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TMI Blog2017 (7) TMI 72X X X X Extracts X X X X X X X X Extracts X X X X ..... ee that the cancellation of registration did not affect the assessment year prior to 2011-12. In view of the above, we hold that the reason recorded by the Assessing Officer of reopening of assessment on the basis of cancellation of registration by the Commissioner of Income Tax was in order. - Decided against assessee Claim of exemption under sections 11 and 12 - Held that:- We have already dealt with this issue in ground No.2 raised by the assessee wherein we have held that the cancellation can be of period prior to 2011-12 also as held by the Hon'ble Bombay High Court in the case of Sinhagad Technical Education Society (2012 (3) TMI 262 - BOMBAY HIGH COURT ). Even otherwise, the learned Commissioner of Income Tax vide his order dated 25.2.2013 has cancelled the registration granted to the assessee society w.e.f. 1992. In the absence of registration the assessee had, therefore, no basis for claiming exemption under sections 11 and 12 of the Act at all as rightly held by the Commissioner of Income Tax. - Decided against assessee Disallowance of expenses incurred on account of repair and maintenance - revenue v/s capital - Held that:- We consider it fit to restore the issue b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under section 12A of the Act vide order dated 9.3.1992. Subsequently, the registration granted was cancelled by applying the proviso to section 2(15) of the Act, since it was found that the assessee was deriving receipts from business by running coaching centre in the name of Olive Greens Projects . After cancellation of registration the Assessing Officer recorded reasons under section 147 and issued notice under section 148 of the Act for the impugned year to bring to tax the income of the assessee which it had claimed exempt u/s 11 12 of the Act on account of the registration granted to it earlier. The reasons for reopening were duly supplied to the assessee who vide his letter dated 26.12.2013 filed during the course of assessment proceedings argued that the Commissioner of Income Tax was not empowered to cancel registration under section 12A as the same was distinct from that under section 12AA of the Act. The Assessing Officer disposed off the objection of the assessee vide ordersheet entry dated 26.12.2013 by stating that the order of the Commissioner of Income Tax could be challenged only before appropriate appellate forum. He, therefore, held that the assessment proceedi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... registration which as per the Ld. counsel for the assessee was to be effective from assessment year 2011-12 only as prescribed by the CBDT and various judicial pronouncements. Therefore, as per the Ld. counsel for the assessee, registration for the impugned year was not cancelled and thus the reasons recorded for assuming jurisdiction to reopen assessee s case for the impugned year were incorrect. We find no merit in this contention of the Ld. counsel for the assessee. Admittedly, the reasons for reopening was the order cancelling registration granted to the assessee, dated 25.2.2013. A perusal of the same reveals that the Ld. Commissioner of Income Tax has cancelled registration which was granted vide order dated 9.3.1992. The relevant and operative part of the order is as under : From the foregoing, 1 am satisfied that the activities of the Young Men Christian Association. Sector 11, Chandigarh have not been carried out in accordance with the objects of the trust in terms of section 12AA (3) of the I.T. Act, 1961. Therefore, registration granted u/s 12A of the Act vide order dated 09.03.1992 is hereby cancelled. 11. It is evident from a bare reading of the above that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of being heard. 7.2 The power of cancellation of registration is inherent and flows from the authority of granting 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. 8.8 Applicability - These amendments have been made effective from 1st April 2011 and will, accordingly, apply in relation to the assessment year 2011-12 and subsequent years. (underline supplied by us) 12. The Ld. counsel for the assessee has interpreted the above, drawing strength from various case laws, to mean that the registration can be cancelled only w.e.f. assessment year 2011-12. The case laws relied upon by the Ld. counsel for the assessee do not help the assessees case. The Ld. counsel for the assessee has relied upon the decision of the I.T.A.T., Agra Bench i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssioner to cancel the registration of a trust or an institution which has obtained registration at any time under Section 12A (as it stood before its amendment by the Finance (No.2) Act, 1996). As a result of the amendment, a regulatory framework is now sought to be put in place so as to cover also a trust or an institution which has obtained registration under Section 12A as it stood prior to its amendment in 1996. Every statutory provision which operates in respect of a trust, which has already been registered in the past does not have a retrospective character. A law which operates with respect to an event which has occurred in the past is not necessarily retrospective. A provision is retrospective when it takes away a right which has vested or accrued in the past. The effect of the provision is to empower the Commissioner to cancel the registration of a trust where he is satisfied that the activities of the trust are not genuine or are not being carried out in accordance with the objects of the trust or institution. This cannot by any stretch of imagination, be regarded as a retrospective