Narula Educational Trust, Kolkata V. ACIT, CC- XXIII, Kolkata, Kolkata

ITA 151/KOL/2012

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 87651 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 11 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-01-2015
• Appeal Filed By: Assessee
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 31-01-2012
• Court: TRIBUNAL
• Department Lawyers: RAVI JAIN
• Assessee Lawyers: S L KOCHAR
• Keywords: Cancellation of registration
• Section: 12A; 12AA

Judgement Text

, A , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH: KOLKATA ( ) BEFORE , /AND , ) [BEFORE SHRI MAHAVIR SINGH, JM & SHRI SHAMIM YAHYA , AM ] / I.T.A NO. 151 /KOL/201 2 / ASSESSMENT YEAR : 200 8 - 09 NARULA EDUCATIONAL TRUST VS. ASSISTANT COMMISSIONER OF INCOME - TAX, (PAN:AAATN4519P) CENTRAL CIRCLE - XXIII, KOLKATA ( /APPELLANT ) ( / RESPONDENT ) DATE OF HEARING: 13 .01.2015 DATE OF PRONOUNCEMENT: 29 .01.2015 FOR THE APPELLANT: S/ SHRI S. L. KOCHAR & ANIL KOCHAR, ADVOCATES FOR THE RESPONDENT: SHRI RAVI JAIN, CIT, DR / ORDER PER SHRI MAHAVIR SINGH, JM : THIS APPEAL BY ASSESSEE S IS ARISING OUT OF ORDER OF CIT (A) , CENTRAL - III , KOLKATA IN APPEAL NO. 132 /C C - XXIII/CIT(A)C - III/10 - 11/KOL DATED 29 . 11 .201 1 . ASSESSMENT WAS FRAMED BY A CIT, C C - XXIII, KOLKATA U/S. 1 43(3) OF THE INCOME - TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT ) FOR ASSESSMENT YEAR 200 8 - 09 VIDE HIS ORDER DATED 22 . 1 2 .20 1 0 . 2. THE ONLY ISSUE IN THIS APPEAL OF ASSESSEE IS AGAINST THE ORDER OF CIT(A) CONFIRMING THE ADDITION MADE BY AO DENYING EXEMPTION U/S. 11 OF THE ACT FOR THE REASON THAT CIT, CENTRAL - III, KOLKATA HAS CANCELLED THE REGISTRATION GRANTED TO ASSESSEE TRUST BY INVOKING THE PROVISION OF SECTION 12AA(3) OF THE ACT VIDE ORDER DATED 22.06.2010. THE CIT(A) HAS DENIED EXEMPTION FOR THE REASON THAT THE ASSESSEE HAS RECEIVED CAPITATION FEE ON BEHALF OF STUDENTS AND THE REGISTRATION UNDER 12AA(3) HAS ALREADY BEEN CANCELLED. AG GRIEVED, NOW ASSESSEE IS IN APPEAL BEFORE US AND RAISED FOLLOWING THREE GROUNDS: 1. FOR THAT THE LD. CIT(A) OUGHT TO HAVE TAKEN NOTE OF THE SUBMISSIONS MADE BY THE APPELLANT WHICH TOUCHED THE LEGALITY OF THE ASSESSMENT FRAMED BY THE A.O. AND THAT ONLY BECAUSE THE LD. CIT, CENTRAL - III HAD CANCELLED REGISTRATION 2 ITA NO. 151 /K/2012 NARULA EDUCATIONAL TRUST AY 2008 - 09 GRANTED U/S 12A BY HIS ORDER PASSED U/S 12AA (3), OUGHT NOT TO HAVE SIMPLY PROCEEDED WITH REFERENCE TO THE SAME BUT OUGHT TO HAVE TAKEN NOTE OF THE FACTS & CIRCUMSTANCES OF THE CASE OF THE APPEL LANT PERTAINING TO THE RELEVANT YEAR OF ASSESSMENT. 