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TMI Blog2024 (5) TMI 708X X X X Extracts X X X X X X X X Extracts X X X X ..... or) M.P. Limited s case [ 2018 (2) TMI 1220 - SUPREME COURT] the Commission had cancelled the registration u/s 12A dated 13.04.1991 by its order dated 29.04.2002 and on 29.04.2002 the Commissioner was not empowered to cancel such registration. In view thereof, the questions answered in favour of the assessee. Power of cancellation of registration granted u/s 12A is required to be examined in law of the recent judgment in New Noble Educational Society [ 2022 (10) TMI 855 - SUPREME COURT] After having considered the entire law with reference to Section 10 (23C)(vi) of the Act as well as Section 11 (4A) of the Act and the law as examined in Pinegrove [ 2010 (1) TMI 49 - HIGH COURT OF PUNJAB AND HARYANA AT] and Queen s Educational Society s cases [ 2015 (3) TMI 619 - SUPREME COURT] - We find that the Commissioner was required to examine the aforesaid factors while granting approval of registration u/s 10(23C) - In the opinion of this Court, the same factors would also be required to be considered for the cancellation of registration already granted to the educational institutions, while examining the case u/s 12AA, of course, taking into consideration the conditions provided therein al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntage of 65.79, 66.38, 55.19, 55.19 and 49.40 for the five assessment years, as mentioned above. A show cause notice was issued to the trust on 12.11.2009 proposing to cancel the registration granted under Section 12A of the Act. 5. The Trust submitted its reply and asserted that it was not being run for profit but the object was to carry out educational activities and the entire profits were diverted towards such educational development activities. 6. The Commissioner took up the matter for reviewing the registration under Section 12AA (3) of the Act and relying on the judgment passed by the Apex Court in Municipal Corporation of Delhi vs Children Book Trust and Safdarjang Enclave Education Society vs Municipal Corporation of Delhi (1992) 3 SC 390, it has been observed that the trust was not carrying on any charitable activities within the meaning of Section 2(15) of the Act but was engaged in trade and commerce with a motive to generate profits under the garb of education. It relied on the interpretation of charitable purpose and finding that imparting education per se is not a charitable activity. He proceeded to cancel the registration vide order dated 02.03.2010. 7. The respon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1997 under Section 12A of the Act. It was alleged that while conducting review of the Society s accounts for the assessment years 2007-2008, 2008-2009 and 2009-2010, it was found that the society had generated huge profit under the garb of education. Accordingly, the registration was cancelled vide order dated 26.03.2010. 12. Per contra, learned counsel for the respondents -assessee submitted that as on the day the order was passed i.e. 02.03.2010, there was no power available with the Commissioner to review the account of the trust and proceed to cancel the registration duly granted by the Commissioner on 22.11.1993. It is submitted that there is nothing on reading Section 12AA (3) of the Act which may suggest that the same has been introduced with retrospective effect. He further submitted that the conditions which are specific for reaching to a conclusion that the registration requires to be cancelled are those as present in Section 12AA (3) of the Act. In the absence of recording any such suggestion, the registration could not be cancelled. 13. We have considered the submissions. Before we advert to the facts of the case, it would be apposite to quote Sections 12A and 12AA (3) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mendment by the Finance (No. 2) Act, 1996 (33 of 1996)], and, subsequently, it has adopted or undertaken modifications of the objects which do not conform to the conditions of registration, in the prescribed form and manner, within a period of thirty days from the date of said adoption or modification, to the Principal Commissioner or Commissioner and such trust or institution is registered under section 12AA; (ac) notwithstanding anything contained in clauses (a) to (ab), the person in receipt of the income has made an application in the prescribed form and manner to the Principal Commissioner or Commissioner, for registration of the trust or institution, (i) where the trust or institution is registered under section 12A [as it stood immediately before its amendment by the Finance (No. 2) Act, 1996 (33 of 1996)] or under section 12AA [as it stood immediately before its amendment by the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (38 of 2020)], within three months from the first day of April, 2021; (ii) where the trust or institution is registered under section 12AB and the period of the said registration is due to expire, at least six months ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce with the provisions of sub-section (4A) of section 139, within the time allowed under that section. (2) Where an application has been made on or after the 1st day of June, 2007, the provisions of sections 11 and 12 shall apply in relation to the income of such trust or institution from the assessment year immediately following the financial year in which such application is made: [Provided that the provisions of sections 11 and 12 shall apply to a trust or institution, where the application is made under (a) sub-clause (i) of clause (ac) of sub-section (1), from the assessment year from which such trust or institution was earlier granted registration; (b) sub-clause (iii) of clause (ac) of sub-section (1), from the first of the assessment year for which it was provisionally registered: 12AA. [Procedure for registration.] xx xx xx 3. Where a trust or an institution has been granted registration under clause (b) of sub-section (1)[or has obtained registration at any time under section 12A [as it stood before its amendment by the Finance (No. 2) Act, 1996 (33 of 1996)]] and subsequently the [Principal Commissioner or] Commissioner is satisfied that the activities of such trust or i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e investments are done to increase the educational learning in the institutions. 