Agra Development Authortty, Agra V. C.I.T.-1, Agra

ITA 166/AGR/2012

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 0507 (ITAT-AGRA)
• Duration Of Justice: 7 year(s) 22 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 16-05-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 13-09-2012
• Assessment Year: misc
• Appeal Filed On: 24-04-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KM ANURADHA
• Assessee Lawyers: R K AGARWAL
• Keywords: Charitable institution; Opportunity of being heard; Principle of natural justice; Source of fund; Retrospective amendment; Additional evidence; Corroborative evidences; Cancellation of registration; Set aside
• Section: 12A; 12AA; 250; 15

Judgement Text

THE INCOME TAX APPELLATE TRIBUNAL AGRA BENCH, AGRA BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI A.L. GEHLOT, ACCOUNTANT MEMBER ITA NO.166/AGR/2012 AGRA DEVELOPMENT AUTHORITY VS. COMMISSIONER OF IN COME TAX-1, JAIPUR HOUSE, AGRA. AGRA. (PAN: AAALA 0081 F) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI R.K. AGARWAL, ADVOCATE & SHRI RAHUL AGARWAL, ADVOCATE RESPONDENT BY : KM. ANURADHA, JR. D.R. DATE OF HEARING : 27.11.2012 DATE OF PRONOUNCEMENT OF ORDER : 11.01.2013 ORDER PER A.L. GEHLOT, ACCOUNTANT MEMBER: THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER DATED 04.04.2012 PASSED BY THE LD. CIT-I, AGRA UNDER SECTION 12AA(3) OF THE INCOME TAX ACT, 1961 (THE ACT HEREINAFTER). 2. THE GROUNDS RAISED BY THE ASSESSEE IN ITS APPEA L ARE AS UNDER :- 1. BECAUSE THE IMPUGNED ORDER CANCELLING REGISTRAT ION U/S 12A PASSED BY LD COMMISSIONER OF INCOME TAX (HEREINAFTE R REFERRED TO AS CIT) ON THE BASIS OF NOTICE ISSUED PURSUANT TO ORDER DT. 02.03.2012 OF HONBLE ITT, AGRA BENCH, AGRA IS WHOLLY ILLEGAL AND INVALID IN THE EYES OF LAW. ITA NO.166/AGR/2012 2 2. BECAUSE THE LD. CIT GROSSLY ERRED, BOTH IN LAW A ND ON FACTS WHILE CANCELLING REGISTRATION GRANTED U/S. 12A W.E. F. A.Y. 2009-10. THE LD. CIT FAILED TO APPRECIATE THAT POWER TO CANC EL REGISTRATION U/S. 12AA(3) WAS BROUGHT ON THE STATUTE W.E.F. 01.06.201 0 PROSPECTIVELY. THE CANCELLATION MADE W.E.F. A.Y. 2009-10 IS INVALI D AND ILLEGAL IN THE EYES OF LAW. 3. BECAUSE THE LD. CIT GROSSLY ERRED, BOTH IN LAW A ND ON FACTS WHILE CANCELLING REGISTRATION U/S 12AA(3). THE LD. CIT FAILED TO BRING AN IOTA OF FACT LEADING TO ESTABLISH THAT THE OBJEC TS OF THE APPELLANT EXISTING PRIOR TO THE AMENDMENT IN SEC.2(15) OF THE I.T. ACT HAVE CHANGED THAT REQUIRED REVIEW OF ITS OWN ORDER GRANT ING REGISTRATION U/S. 12A. THE APPELLANT, NOT BEING INVOLVED IN CAR RYING ON ANY ACTIVITY IN THE NATURE OF TRADE, COMMERCE, BUSINESS OR ANY ACTIVITY RENDERING ANY SERVICE IN RELATION TO ANY TRADE, COM MERCE OR BUSINESS FOR A CESS, FEE OR ANY OTHER CONSIDERATION, THE AME NDMENT IN SECTION 2(15) HAS NO LEGAL APPLICATION. 4. BECAUSE THE IMPUGNED ORDER U/S. 12AA(3) PASSED B Y THE LD. CIT IN THE CASE OF APPELLANT IS PATENTLY INVALID, C ONTRARY TO PROVISION OF LAW, CONTRARY TO ALL CANONS OF NATURAL JUSTICE A ND IS VOID AB-INITIO. 