2 F OR THAT THE LD. CIT ( A) HAS SIMPLY PROCEEDED ON THE BASIS THAT REGISTRATION U/S 12A GRANTED TO THE APPELLANT ON 24.03.2000 WAS CANCELLED BY THE LD. CIT, C - III, KOLKATA WHEREAS THE LD. CIT ( A) OUGHT TO HAVE TAKEN NOTE OF AND DECIDED THE ISSUES INVOLVED WITH REFERENCE TO THE FACTS AND LAW APPLICABLE FOR THE YEAR OF ASSESSMENT IN APPEAL. 3. FOR THAT THE LD. CIT (A) WHO HAD BEEN INFORMED THAT THE ORDER OF THE LD. CIT, C - III, KOLKATA WAS IN APPEAL BEFORE THE HON'BLE TRIBUNAL, THE MATTER OUGHT TO HAVE BEEN PROPERLY TAKEN NOTE OF AND OUGHT NOT TO HAVE PASSED ORDER DISMISSING THE APPEAL OF THE APPELLANT. 3. AT THE OUTSET, LD. COUNSEL FOR THE ASSESSEE RELIED ON THE TRIBUNAL S ORDER IN ASSESSEE S OWN CASE FOR AYS 2004 - 05, 2006 - 07 AND 2007 - 08 IN ITA NOS. 220 - 222/K/2011 DATED 30.04.2012, WHEREIN EXACTLY ON SIMILAR ISSUE ALLOWED EXEMPTION U/S. 11 OF THE ACT FOR THE REASON THAT THE TRIBUNAL IN ITA NO. 1478/KOL/2010 DATED 24.02.2014 HAS ALLOWED REGISTR ATION U/S. 12A OF THE ACT AND CANCELLED THE ORDER OF CIT, CENTRAL - III, KOLKATA DATED 22.06.2010 PASSED IN TERM OF SECTION 12AA(3) OF THE ACT. THE RELEVANT ORDER IS QUOTED IN THIS ORDER AND THE SAME READS AS UNDER: 3. AT THE OUTSET THE LD. COUNSEL FOR A SSESSEE FILED COPIES OF TRIBUNAL ORDERS IN ITA NO.1477/KOL/2010 DATED 24.02.2012 AND SIMILAR ORDER ALSO PASSED IN IT A NO.1478/KOL/2010 DATED 24.02.2012 WHEREIN THE TRIBUNAL HAS ALLOWED REGISTRATION ULS. 12A OF THE IT ACT AND CANCELLED THE ORDER OF CIT, C - I LL, KOLKATA DATED 22.06.2010 IN TERMS OF SECTION 12AA(3) OF THE ACT. THE RELEVANT FINDINGS OF THE TRIBUNAL VACATING THE ORDER OF CIT - CENTRAL - III, KOLKATA READS AS UNDER : - '5. WE HAVE HEARD THE PARTIES AND PERUSED THE MATERIAL PLACED ON RECORD. WE HAVE AL SO CAREFULLY GONE THROUGH THE ORDER OF ID. CI.T. PASSED U/S. 12AA(3) OF THE ACT. THE ASSESSEE'S CONTENTION IS THAT THE POWERS CONFERRED ON THE ID. CIT. U/S. 12AA( 3) OF THE ACT DID NOT EXTEND TO CANCELLATION OF REGISTRATION GRANTED U/S. 12A OF THE ACT. WE OBSERVE THAT REGISTRATION TO THE ASSESSEE - TRUST WAS GRANTED U/S. 12A OF THE ACT ON 05/12/2000. SUBSEQUENTLY, BY INVOKING PROVISIONS OF SEC. 12AA(3) OF THE ACT, THE LD.CIT REJECTED THE SAID REGISTRATION HOLDING THE ACTIVITIES OF THE ASSESSEE BEING NOT IN ACCORDANCE WITH THE OBJECTS OF THE TRUST. AFTER CONSIDERING THE FACTUAL MATRIX OF THE CASE AS ALSO THE APPLICABLE LEGAL POSITION, WE ARE OF THE CONSIDERED VIEW THA T A REGISTRATION GRANTED U/S. 12A OF THE ACT CANNOT BE WITHDRAWN OR CANCELLED BY THE LD CIT BY INVOKING THE PROVISIONS OF SEC. 12AA(3) OF THE ACT, SEC. 12AA(3) OF THE ACT READS AS UNDER: '(3) WHERE A TRUST OR AN INSTITUTION HAS BEEN GRANTED REGISTRATION UN DER CLAUSE (B) OF SUB - SECTION (1) AND SUBSEQUENTLY THE COMMISSIONER IS SATISFIED THAT THE ACTIVITIES