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2012 (2) TMI 659 - AT - Income TaxPower of CIT to cancel registration of trust u/s 12AA(3) - Assessee trust has received capitation fees in the garbs of donations from and on behalf of the students for giving them admission. CIT cancelled the registration granted to assessee trust in the year 2000 by invoking the provisions of s.12AA(3). The assessee s contention is that the powers conferred on the ld. C.I.T. u/s. 12AA(3) did not extend to cancellation of registration granted u/s. 12A. - HELD THAT - There was no power vested with the Commissioner to cancel or withdraw the registration granted to the assessee u/s 12A(a) in the year 2000. This power came to be incorporated by way of amendment introduced by the Finance Act, 2010, with effect from June 1, 2010. Thus, the impugned order of ld. C.I.T. vacated and as a corollary thereto, the registration granted to the assessee-trust u/s. 12A of the Act stands restored. Decision in the case of DIT (EXEMPTIONS) VERSUS MOOL CHAND KHAIRATI RAM TRUST 2011 (4) TMI 563 - DELHI HIGH COURT , relied upon. Decision in favour of Assessee.
Issues:
Cancellation of registration granted to the assessee-trust under section 12A of the Income Tax Act by invoking provisions of section 12AA(3) from the assessment year 2004-05. Analysis: The appeal was filed against the order of the ld. C.I.T., Central-III, Kolkata canceling the registration granted to the assessee-trust under section 12A of the Act. The assessee raised grounds challenging the cancellation, arguing that the activities were genuine and in accordance with the trust's objects. The ld. C.I.T. canceled the registration based on the belief that the trust received "capitation fees" disguised as donations, indicating activities not aligned with the trust's objectives. The assessee's counsel contended that the ld. C.I.T. lacked the authority to cancel the registration granted under section 12A, citing the amended clause in section 12AA(3) introduced by the Finance Act, 2010. The counsel referenced legal precedents to support the argument that the registration could not be canceled under the circumstances presented in this case. The Departmental Representative supported the ld. C.I.T.'s decision, asserting that the power to cancel registration is inherent and flows from the authority of granting registration. The representative highlighted the clarificatory nature of the amendment in section 12AA(3) and defended the cancellation based on the trust's activities not being genuine or aligned with its objectives. After reviewing the arguments and the legal provisions, the Tribunal concluded that the ld. C.I.T. exceeded his authority by canceling the registration under section 12A using the provisions of section 12AA(3). The Tribunal emphasized that the power to cancel registration is limited to cases where registration was granted under section 12AA(1)(b) and not under section 12A. Citing a decision of the Hon'ble Delhi High Court, the Tribunal held that the ld. C.I.T. did not have the power to cancel the registration granted under section 12A. Therefore, the Tribunal allowed the appeal, vacated the ld. C.I.T.'s order, and restored the registration granted to the assessee-trust under section 12A of the Act. In conclusion, the Tribunal's detailed analysis focused on the interpretation of relevant legal provisions and precedents to determine the scope of the ld. C.I.T.'s authority in canceling the registration of the assessee-trust. The decision clarified the limitations on the ld. C.I.T.'s power to cancel registrations granted under specific sections of the Income Tax Act, ultimately leading to the restoration of the trust's registration status.
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