alteration of the law. In any event, Parliament has plenary powers as a legislative body t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7. In the present case, the issue is not with regard to the assessment of income of the petitioners as in the case of Sedco Forex (supra). The issue in this case is with regard to the power to cancel registration of the trust under Section 12AA in view of the amendment to sub section (3) to Section 12AA brought about with effect from 1 June 2010. The amendment to Sub Section 3 of Section 12AA empowers the Commissioner to cancel the registration of a trust which has been obtained at any time under Section 12A. The amendment to sub section(3) of Section 12AA gives wide powers to cancel a registration obtained at any time. In Sedco Forex (supra) the explanation to Section 9(1)(ii) was effective from 1 April 2000. Therefore, it was to be applicable post 1 April 2000 and was not to apply to assessment of income for earlier years. In this case the amendment to sub section 3 of Section 12AA is with effect from 1 June 2010. Therefore the amended section 12AA becomes effective from 1 June 2010. Consequently from 1 June 2010 the Commissioner can exercise the power under Section 12AA(3) and cancel the registration of a Trust registered under Section 12A. Parliament while empowering the Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and it would be open to the Petitioner to submit a reply to the notice on all grounds, including those which are contained in the order dated 9 October 2007. In other words, the contents of the order dated 9 October 2007 shall be treated as a notice to show cause to the Petitioner to which the Petitioner shall be at liberty to file a reply before the Commissioner. We decline to exercise our jurisdiction under Article 226 of the Constitution, at the present stage, to interdict the hearing of the notice to show case. We clarify that we have not expressed any opinion on the allegation levelled against the Petitioner, the correctness of which is left open to be determined by the Commissioner in the course of the proceedings. 10. The Petition is accordingly rejected. No order as to costs. 13. We, therefore, reject the contention of the Ld. counsel for the assessee that the cancellation of registration did not affect the assessment year prior to 2011-12. In view of the above, we hold that the reason recorded by the Assessing Officer of reopening of assessment on the basis of cancellation of registration by the Commissioner of Income Tax was in order. The ground of appeal rais ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not only unjust, but is also illegal as the same is not based upon correct Appreciation of facts and deserves to be quashed. It is prayed that action of the A.O. holding the revenue expense as capital expenditure to the extent of ₹ 993327 may be quashed and the A.O may be directed to delete the additions of ₹ 884305 made on this ground. 18. The above ground is in relation to disallowance of expenses incurred on account of repair and maintenance holding the same to be capital in nature as against the revenue claimed by the assessee. 19. Briefly stated, during the assessment proceedings, the Assessing Officer found that the assessee had debited an amount of ₹ 11,22,484/-under the head repair and maintenance . The details of the above expenses were called for during the assessment proceedings. After going through which the Assessing Officer held that the expenditure amounting to ₹ 9,93,327/- was capital in nature. Accordingly, after allowing depreciation on the same, the balance amounting to ₹ 8,84,305/- was disallowed and added back to the income of the assessee. 20. The matter was carried in appeal before the CIT (Appeals) where the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee has debited an amount of ₹ 11,22,484/- under the head Repair and Maintenance details which are as under: SI.No. Expenditure Amount. 1. Electricity 43,602/ 2. Hostel 1,50,593/ 3. Furniture 97,292/- 4. Office Equipment 23,083/- 5. Building 7,02,257/- 6. Sanitary 62,472/- 7. Vehicle 43,185/- Total:- 11,22,,484/- 6.1 During the course of assessment proceedings, the counsel of the assessee was asked to explain the nature of these expenditure and why not these expenditures treated as capital nature and disallowed as revenue expenditure. The counsel of the assessee has stated that these expenses are in the natur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d therefore deserves to be deleted. 6.2 I have considered he submission of the Ld. Counsel. The appellant has not filed any evidence about the nature of expenses on account of hostel', furniture', building' and Vehicle' to prove that these were of the nature of repair and maintenance, either before the Assessing Officer or before the undersigned in the appellate proceedings. The Assessing Officer has given his findings in para 6.2 of his order that as per the details submitted, the expenses incurred on account of hostel, furniture, building and vehicle were in the nature of capital expenses and this finding of the Assessing Officer has not been contradicted. Therefore, it is held that the Assessing Officer was right in treating this expenditure as capital expenditure and in disallowing the impugned amount. The addition made on this account is, therefore, confirmed. Ground of appeal No. 4 is dismissed. 25. In view of the same, in the interest of justice, we consider it fit to restore the issue back to the file of the Assessing Officer to verify the nature of expenses incurred and thereafter pass a speaking order in accordance with law. We may add that ..... X X X X Extracts X X X X X X X X Extracts X X X X
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