OF SUCH TRUST OR INSTITUTION ARE NOT GENUINE OR ARE NOT BEING CARRIED OUT IN ACCORDANCE WITH THE OBJECTS OF THE TRUST OR INSTITUTION, AS THE CASE MAY BE, H E SHALL PASS AN 3 ITA NO. 151 /K/2012 NARULA EDUCATIONAL TRUST AY 2008 - 09 ORDER IN WRITING CANCELLING THE REGISTRATION OF SUCH TRUST OR INSTITUTION. A PLAIN READING OF THE ABOVE PROVISION SHOWS THAT SEC. 12AA OF THE ACT EMPOWERS THE LD. CIT TO GRANT THE REGISTRATION IN THOSE CASES WHERE THE ASSESSEE APPLIES FOR SUCH REGISTRATION U/S. 12AA (1) OF THE ACT. ON THE OTHER HAND, SEC. I2AA (L ) OF THE ACT REA DS AS UNDER : - '12AA.(1) THE COMMISSIONER, ON RECEIPT OF AN APPLICATION FOR REGISTRATION OF A TRUST OR INSTITUTION MADE UNDER CLAUSE (A) [OR CLAUSE (AA) OF SUB - SECTION (L I] OF SECTION 12A SHALL - (A) CALL FOR SUCH DOCUMENTS OR INFORMATION FROM THE TRUS T OR INSTITUTION AS HE THINKS NECESSARY IN ORDER TO SATISFY HIMSELF ABOUT THE GENUINENESS OF ACTIVITIES OF THE TRUST OR INSTITUTION AND MAY ALSO MAKE SUCH INQUIRIES AS HE MAY DEEM NECESSARY IN THIS BEHALF; AND (B) AFTER SATISFYING HIMSELF ABOUT THE OBJEC TS OF THE TRUST OR I INSTITUTION AND THE GENUINENESS OF ITS ACTIVITIES, HE - (I) SHALL PASS AN ORDER IN WRITING REGISTERING THE TRUST OR INSTITUTION; (II) SHALL, IF HE IS NOT SO SATISFIED, PASS AN ORDER IN WRITING REFUSING TO REGISTER THE TRUST OR INSTITUTION, AND A COPY OF SUCH ORDER SHALL BE SENT TO THE APPLICANT: THE COMBINED READING OF BOTH THE ABOVE SECTIONS, IN OUR CONSIDERED OPINION, MAKES IT CLEAR THAT R EGISTRATION CAN BE CANCELLED ONLY IN THOSE CASES WHERE THE REGISTRATION HAS BEEN GRANTED UNDER SUB - SEC. (IB) OF SEC. 12AA OF THE ACT. THIS SECTION NOWHERE EMPOWERS THE ID CIT. TO CANCEL OR WITHDRAW THE REGISTRATION GRANTED U/S. 12A OF THE ACT. IN THE ABSEN CE OF SUCH EXPRESS POWER, IN OUR OPINION, THE REGISTRATION GRANTED U/S. 12A OF THE ACT CANNOT BE CANCELLED BY INVOKING PROVISIONS OF SEC. 22AA(3) OF THE ACT. IDENTICAL ISSUE WAS CONSIDERED BY THE HON'BLE DELHI HIGH COURT IN THE CASE OF DIT (EXEMPTION) VS. MOOL CHAND KHAIRATI RAM TRUST (SUPRA), WHEREIN IT HAS BEEN HELD AS UNDER: - 'FROM THE CONJOINT READING OF SUB - SECTION (I ) CLAUSE (B) AND SUB - SECTION (3) OF SECTION 12A, IT WOULD BE SEEN THAT THE CANCELLATION OF THE REGISTRATION WAS GRANTED UNDER CLAUSE ( B) OF SUB - SECTION (1). FURTHER, CANCELLATION UNDER SUB - SECTION (3) WAS ALSO PROVIDED WHERE THE REGISTRATION WAS OBTAINED AT ANY TIME UNDER SECTION 12A (MAY BE UNDER CLAUSE (A) OR CLAUSE (AA ) OF SUB - SECTION (I) OF SECTION 12A). BUT THIS POWER OF CANCELLATION OF REGISTRATION OBTAINED UNDER SECTION 12A CAME TO BE INCORPORATED BY WAY OF AMENDMENT INTRODUCED BY THE FINANCE ACT, 2010, WITH EFFECT FROM JUNE I, 2010. THAT