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2022 (11) TMI 840 - AT - Income TaxFresh registration of trust u/s 12A(1) w.e.f. 1.4.2021 - Power of CIT(E) to impose conditions - registration u/s 12AB(1)(a) and under clause (iii) of the second proviso to Section 80G(5) denied - conditions stipulated in Form 10AC not satisfied - action of Ld. CIT(E) to have prescribed conditions for grant of registration u/s 12AB - power of CIT to impose additional conditions while passing the order - objection of the Revenue that this Tribunal is not empowered to look into the vires of the conditions stipulated in Form 10AC notified in terms of Rule 17A of the Rules - HELD THAT - As held by the Hon ble Supreme Court (Constitutional Bench) in the case of L Chandra Kumar Rao vs. UOI 1997 (3) TMI 90 - SUPREME COURT that even though this Tribunal is indeed a creature of the Statute, it is empowered to test the vires of subordinate legislation and rules. We note that there is no mention of conferring of power upon the Ld. CIT to stipulate conditions for granting registration in Rule 17A (already reproduced above) of the Rules. Hence, the contention of the Ld. CITDR, that the conditions stipulated at Sl No. 10 of Form 10AC had been placed and impliedly approved by the Parliament cannot be accepted. Even otherwise, if the said Form was indeed placed before the parliament, in view of case of Hukum Chand Vs UOI 1972 (8) TMI 130 - SUPREME COURT it cannot stipulate anything more than what is contained in the extant section/ provision of law as enacted by the Legislature ie. in this case, Section 12AB of the Act . We thus agree with the submissions of the Ld. Sr. counsel that the Ld. CIT(E) could not have been empowered to stipulate conditions while granting registration in Form 10AC, which is otherwise not expressly provided in provisions contained in Section 12AB of the Act. As relying on SAIFEE BURHANI UPLIFTMENT TRUST MUFADDAL SHOPPING ARCADE 2022 (5) TMI 768 - ITAT MUMBAI CIT(E) could not have stipulated conditions on his own (other than what is stipulated in law) while granting registration under section 12AB of the Act as the scheme of the law does not visualize these conditions being part of granting of registration to charitable trusts. Accordingly, the grounds raised in the appeal by the assessee stands allowed. CIT(E) did not enjoy the power to prescribe/impose any conditions on his own (other than what is stipulated in law) while granting the registration u/s 12AB we similarly hold that the Ld. CIT(E) lacked jurisdiction to impose any conditions on his (other than what is stipulated in law) while granting the approval u/s 80G of the Act as well. Accordingly, this appeal also stands allowed.
Issues Involved:
1. Imposition of conditions while granting registration under Section 12AB of the Income Tax Act, 1961. 2. Imposition of conditions while granting approval under Section 80G of the Income Tax Act, 1961. Issue-wise Detailed Analysis: 1. Imposition of Conditions while Granting Registration under Section 12AB: The assessee, a public charitable trust, challenged the imposition of conditions by the Commissioner of Income Tax (Exemptions) [CIT(E)] while granting registration under Section 12AB of the Income Tax Act, 1961. The trust argued that Section 12AB is procedural and does not empower the CIT to impose conditions while granting registration. The CIT(E) granted registration but imposed several conditions, which the assessee deemed impermissible and beyond the jurisdiction of the CIT(E). The Tribunal examined the relevant provisions and the legislative history of Sections 12A and 12AA. It was noted that the CIT's role is limited to satisfying himself about the genuineness of the activities and the compliance of the trust with the law. The Tribunal referred to several judicial precedents, including CIT vs. RMS Trust and CIT vs. Mahavir Jain Society, which held that the CIT does not have the power to impose extraneous conditions while granting registration. The Tribunal also considered the legislative amendments and the Finance Act, 2022, which introduced specific conditions under which registration can be canceled. It was emphasized that the CIT cannot impose conditions beyond those specified in the Act. The Tribunal held that the CIT(E) could not stipulate conditions while granting registration in Form 10AC, as the scheme of the law does not visualize such conditions being part of the registration process. The Tribunal relied on the decision in Saifee Burhani Upliftment Trust vs. CIT, which held that Section 12AB does not authorize the Commissioner to impose any conditions while granting registration. The Tribunal concluded that the conditions imposed by the CIT(E) were beyond his jurisdiction and vacated the conditions stipulated in the impugned order. 2. Imposition of Conditions while Granting Approval under Section 80G: The assessee also challenged the imposition of conditions by the CIT(E) while granting approval under Section 80G of the Act. The assessee argued that the CIT(E) was not conferred with any powers to impose conditions while granting approval under Section 80G. The Tribunal examined the relevant provisions and noted that the second proviso to Section 80G(5) only grants the Commissioner the power to grant approval and does not authorize the imposition of conditions. The Tribunal referred to the conditions specified in Section 80G(5), which include maintaining separate books of account, not applying income for private religious purposes, and ensuring the genuineness of activities. It was noted that none of the conditions imposed by the CIT(E) in the impugned order were in conformity with the conditions specified in the Act. The Tribunal also referred to Circular No. 11 of 2022, which retrospectively modified the conditions imposed in orders passed under Section 80G. The Tribunal held that the CIT(E) lacked the jurisdiction to impose any conditions while granting approval under Section 80G, as the scheme of the law does not visualize such conditions. Conclusion: The Tribunal allowed the appeals filed by the assessee, holding that the CIT(E) could not impose conditions while granting registration under Section 12AB or approval under Section 80G of the Income Tax Act, 1961. The Tribunal's decision was based on the scheme of the law, judicial precedents, and the legislative history of the relevant provisions.
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