16. While answering questions of law nos. 1, 3 and 4 (supra), we find that essentially the ITAT has held the order passed by the CIT cancelling the registration on 02.03.2010 to be without jurisdiction and without authority in law. It has stated so as the amendment was made in Section 12AA (3) of the Act by the Finance Act of 2010 empowering the Commissioner to cancel the registration granted under Section 12A of the Act where it reaches to a conclusion that the activities of the such trust are not genuine and not being carried out in accordance with the objects of the trust or institution. The power was, therefore, not available as on the day when the CIT cancelled the registration i.e. on 02.03.2010. 17. We find that the issue involved in the case is no more res integra. In Industrial Infrastructure Development Corporation (Gwalior) M.P. Limited vs Commissioner of Income-Tax, Gwalior (2018) 403 ITR 1 (SC), Hon ble the Supreme Court held as under:- 21. In our considered opinion, the CIT had no express power of cancellation of the registration certificate once granted by him to the assessee under Secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , on the same principle it is held that the application of Section 21 of the General Clauses Act has no application to amend or rescind or vary a notification issued under Section 3 of the Commissions of Enquiry Act for reconstituting the commission by replacement or substitution of its sole member except applicable for a limited purpose for extending the time for completing the enquiry. (See- State of Madhya Pradesh vs. Ajay Singh, AIR 1993 SC 825). It is also held while construing the provisions of Citizenship Act that the certificate of registration of citizenship issued under Section 5(1)C of the Citizenship Act cannot be cancelled by the authority granting the registration by recourse to Section 21 of the General Clauses Act. (See- Ghaurul Hasan vs. State of Rajasthan, AIR 1967 SC 107 and Hari Shanker Jain vs. Sonia Gandhi, AIR 2001 SC 3689 ). And lastly, while construing the provisions of the Representation of People Act, it is held that the Election Commission cannot, by recourse to Section 21 of the General Clauses Act, deregister or cancel the registration of a political party under Section 29A of the Act for the decision of the Commission to register a political party und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ngage itself in education or educational activities, and not engage in any activity of profit, means that such institutions cannot have objects which are unrelated to education. In other words, all objects of the society, trust etc., must relate to imparting education or be in relation to educational activities. (b) Where the objective of the institution appears to be profit-oriented, such institutions would not be entitled to approval under Section 10 (23C) of the Income Tax Act. At the same time, where surplus accrues in a given year or set of years per se, it is not a bar, provided such surplus is generated in the course of providing education or educational activities. (c) The seventh proviso to Section 10 (23C), as well as Section 11 (4A) refer to profits which may be incidentally generated or earned by the charitable institution. In the present case, the same is applicable only to those institutions which impart education or are engaged in activities connected to education. (d) The reference to business and profits in the seventh proviso to Section 10 (23C) and Section 11 (4A) merely means that the profits of business which is incidental to educational activity as explained i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t authoritative pronouncements of this court in T.M.A Pai Foundation (supra). The interpretation of education being the sole object of every trust or organization which seeks to propagate it, through this decision, accords with the constitutional understanding and, what is more, maintains its pristine and unsullied nature. 21. In view of the aforesaid interpretation, we find that the Commissioner was required to examine the aforesaid factors while granting approval of registration under Section 10 (23C) of the Act. In the opinion of this Court, the same factors would also be required to be considered for the cancellation of registration already granted to the educational institutions, while examining the case under Section 12AA of the Act, of course, taking into consideration the conditions provided therein also. 22 Accordingly, we answer question no. 2, as above. 23. The facts of ITA No. 94 of 2011 Young Scholar s Educational Society, Barnala, are almost similar and the questions of law as framed and answered above would apply mutatis mutandis to the said appeal also. 24. In view of our aforesaid conclusions, we dismiss the appeals preferred by the revenue and upheld the order pas ..... X X X X Extracts X X X X X X X X Extracts X X X X
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