BEING THE INTERPRETATION OF SUB - SECTION (3), IT IS AMPLY CLEAR THAT THE POWER TO CANCEL THE REGISTRATION ONCE GRANTED WAS ONLY CONFINED TO THE REGISTRATION GRANTED UNDER CLAUSE (B) OF SUB - SECTION (1) OF SECTION 12AA TILL BEFORE JUNE 1 2010 . OF COURSE, NOW WITH EFFECT FROM JUNE 1, 20 10, THE POWER VESTS WITH THE 4 ITA NO. 151 /K/2012 NARULA EDUCATIONAL TRUST AY 2008 - 09 COMMISSIONER EVEN TO CANCEL THE REGISTRATION GRANTED UNDER ANY OF THE CLAUSES OF SUB - SECTION (I ) OF SECTION 12A. IN THAT VIEW OF INTERPRETATION, WE ARE OF THE CONSIDERED VIEW THAT THERE WAS NO POWER VESTED WITH THE COMMISSIO NER TO CANCEL OR WITHDRAW THE REGISTRATION GRANTED TO THE ASSESSEE UNDER SECTION 12A(A) IN THE YEAR 1974. [EMPHASIS SUPPLIED) THEREFORE, RESPECTFULLY FOLLOWING THE AFORESAID DECISION OF HON'BLE DELHI HIGH COURT AS ALSO THE DECISIONS OF COORDINATE BENCHES OF THE TRIBUNAL RELIED ON BY THE LEARNED COUNSEL, WE HOLD THAT THE CANCELLATION OF REGISTRATION BY THE ID. CIT. BY INVOKING PRO VISIONS OF SEC. 12AA(3) OF THE ACT WAS NOT IN L ACCORDANCE OF LAW AND AS A RESULT, THE IMPUGNED ORDER OF ID, CIT DATED 22/06/2010 IS VACATED AND AS A COROLLARY THERETO, THE REGISTRATION GRANTED TO THE ASSESSEE - TRUST U/S. 12A OF THE ACT STANDS RESTORED. 6, IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. ' 3.1. SINCE THE TRIBUNAL HAS VACATED THE ORDER OF CIT - CENTRAL - III, KOLKATA CANCELLING THE REGISTRATION U/S 12AA(3) OF THE I. T. ACT, NOW REGISTRATION GRANTED U/S. 12A OF THE ACT SURVIVES AND RE GISTRATION U/S. 12A OF THE ACT STANDS RESTORED. THE CONSEQUENTIAL ORDERS PASSED BY AO DENYING THE BENEFIT U/S. 11 OF THE I. T. ACT AND CONFIRMED BY CIT(A) DESERVED TO BE QUASHED. WE ORDER ACCORDINGLY. AS THE FACTS AND CIRCUMSTANCES ARE EXACTLY SIMILAR AND SINCE THE CIT(A) HAS DENIED EXEMPTION U/S. 11 OF THE ACT ON THE ENTIRE PREMISE THAT THE REGISTRATION U/S. 12AA(3) OF THE ACT HAS BEEN CANCELLED BUT THE SAME HAS BEEN RESTORED BY THE TRIBUNAL. THERE IS NO OTHER REASON FOR DENYING EXEMPTION IN THE ORDERS OF THE LOWER AUTHORITIES. HENCE, WE ALLOW THE APPEAL OF ASSESSEE. 4 . IN THE RESULT, APPEAL OF ASSESSEE IS ALLOWED. 5 . ORDER IS PRONOUNCED IN THE OPEN COURT ON 2 9 . 0 1 . 2 0 1 5 . S D / - S D / - , , (SHAMIM YAHYA) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 2 9 T H JANUARY , 201 5 JD.(SR.P.S.) 5 ITA NO. 151 /K/2012 NARULA EDUCATIONAL TRUST AY 2008 - 09 - COPY OF THE ORDER FORWARDED TO: 1 . / A PPELLANT NARULA EDUCATIONAL TRUST, C/O, S. L. KOCHAR, ADVOCATE, 86, CANNING STREET, KOLKATA - 1. 2 / RESPONDENT A CIT, CENTRAL CIRCLE - XXIII, KOLKATA 3 . ( )/ THE CIT(A), KOLKATA 4. 5. / CIT KOLKATA / DR, KOLKATA BENCHES, KOLKATA / TRUE COPY, / BY ORDER, /ASSTT. REGISTRAR .