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TMI Blog2021 (3) TMI 1191X X X X Extracts X X X X X X X X Extracts X X X X ..... We see no reasons to take any other view of the matter than the view so taken by the coordinate bench in the case of Navajbai Ratan Tata Trust vs PCIT[ 2021 (3) TMI 1146 - ITAT MUMBAI] . These observations will apply mutatis mutandis in the present case as well. Respectfully following the same, we hold that the impugned order cancelling registration granted to the assessee trust will have effect from the date on which hearing, on the first show cause notice requiring the assessee to show cause as to why registration under section 12A not be cancelled, and the assessee formally acquiesced to the said notice 10.03.2015, i.e on 20th March 2015. - ITA No. 7237/Mum/2019 - - - Dated:- 24-3-2021 - Justice P P Bhatt (President) and Pramod Kumar (Vice President)] P J Pardiwala, Sr Advocate, along-with Madhur Agarwal, Sukh Sagar Syal, T P Ostwal and Indira Anand for the appellant Anil C Singh, Additional Solicitor General, along with Suresh Kumar, Sr. Standing Counsel, for the respondent ORDER Per Bench : 1. By way of this appeal, the assessee-appellant has challenged the correctness of the order dated 31st October 2019, passed by the learned Principal Commissione ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T grossly erred in holding that the surrender of registration granted under section 12A of the ITA cannot be accepted as such registration is not only a benefit but also carries responsibilities and obligations along with it. The PCIT erred in not appreciating that the registration under section 12A of the IT A is an enabling provision to claim a benefit and the responsibilities and obligations are to be fulfilled only for claiming exemption under section 11 of the ITA. f) Without prejudice to the Appellant's contention that the Appellant has surrendered its registration, the PCIT grossly erred in holding that Appellants reference to Para 3c of the Income-tax Business Application exemption Instruction No 1 dated 08.07.2016 was misplaced even when the said Instructions of the Director of Income-tax (Systems) on cancellation of registration permitted cancellation at the request of the Appellant which also was undertaken by CIT(E) when he issued SCN dated 10.03.2015. 3. a) The PCIT grossly erred in passing the impugned order cancelling registration with effect from 31.10.2019 with the sole motive of applying the provisions of section 115TD of the ITA introduced from 01 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tting so at para X of the submissions dated 18.10.2019. b) PCIT erred in drawing conclusions which are factually incorrect on records. c) The learned PCIT exceeded his jurisdiction in observing and giving erroneous findings that the 'Tata Trusts' are controlling 'Tata group of Companies', etc. 5. Without prejudice to the above, a) the PCIT has erred in law and in fact in holding that the provisions of section 13(2)(h) of the ITA are attracted. b) the PCIT has erred in law and in fact by incorrectly placing reliance on an extract of trust deed to hold that the Appellant and Trustees have not carried out activities in strict adherence to the object clause in the trust deed. In doing so, the PCIT erred in not appreciating that i) the Appellant had applied its entire income for charitable purposes. ii) the trust deed does not mandate the registration or surrender of registration under section 12A of the ITA. iii) the trust deed provides that the Appellant is to expend monies for the various charitable objects as specified in the trust deed so long as those are objects which the ITA permits to enable a trust to qualify for exempt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ress) as constituted by the trust deed dated 23-12-1974 has filed the registration application under section 12A(a) of the Income Tax Act, 1961, in the prescribed form on 1-8-1975, i.e. within the stipulated time limit. The application has been eneterd at No. TR/10925 in the register of applications under section 12-A(a) maintained in this office. Seal for Commissioner of Income Tax Bombay City- IV, Bombay 6. On 11th March 2015, the assessee trust wrote a letter to the Commissioner of Income Tax concerned indicating that the assessee does not desire to continue to avail the benefits of the registration made by the trustees in 1975 . This communication reads as follows: March 11, 2015 Commissioner of Income Tax (Exemptions) Piramal Chambers, Parel, Mumbai 400 012 Dear Sir, Navajibai Ratan Tata Trust is a public charitable trust created by the trust deed dated 23rd December 1974. The trust, on 1st August 1975, had filed the prescribed form no. 10A for registering itself as required under section 12A(a) of the Income Tax Act. We were informed by the communication dated 15th March 1976 that the said application has been entered at Ser ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rmed by the communication dated 15th March 1976 that the said application has been entered at Serial No. TR/10925 in the Register of applications under section 12A(a) of the Act maintained by the Income Tax Department. We now refer to Section 12AA(4) of the Act, inserted with effect from 1st October 2014, by the Finance Act (No. 2) Act, 2014, and submit that some of the activities of the Trust are not in compliance with the provisions of Section 13(1) of the Act. We understand that the said non-compliance would be