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Issues Involved:
1. Retrospective application of Section 12AA(3). 2. Genuineness of the activities of the institution. 3. Compliance with the objects of the institution. 4. Examination of financial transactions and expenditures. 5. Validity of the cancellation of registration under Section 12AA. Issue-wise Detailed Analysis: 1. Retrospective Application of Section 12AA(3): The primary issue was whether the power to withdraw registration under Section 12AA(3) could be applied retrospectively. The Tribunal noted that the power to withdraw registration was introduced in the statute books w.e.f. 1-10-2004 and further amended w.e.f. 1-6-2010 to include registrations obtained under Section 12A. The Tribunal concluded that the cancellation of registration granted vide order dated 8-1-2002 for assessment year 2001-02 onwards was bad in law as the provision was not clarificatory or explanatory and thus could not be applied retrospectively. This stance was supported by several judicial precedents, including *Director of IT (Exemptions) v. Mool Chand Khairati Ram Trust* and *Oxford Academy for Career Development v. Chief CIT*. 2. Genuineness of the Activities of the Institution: The Tribunal examined whether the activities of the institution were genuine and carried out in accordance with its objects. It noted that the assessee was running various educational institutions affiliated with different universities and government authorities, and there was no dispute about the object of the institution, which was to impart education. The Tribunal emphasized that issues such as expenditure on advertisements, benefits provided to office bearers, and surplus generation were irrelevant for examining the genuineness of activities for the purpose of cancellation of registration under Section 12AA(3). It cited cases like *Maharashtra Academy of Engineering & Educational Research (MAEER) v. CIT* to support this view. 3. Compliance with the Objects of the Institution: The Tribunal observed that the CIT's various observations regarding advertisement expenses, benefits to office bearers, and surplus generation did not indicate that the activities were not in accordance with the institution's objects. It reiterated that the motive of education is charitable, and surplus generated and utilized for the objects of the trust could not be grounds for cancellation of registration. The Tribunal referred to judicial precedents such as *Chaturvedi Har Prasad Educational Society v. CIT* and *H.P. Government Energy Development Agency v. CIT* to substantiate this point. 4. Examination of Financial Transactions and Expenditures: The Tribunal scrutinized the CIT's detailed observations on the income and expenditure account and balance sheet, which highlighted that expenditures and advances were not for the purpose of running educational institutions but for the benefit of specified persons under Section 13(3). The Tribunal held that these observations were to be considered by the AO at the assessment stage for computing the income of the trust and not for the purpose of cancelling registration. It cited cases like *CIT v. Red Rose School* and *Guru Gobind Singh Educational Society v. CIT* to support this view. 5. Validity of the Cancellation of Registration under Section 12AA: The Tribunal concluded that the CIT was not justified in cancelling the registration under Section 12AA(3). It noted that the Chief CIT had granted exemption under Section 10(23C)(vi) after considering the objections raised in the earlier order and the order of CIT withdrawing the registration. The Tribunal emphasized that the registration could only be cancelled if the activities were not genuine or not carried out in accordance with the objects of the institution, which was not the case here. It referenced the Tribunal's decisions in cases like *Maharashtra Academy of Engineering & Educational Research (MAEER) v. CIT* and *Chaturvedi Har Prasad Educational Society v. CIT* to reinforce its decision. Conclusion: The Tribunal allowed the appeal of the assessee, holding that the CIT was not justified in cancelling the registration under Section 12AA(3). The order passed by the CIT was cancelled, and the appeal was allowed.
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