA in relation to an order passed under section 10(23C)(vi) of the Income-tax Act, 1961.
2. Justification of cancellation of registration based on violation of charitable activity provisions.
3. Consideration of decisions relied upon by the Commissioner of Income-tax in cancelling the registration of the assessee society.

Analysis:

Issue 1:
The appeal questioned whether the Tribunal was correct in concluding that registration under section 12AA could not be cancelled solely based on an order under section 10(23C)(vi) by the Chief Commissioner. The respondent was initially granted registration under section 12A as a charitable institution but was denied exemption under section 10(23C)(vi) due to other objectives besides educational purposes. The Commissioner cancelled the registration under section 12A. The Tribunal restored the registration, emphasizing the independence of the proceedings under sections 10(23C)(vi) and 12A. The High Court upheld the Tribunal's decision, stating that exemption under section 10(23C)(vi) can be claimed without section 12A registration if conditions under section 11 are not required, and the Commissioner's order did not indicate non-compliance with section 11 conditions.

Issue 2:
The second issue raised whether the cancellation of registration was justified due to the assessee's alleged lack of charitable activities and violation of sections 11, 12, 12A, and 13 of the Act. The Tribunal found in favor of the respondent, noting that deductions under section 11 were allowed for specific assessment years. The High Court concurred, stating that the Tribunal correctly considered the history of exemption/deduction under section 11 for the respondent, leading to the restoration of registration.

Issue 3:
Lastly, the issue involved whether the Tribunal erred in not considering decisions relied upon by the Commissioner in cancelling the registration. The High Court found no error in the Tribunal's decision, as it focused on the fulfillment of conditions under section 11 for claiming charitable institution status, rather than solely relying on the Chief Commissioner's order under section 10(23C)(vi). The restoration of registration was deemed appropriate based on the allowance of exemptions/deductions under section 11 for the relevant assessment years.

In conclusion, the High Court dismissed the appeal, upholding the Tribunal's decision to restore the registration of the respondent-assessee under section 12A of the Income-tax Act, 1961.