construed as an activity of the trust which is being carried out in a manner that the provisions of Section 11 and 12 of the Act donot apply to exclude either whole or any part of the income of the Trust resulting in withdrawal of registration obtained by us under section 12A(a) of the Act. Accordingly, the assessee does not desire to continue to avail the benefits of registration made by the Trustees in 1975. Hence, you are hereby informed that the Trust would not be claiming exemption under section 11 of the Act, since, upon withdrawal of the registration or in any event cancellation of the registration under section 12A of the Act, it would not comply wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... registration under section 12A(a) of the Act, viz. exemption from tax u/s 11 of the Act and that consequently the Trust would not be claiming exemption under section 11 of the Act i.e. in effect, surrender the registration obtained by the Trust. Pursuant to our letter, we received a Notice dated March 13, 2015, wherein you had proposed to withdraw registration under section 12A of the Act, granted to the Trust vide registration no. TR/10925 and asked us to appear before you on March 20, 2015. Accordingly, on March 20, 2015, the Authorized Representatives of the Trust appeared before you and confirmed their agreement to the action you had proposed to take and stated that the Trust had no objection to your proposal, as the Trust itself had sought the deregistration. As there was no dispute that our request would not be acceded to we proceeded to file our Return of Income for Assessment Year 2015-16, by not availing the benefits under sections 11 to 13 of the Act. The Return of Income was filed on the basis of the normal provisions of the Act. As over fourteen months have elapsed after our meeting on 20th March, 2015, we presume our request has been noted and accepted. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8 observing, inter alia, we dispose of each of these writ petitions with the liberty to raise all the contentions at an appropriate stage before the appellate forum/authority and that the petitions are disposed of with the liberty, as prayed . 13. Once again, proceedings resumed before the respondent Principal Commissioner of Income Tax. It was, inter alia, explained by the assessee that this exercise is an exercise in futility inasmuch as the registration under section 12A has already been surrendered by the assessee and it stood cancelled/ withdrawn with effect from March 2015, for the reasons as follows: (i) The Trust was constituted by trust deed dated 23.12.1974 and obtained registration as public charitable trust in August 1975 under section 12A(a) of the ITA. In August 1975 it had filed prescribed Form 10A as required under section 12A(a) of the ITA. Vide communication dated 15.03.1976 the Trust was informed that the said application had been entered at Sr No TR/10925 in the Register of Applications under section 12A(a) of the ITA. (ii) In March 2015, referring to section 12AA(4) of the ITA inserted with effect from 1 October 2014 by Finance Act, 2014 the T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is order, and the dispute of the assessee is confined to the date from which such cancellation has to be effective. Rival submissions: 15. Shri P J Pardiwalla, learned Senior Advocate, painstakingly took us through the facts of the case in detail and submitted that this entire exercise of cancellation of registration is a nullity in law inasmuch as by virtue of letter dated 11th March 2015, the registration under section 12 A is no longer in existence. He submits that what is provided by Section 12 A is a registration which is the nature of benefit as it is a foundational requirement for the exemption under section 11. It is thus meant to be a beneficial scheme for the taxation of trusts. A benefit cannot be thrust upon an unwilling person, particularly when what is perceived and claimed to be a benefit turns out to be a liability. Learned counsel submits that a benefit, right or privilege cannot be thrust upon anyone, and it can only be retained by a beneficiary on his own choosing. Our attention is then invited to John W Salmond s very respected and authoritative commentary The Theory Of Law , which at page 642, states as follows: Vestitative facts- whether t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... may waive the benefit of an enactment which entitles him to carry so many pounds of luggage with him; and he does so, it may be added, by taking a ticket with the express condition that he shall carry no luggage (a). The only person intended to be benefitted by such an enactment is obviously, the passenger himself; and no consideration of public policy is involed in it (b). A company authorised by the statute to levy tolls within a specified maximum is not bound to exact uniform tolls from all persons alike; but is entitled, in the absence of an express provision requiring equality, to remit any part of the tolls to particular persons, at its discretion (c). (page 474) 17. Learned senior counsel submits that these principles have been reiterated time and again by the Hon ble Courts above. Our attention is then invited to Hon ble Supreme Court s judgment in the case of CIT Vs Mahendra Mills [(2000) 243 ITR 56 (SC)] wherein Their Lordships have, inter alia, observed as follows: The Officer is required to do no more than to advise the assessee. It does not place any mandatory duty on the officer to allow depreciation if the assessee does not want to claim that. Provisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion, upon the judicial precedents in the cases of Shri Poosaji Magnilal Vs The South Indian Humanitarian League [(2009) 2 CTC 25 (Mad)], Commissioner of Customs Vs Virgo Steels [(2002) 4 SCC 316)], Vellayan Chettiar Vs Province of Madras [(1947) 49 BOMLR 794], Jain Ram Vs Union of India [(1954) AIR SC 584 (SC)] as also several precedents on the same lines. For the sake of brevity, however, we may not deal with these precedents. 