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TMI Blog2016 (1) TMI 978X X X X Extracts X X X X X X X X Extracts X X X X ..... gs of the CIT to the effect that the activities of the assessee are not genuine or the activities are not being carried out in accordance with the objects on the basis of which registration under section 12A of the Act was granted to it, have also not been fulfilled in this case. CIT(A) has nowhere given a finding in this regard. It is not the case of the Commissioner of Income Tax that the activities of the assessee are not genuine or not being carried out in consonance with the objects of the assessee. The action of the CIT(A) in cancelling the registration is not as per law. - Decided in favour of assessee. - IT APPEAL NO. 834 (CHD.) OF 2012 - - - Dated:- 19-10-2015 - H.L. KARWA, VICE-PRESIDENT AND MS. RANO JAIN, ACCOUNTANT MEMBER For The Appellant : Rakesh Marwaha For The Respondent : S.K. Mittal, DR ORDER PER RANO JAIN, A.M. : This appeal filed by the assessee is directed against the order of learned Commissioner of Income Tax-II, Chandigarh dated 20.6.2012 passed under section 12AA(3) of the Income Tax Act, 1961 (in short 'the Act') cancelling the registration under section 12A from assessment year 2009-10 onwards. 2. Briefly, the facts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A of the Act. The Department has preferred an appeal against the said order before the Hon'ble Punjab Haryana High Court, which is still pending. However, the learned Commissioner of Income Tax further observed that subsequent to the decision of the I.T.A.T., there has been an amendment in section 12AA(3) of the Act with effect from 1.6.2010, which provides that registration granted under section 12A of the Act be also covered for cancellation of registration by the Commissioner of Income Tax. By virtue of such amendment in section 12AA(3) of the Act w.e.f. 1.6.2010, the Commissioner of Income Tax has been empowered to consider cancelling registration granted under section 12A of the Act. 3. On the merits of the case, the learned Commissioner of Income Tax reproduced the order of the Commissioner of Income Tax dated 31.3.2009 on the basis of which registration was earlier cancelled. The view of the learned Commissioner of Income Tax was that the position regarding income and expenditure statements of the society continues to be the same and there is no difference in the subsequent years also. The crux of the order of the learned Commissioner of Income Tax is as follows : ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome Tax to cancel registration under section 12A of the Act., however, the said amendment cannot be construed to be operative retrospectively. For this, copy of the explanatory notes to the provisions of Finance Act, 2010, Circular No.1/2011(FNo.142/1/2011-SO(TPL), whereby it has been clearly provided that the power to cancel the registration given to the assessee under section 12A of the Act, has been given to Commissioner of Income Tax only w.e.f.1.6.2010 and accordingly, applicable for assessment year 2011-12 and subsequent assessment years. It was brought to our notice that the learned Commissioner of Income Tax in his order under section 12AA(3) of the Act has mentioned at many places that he intends to cancel the registration from assessment year 2009-10 onwards, which is not as per law. 6. The second contention raised by the learned counsel for the assessee was that the only reason given by the learned Commissioner of Income Tax while withdrawing the registration granted under section 12A of the Act is the amendment brought on the Statute by the Finance Act, 2008 in section 2(15) of the Act. It was stated that the detailed analysis made by the learned Commissioner of In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... perusal of the order of the I.T.A.T., Chandigarh Bench, we see that the Tribunal allowed the appeal of the assessee holding that the order passed by the learned Commissioner of Income Tax under section 12AA(3) of the Act was unsustainable in law for the reason that the power for withdrawing registration was effected in section 12AA(3) of the Act by Finance (No.2) Act, 2004 w.e.f. 1.4.2004 only to the entities registered under section 12AA of the Act and could not operate to withdraw or cancel the registration granted under section 12A of the Act. In holding so, the Tribunal relied upon the decision of the I.T.A.T., Pune Bench in the case of Bharati Vidyapeeth v. ITO (2008) 28 SOT 32.. In the sand decision, it was held that section 12AA(3) of the Act empowers the Commissioner of Income Tax to cancel registration in those cases where the registration had been granted under sub-section (1b) of section 12AA of the Act and that this section nowhere empowers the Commissioner of Income Tax to cancel or withdraw the registration granted under section 12A of the Act. Pune Bench of the Tribunal further held that the provisions of section 12AA(3) were not applicable to registration granted p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting registration. However, judicial rulings in some cases have held that the Commissioner does not have the power to cancel the registration which was obtained earlier by any trust or institution under provisions of section 12A as it is not specifically mentioned in section 12AA. 7.3 Therefore, section 12AA has been amended to provide that the Commissioner can also cancel the registration obtained under section 12A as it stood before amendment by Finance (No.2) Act, 1996. 7.4 Applicability - This amendment has been made applicable with effect from 1st June, 2010 and shall accordingly apply for assessment year 2011-12 and subsequent assessment years. 10. On perusal of the order of the learned Commissioner of Income Tax for cancelling the registration, we see that at the beginning of the order as well as at every place while concluding his finding, the learned Commissioner of Income Tax has referred to cancellation of registration w.e.f. assessment year 2009-10 onwards. However, since the amendment to section 12AA(3) of the Act has been specifically provided to be applicable to assessment year 2011-12 and onwards, the learned Commissioner of Income Tax cannot assume j ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s under section12AA(3)being invoked. We, therefore, uphold the grievance of the assessee that the action of the learned Commissioner, in withdrawing the registration under section 12AA(3), was well beyond the limited scope of the powers conferred on him by the statute. The assessee, therefore, must succeed in the appeal for this short reason alone. 10. There is, however, a much more fundamental a reason for the assessee succeeding in this appeal. In our considered view, the considerations with respect to the-first proviso to Section 2(15) coming into the play and, for that reason, the objects of an assessee trust or institution being held to be not covered by the definition of charitable purposes', have no role to play in the matters relating to registration of a trust or institution under section 12A or 12AA - whether in respect of granting or declining of a registration or in respect of cancellation, even if otherwise permissible, of a registration. A close look at the scheme of the Act would unambiguously show this aspect of the matter. 12. On a closer look at the said order of the I.T.A.T., Amritsar Bench, we find that the proposition so laid down by the I.T.A.T., ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt, decline or withdrawal of registration but in declining the benefits of exemption under section 11 on that count, on year to year basis, notwithstanding the status of registration. (vi) The disentitlement for exemption under section 11, as a result of the activities of an assessee being held to be not for charitable purposes under section 2(15) read with provisos thereto, is in respect of entire income of the assessee trust or institution but only for the assessment year in respect of which the first proviso to section 2(15) is triggered. (vii) If the status of registration is to be declined to an assessee only on the ground that some of the objects may be hit by the first proviso to section 2(15) but the assessee's receipts from such activities do not exceed specified threshold in a particular assessment year, the assessee will be subjected to undue hardship in the sense that while the assessee will be disentitled to exemption under section 11 due to denial of registration under section 12A or 12AA which is sine qua non for admissibility of exemption under section 11. (viii) The considerations about the possibilities of first proviso to section 2(15) into play are ..... X X X X Extracts X X X X X X X X Extracts X X X X
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