20. It is then contended that unlike Section 18 of the Bombay Public Trust Act, 1950, which mandates every public trust to make an application for registration under the Income Tax Act, there is no such requirement under the Income Tax Act. Registration is mandatory only when exemption under section 11 is claimed. Thus, when the assessee files the registration application on his own will, it is a natural corollary thereto that the assessee may, in his own right, surrender the registration as well. Learned counsel then invites contrast of this situation with the situation under section 115BAA wherein the assessee, once applying for the lower rate of taxation subject to certain conditions, cannot subsequently withdraw from the said scheme. It is contended ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e violation, and no further satisfaction by the Commissioner is necessary. It is thus contended that the requirements of Section 12AA(4) were clearly satisfied in the present case. It is then pointed out that while under section passing of an order is mandatory under section 12AA(3) inasmuch as it provides that the Commissioner shall pass the order, the word used in section 12AA(4) is may , and, by implication therefore, passing of the order is not mandatory at all. It is further pointed out that while section 12AA(3) provides for an opportunity of hearing to the assessee, no such provision exists in section 12AA(4). This too, according to the learned counsel, indicate that it is not necessary that a formal order be passed under section 12AA(4). 23. It is then contended that, as held by Hon ble Supreme Court in the case of Moti Ram Vs Param Dev [(1993) 2 SCC 725 (SC)], doctrine of unilateral relinquishment permits a person to give up its rights and privileges, and having done so, it is not necessary for anyone to recognize or give effect to such relinquishment. In such cases, relinquishment becomes complete and operative when relinquisher, by a concomitant act makes good hi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly purpose of registration under section 12 A was to establish identity of the Trust. Our attention was then invited to the CBDT circular 762 of 1998 which, inter alia, has, referring to the scheme of section 12 A as it then stood, observed that One of the conditions is that the person in receipt of income shall make an application for registration of trust or institution in the prescribed form and in the prescribed manner to the Chief Commissioner or the Commissioner in the specified time. However, there was no provision in the income tax law for processing of such an application and granting or refusal of registration to the concerned trust or institution . It is then contended that so far as registrations under section 12 A are concerned, these were no granted by the Commissioner as there was admittedly no legal process for grant of or refusal of such registrations in the first place. It was obtained by a unilateral act, though confirmed by a communication by the Commissioner, and, therefore, its cancellation cannot entail a different process. 27. Learned senior counsel then submits that in any event, learned Commissioner could not have delayed disposal of the assessee s r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... volved in carrying out philanthropic activities. The legislature in its wisdom has deemed it fit to permit entities which seek to help society by performing charitable acts to be entitled to certain benefits from the taxation schemes of the Government. It is further submitted that these benefits however, are not standalone benefits available to any and all trusts but only to trusts that perform charitable activities and meet the criterions mentioned in the statute for this purpose. He submits that the registration is granted only when the activities and objects of the Trust are in conformity with the Act. The Act lays down a welfare scheme whereby it seeks to permit certain exemptions to Trusts but only such Trusts or entities as are involved in charitable activities. Thus, to assert that registration is merely a benefit with no obligation is clearly contrary to the express language, intent and purport of the Act. It is contended that the concept of benefit per se is not exactly applicable to registration of Trusts. Learned ASG submits that registration is not granted for the asking but is dependent upon the applicant being otherwise in conformity of the provisions of the statute ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the trust, however, not claiming benefits under section 11 and surrendering the registration granted under section 12A are, two entirely different concepts. It is legally tenable for a Trust to be registered under section 12A of the Act and still opt for not claiming benefits of section 11 of the Act. Reliance is also placed on the registration certificate of one of the group Trusts wherein it is specifically mentioned that registration in itself does not entitle the Trust for claiming exemption under section 11 of the Act. It is submitted that this would even stand to reason since, otherwise every Trust once registered would need to do nothing further to claim exemption but would be deemed automatically to be entitled to an exemption. This is, according to the learned ASG, clearly not the prevailing law. The distinction between claiming an exemption and the registration as a trust has even been admitted by the Trust also- as is evident from the wordings of ground 2 (e) raised by the assessee. It is thus reiterated and respectfully submitted that registration is not a simplicitor benefit. To illustrate that the registration of a Trust is not merely a benefit but an obligation in te ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the question of a unilateral surrender cannot and would not arise. In fact, there is no power or provision under the Act whereby a party can unilaterally effect a surrender of the registration. Section 12AA(3) and (4) expressly provide for an Order in Writing for cancelling the registration. Necessity of passing an order is a statutory requirement without which the registration of a Trust cannot be cancelled, meaning thereby that the registration under section 12A of the Act continues till the Commissioner of Income tax/Principal Commissioner of Income Tax cancels the registration by an order in writing. 32. Learned ASG then submits that the appellant has sought to urge that the power to unilaterally surrender must be read into Section 12AA(4). This submission is made on the basis of distinguishing the language between Section 12AA(3) and Section 12AA(4) more particular the distinction between the use of the words 'shall' and 'satisfaction in the former as against 'may' and notice in the latter. It is submitted that such an interpretation is clearly misconceived for the following reasons:- 1. plain and clear language of the provisions does not provide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tes that they would no longer seek exemption. The letter expressly records that, Accordingly, the Trustees do not desire to continue to avail the benefits of the registration made by the Trustees in 1975. Hence, you are hereby informed that the Trust would not be claiming exemption under Section 11 of the Act, since upon withdrawal of the registration or in any event cancellation of the registration under Section 12A of the Act, it would not comply with the requirements of Section 12A(1)(a) read with 12AA(4) of the Act . The clear language of the letter suggests that the Trust understood it was only upon withdrawal of registration or cancellation that it would not comply. Hence, the own understanding of the Trust was that such effect takes place only upon withdrawal and/or cancellation and not by the mere submission of the letter as is being urged. It is further submitted that it is trite law that an Order of cancellation is a quasi-judicial act (See Industrial Infrastructure Development Corporation vs CIT -Order dated 16th February, 2018 passed in Civil Appeal No. 6262 of 2010 -Para 29 and 30). Hence, the question of circumventing such a quasi-judicial act cannot and does not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elinquish even found in the said letter. A bare perusal of the portion quoted above, would evince that what was urged by the Trust is that they would not claim the benefits of registration i.e. the exemption and not that they were surrendering the same. As explained above, there is a difference and distinction between registration and claiming the exemption. It is contended that the letter only suggested that no exemption would be claimed and nothing beyond that. 38. Learned ASG submits that the reliance on the noting dated 20th March, 2015 is misconceived, as it is an admitted position that no formal order thereon was ever passed and hence, the requirement of an order in writing was never completed. Hence, it is incorrect to urge that the cancellation of registration took place by way of surrender or acquiescence to the show cause notice in March, 2015. Such an interpretation would render otiose the requirement of an order in writing as mandated under Section 12AA(3) and (4). It is then submitted that there is no power of surrender vested in the Trustees under the Trust Deed dated 23rd December, 1974, and therefore the question of trustees acting in purported violation of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t had been affirmed by the Hon'ble ITAT, Mumbai in 2014 in the case of Jamshetji Tata Trust. Therefore, once the final fact-finding authority, had confirmed the Trust's violation of the aforesaid provisions, this Trust (being a group concern of Jamsetji Tata Trust) was left with no other alternative but to give up the benefits of registration. Therefore, it is submitted that this act on the part of the Trust was not a voluntary act but was a fait accompli. There is nothing on record to show that, but for this, the Trust would have suo moto surrendered the benefits of exemption under sections 11 and 12 of the Act. The entire argument on the basis of an option being available to the Trust in light of Section 10(34) of the Act, is not to be found on the record anywhere nor does the letter dated 11th March, 2015 refer to Section 10(34) of the Act. It may be noted that as early as in 2013, the Comptroller and Auditor General of India ( C AG ) in its Report No.20 of 2013 had pointed out that the Trust was violating the provisions of section 13(1)(d) of the Act. The Trust, had sold the shares of TCS (which formed part of the Trust's corpus) and the proceeds thereof were utiliz ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esent limited facts, is not possible. 39. Learned counsel for the assessee, in his rejoinder, points out that the short question before us is the date from which the cancellation has to be effective- the date on which the assessee wrote to the Commissioner that the assessee is no longer eligible for the benefit of exemption under section 11 and, therefore, there is no point in his continuing with the registration, the date on which the first show cause notice in this regard, the date on which the hearing for cancellation was concluded, a date within reasonable time frame of concluding the hearing on cancellation, or a date on the whims and fancies of the tax administration. Our attention is once again invited to the significance of the date of cancellation and tax implications flowing from the same. There is no dispute that the assessee is not eligible for the benefit of Section 11, and that is the reason that the assessee has surrendered the registration. As for the audit observations made by the CAG, learned counsel submits that audit observations are not the gospel truth but simply perceptions of the auditor which may or may not be correct, and just because CAG takes a part ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... effect from a date prior to the date on which it is granted, when it is granted, so that a trust can avail more of the tax-exemption, if admissible, under section 11. In this case, however, while the assessee claims that the registration was surrendered on 10 th February 2015, and, therefore, the trust should not be treated as registered charitable trust, for the application of Section 11 tax exemption, with effect from the assessment year 2015-16, the case of the revenue authorities is that since registration is cancelled vide respondent Principal Commissioner s formal order dated 31st October 2019, such cancellation will only have a prospective effect, and, accordingly, the trust is required to be treated as a registered trust, for the application of section 11 tax exemption, for the assessment years 2015-16, 2016-17, 2018-19, 2019-20, as also assessment year 2020-21. 42. The question then arises as to why would an assessee trust decline such a generousity of the income tax department, or, to put it conversely, why is the income tax department is so keen to extend registration under section 12A, for this extended period from March 2015 to October 2019, when the assessee do ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... haritable institution under section 12A, is deprived of exemption under section 10(34). To this extent, the registration under section 12A acts as a disability for the assessee, and, by thus ensuring that the registration under section 12A continues to remain in existence, the assessee is denied exemption under section 10(34). Effectively thus, the continuance of registration under section 12A, even when the assessee does not want exemption under section 11, may result in higher tax liability for a trust which has earned, as this Trust has earned, income by way of dividends from domestic companies eligible for exemption under section 10(34). 46. While on this subject, it is perhaps appropriate to look at the way the income tax department itself has understood the related legal provisions. While explaining the purpose of this amendment, CBDT circular no. 1/ 2015 (F No 142/13/2014 (TPL) dated 21st January 2015) has, inter alia, observed as follows: 4. The first issue was regarding the interplay of the general provision of exemptions which are contained in section 10 of the Income-tax Act vis-a-vis the specific and special exemption regime provided in sections 11 to 13 of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orities, and that approach, coupled with the facts set out earlier, puts the assessee to a clear tax disadvantage. Effectively thus, as a result of the trust being held to be a charitable trust registered under section 12A, the trust is declined the exemption of dividends received by the trust from the domestic companies- an exemption which is available to every taxpayer. To this extent, the scheme of Sections 11, 12 and 13 of the Income-tax Act are special provisions governing institutions which are being given benefit of tax exemption , which was intended to be an optional benefit to the charitable institutions, inasmuch as the assessee could voluntarily opt for the special dispensation, has become source of an additional tax burden for the trusts in question. 48. The other aspect of the matter is that this circular specifically recognizes that Sections 11, 12 and 13 of the Income-tax Act are special provisions governing institutions which are being given benefit of tax exemption and that it is for the assessee to voluntarily opt for the special dispensation . We will, however, come to this dimension a little later. 49. The next important legislative development is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 12 A, is the possible denial of exemption of dividends from domestic companies, under section 10(34) as also the fact that there may be certain adverse tax implications under section 115 TD on account of the effect of cancellation being after 1st April 2016, which result in more tax revenues to the exchequer. That is, in our humble understanding, the reason for canvassing the path followed by the revenue authorities to the correct by them, and the revenue authorities are thus seeking to benefit from their own inertia. Of course, revenue authorities have made out a case that the cancellation can have only prospective effect and it is purely the compulsion of law, rather than any temptation for revenue, that the benefit of registration under section 12A must be extended to the assessee till 31st October 2019- whether the assessee wants it or not. That claim, for the detailed reasons we will set out now, does nor seem to be correct. 52. One of the fundamental issues which have come up before us, in this case, is whether the registration under section 12 A constitutes a benefit or not, and whether an assessee, not inclined to continue with registration under section 12A, ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... us once again take a look at the CBDT circular no 1/ 2015 (supra). This circular, relevant extracts from which we have reproduced earlier as well, specifically notes that Sections 11, 12 and 13 of the Income-tax Act are special provisions governing institutions which are being given the benefit of tax exemption and that it is for the assessee to voluntarily opt for the special dispensation . In our considered view, therefore, for this short reason alone, it cannot be open to the income tax authorities to suggest that the provisions of Section 12A are not in the nature of a benefit or to suggest that it is not voluntary for the assessees to opt for such special dispensation. One it is held, as is our view, that the benefit of this special dispensation of scheme of Section 11, 12 and 13, is voluntary and at the option of the assessee, it is clear that continuance of a registration under section 12A, as a foundational requirement for exemption under section 11, cannot be thrust upon an unwilling assessee. Viewed thus, an assessee has an inherent right to withdraw from this special dispensation of scheme of Section 11, 12 and 13, unless such an withdrawal is found to be malafide. F ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t special provisions governing institutions which are being given the benefit of tax exemption , all that happens to the assessee is that the assessee does not get the said exemption. It was exemption under section 11, which was given as quid pro quo for the assessee doing the charitable activities. There was no quid pro quo for the registration inasmuch as a registration under section 12A did not, at that point of time, result in any obligations on the assessee or disadvantage to the assessee- in tax or otherwise. The disadvantageous tax implications on the assessee are only as a result of a much later legislative amendment which were not in effect even when the assessee informed the Commissioner of Income Tax of his disinclination to continue with the registration. The registration under section 12A was thus only an advantage to the assessee, and was a benefit as such. The question then is whether a benefit can be conferred upon an unwilling person. We do not think such a course is permissible in law unless this benefit is coupled with obligation or unless there is specific provision, such as in Section 115BAA, to the effect that once an assessee avails a specific beneficial pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dertaking to comply with the statute and the purpose of rendering charitable services and that registration is not a benefit available to all but a benefit which can be claimed by the Trusts which meet the criterions specified by the Act and which are willing to comply with it . Undoubtedly, that position could be correct for the period after insertion of Section 12AA with effect from 1st April 1997, but, so far as the relevant point of time is concerned, the registration was not granted but was simply obtained by the mere filing of an application in the office of the prescribed authority. There was nothing more than mere filing of the form which would entitle the applicant for registration under section. The use, in Section 12AA(3), of expression grant for registrations after 1st April 1997, and use of the expression obtain for registrations under section 12A prior to 1st April 1997, takes that aspect of the matter beyond any doubt or controversy. In the present case, the registration was obtained on 15th March 1976, and, therefore, there was no question of registration being granted upon the satisfaction of the Commissioner about the objects of the trust or instituti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... activities of the trust or the institution are being carried out in a manner that the provisions of sections 11 and 12 do not apply to exclude either whole or any part of the income of such trust or institution due to operation of sub- section (1) of section 13; or (b) the trust or institution has not complied with the requirement of any other law, as referred to in sub-clause (ii) of clause (a) of sub-section (1), and the order, direction or decree, by whatever name called, holding that such non- compliance has occurred, has either not been disputed or has attained finality, then, the Principal Commissioner or the Commissioner may, by an order in writing, cancel the registration of such trust or institution [Emphasis, by underlining, supplied by us] 61. It is quite clear that once the admitted violation of law by the assessee came to the notice of the Commissioner, as not only he received the communication of the assessee but also issued a show-cause notice to the assessee requiring the assessee to show cause why the registration not be cancelled and concluded hearing thereon, the Commissioner had the powers, under section 12AA(4), to cancel the registration ob ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stainable in law is the fact the delay in cancellation of registration has tax implications to the disadvantage of the assessee, and, to that extent, one will have to be really na ve, or at least pretend to be so na ve, to miss the obvious, or, to put it mildly, apparent motives. In any case, it is incorrect to say that the cancellation of registration cannot take effect from a date prior to the date of the order of cancellation. In the case of Agra Development Authority (supra), Hon ble High Court has observed that it can relate back to the date of show cause notice, and the first show-cause notice in the present case is dated 13th March 2015. In the case of Young Indian Vs CIT [(2019) 11 taxmann.com 235 (Del)], a coordinate bench of this Tribunal has observed, and very appropriately so, that The cancellation of registration, whether with retrospective effect or prospective, depends upon the facts and circumstances of the case and the Commissioner has power to cancel the registration from the time when such breach has occurred. It cannot be, and is not, the law that formal order cancelling registration of a trust, on account of disability attracted by the trust or for any other ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be no dispute with this proposition. The question, however, is the date from which such an order has to be effective, and on that aspect, we have already given our findings against the stand of the revenue authorities. In our considered view, the inordinate delay in passing the order in writing, cancelling registration granted under section 12A, must not put assessee to a disadvantage- particularly when the effect of the cancellation has to essentially relate back to the point of time when the first show-cause notice was issued, or, at the minimum, when hearing on the first show-cause notice were validly concluded and the first show cause notice, requiring the assessee to show cause as to why the registration obtained by the assessee under section 12A, was formally acquiesced by the assessee. 64. Learned ASG has also provided several examples from the corporate law, particularly with respect to removal of a company s name from the records of the Registrar of Companies, which cannot be done unilaterally by the company. In our humble understanding, that example will not hold good in the present context inasmuch as the incorporation of a company brings a new legal entity into exi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rove the approach adopted by the revenue authorities. 66. The question of whether the assessee had the powers, under the trust deed, to seek cancellation or withdrawal of registration under section 12A or not is wholly irrelevant because once the assessee informs the Commissioner of the assessee becoming ineligible for exemption under section 11, it is power, as indeed duty, of the Commissioner to cancel the said registration and that power of the Commissioner is not dependent on the assessee having powers, under the trust deed, to seek cancellation of registration. On this aspect of the matter also, we are unable to find ourselves in agreement with the learned ASG. 67. It is difficult to understand on the first principles, much less approve, any legitimate justification for the income tax authorities to insist that the assessee must have continue with the registration under section 12A when the assessee does not want it. It is nobody s case that there were certain specific obligations on the part of the assessee which the assessee must perform as a quid pro quo for the registration per se. Whatever obligations a charitable institution has towards the income tax authoriti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e with the statutory provisions under section 11 to 13, are raised in the course of the impugned proceedings. In our humble understanding, there is no need to deal with these aspects so far as our adjudication, on the core issue requiring our adjudication in this appeal, is concerned. All these issues so raised by the revenue authorities are left open for adjudication at the appropriate stage such as in the assessment, or any other related, proceedings, if and so necessary. Our observations hereinabove have no bearing, or should be construed as having any bearing, on these issues. 70. The admission of additional ground of appeal is also an academic issue in the light of the above conclusions arrived by us, and there is no need to deal with that aspect of the matter either. As we have decided this appeal on the short issue about the date from which the impugned order must be held to be effective, we refrain from dealing with all other issues, including the additional ground of appeal, at this stage. There are many other facets of arguments advanced before us and the grievances raised before us. However, we see no need to deal with all these aspects of the matter at this stage. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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