5. BECAUSE THE LD. CIT GROSSLY ERRED IN LAW AND ON FACTS IN HOLDING THAT RECEIPTS FROM VARIOUS SOURCES REFERRED TO IN PARA 5.2 OF HIS ORDER ARE FROM ACTIVITIES IN THE NATURE OF TRAD E, BUSINESS OR COMMERCE. THE LD. CIT FAILED TO APPRECIATE THAT TH E APPELLANT WAS CONSTITUTED BY UP URBAN PLANNING & DEVELOPMENT ACT, 1973 SOLELY FOR THE DEVELOPMENT OF AGRA CITY AND NOT FOR ANY AC TIVITY IN THE NATURE OF TRADE, COMMERCE OR BUSINESS. THE RECEIPTS FROM ALL SOURCES ARE UTILISED EXCLUSIVELY IN ACHIEVING OBJECTS OF THE AP PELLANT. 6. BECAUSE THE LD. CIT GROSSLY ERRED IN LAW AND ON FATS IN HOLDING THAT THE APPELLANT IS DOING THE ACTIVITIES FOR A C ESS OR FEE. THE FINDINGS ARE PATENTLY WRONG, EXPOSE THE GROSS IGNOR ANCE, DELIBERATE LEGAL MALICE AND BIAS AGAINST THE APPELLANT. 7. BECAUSE THE LD. CIT GROSSLY ERRED IN LAW AND ON FACTS IN HOLDING THAT THE FACTS STATED BY THE APPELLANT ARE INCONSISTENT WITH THE ANNUAL STATEMENT FURNISHED. THE LD. CIT FAILED TO APPRECIATE THAT NONE OF THE RECEIPTS SHOWN IN THE ANNUAL STATEMENT IS PROFIT OR FROM ANY ACTIVITY IN THE NATURE OF TRADE OR BUSINESS. ITA NO.166/AGR/2012 3 8. BECAUSE THE LD. CIT GROSSLY ERRED IN LAW WHILE A PPLYING FACTS AND CIRCUMSTANCES OF OTHER STATUTORY BODIES REFERRE D TO IN PARA 9 OF HIS ORDER. THE LD. CIT FAILED TO APPRECIATE THAT O RDER OF HONBLE ITAT, AMRITSAR BENCH, IN JALANDHAR DEVELOPMENT AUTH ORITY, RELIED UPON BY HIM, RELATES TO GRANT OF REGISTRATION AND N OT CANCELLATION. THE APPLICATION OF THE ORDER OF HONBLE ITAT BY THE LD. CIT IS WHOLLY ILLEGAL. 9. BECAUSE THE ORDER IS AGAINST LAW AND FACTS. 10. BECAUSE THE APPELLANT CRAVES LEAVE TO ALTER/MOD IFY GROUNDS OF APPEAL AT THE TIME OF HEARING. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E WAS GRANTED REGISTRATION UNDER SECTION 12A W.E.F. 01.04.2003. IN ORDER TO E XAMINE THE CASE OF THE ASSESSEE IN THE LIGHT OF CHANGE IN DEFINITION OF CHARITABLE PURPOSE UNDER SECTION 2(15) OF THE ACT, NOTICE FOR CANCELLATION OF REGISTRATION W. E.F. A.Y. 2009-10 WAS ISSUED TO THE ASSESSEE ON 06.03.2012 UNDER SECTION 12AA(3) BY THE CIT. 4. THE I.T.A.T. VIDE ORDER DATED 02.03.2012 IN ASS ESSEES OWN CASE IN ITA NO.447/AGR/2011, ANNULLED EARLIER ORDER OF CIT VIDE ORDER DATED 25.11.2011 HOLDING THE SAME AS WITHOUT JURISDICTION, AS SHOW C AUSE NOTICE WAS ISSUED UNDER SECTION 293C OF THE ACT. HOWEVER, LIBERTY WAS GIVE N TO THE CIT TO TAKE ACTION IN ACCORDANCE WITH LAW. ON BEING AT LIBERTY BY THE AB OVE ORDER TO INITIATE FRESH PROCEEDINGS, THE CIT TOOK LIBERTY TO ISSUE FRESH NO TICE UNDER SECTION 12AA(3). TILL 31.03.2003 THE ASSESSEE HAD CLAIMED EXEMPTION UNDER SECTION 10(20A) OF THE ACT. THE CIT NOTED THAT THE ASSESSEE COULD NOT CLAIM EXE MPTION UNDER SECTION 10(20A) OF THE ACT AS THE SECTION WAS DELETED BY FINANCE AC T 2002. THE ASSESSEE HAD BEEN ITA NO.166/AGR/2012 4 GRANTED REGISTRATION UNDER SECTION 12A OF THE ACT W .E.F. 01.04.2003 BY THE THEN CIT, AGRA VIDE ORDER DATED 24.09.2003. THE CIT EXA MINED OBJECTS OF THE ASSESSEE IN THE LIGHT OF AMENDED SECTION 2(15) OF THE ACT. THE CIT HELD AS UNDER :- (PAGE NO.4) ON PERUSAL OF THE OBJECT OF THE ASSESSEE SOCIETY, IT IS NOTICED THAT THE OBJECT OF THE AUTHORITY CLEARLY FALLS IN T HE FOURTH LIMB I.E. ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC U TILITY AS I IS NEITHER RELIEF TO POOR, NOR EDUCATION NOR HEALTH. 5. THE SECOND ASPECT OF THE MATTER WHICH HAS BEEN E XAMINED BY THE CIT IS WHETHER THE ASSESSEE CARRIES ON ANY ACTIVITY IN THE NATURE OF TRADE COMMERCE OF BUSINESS. THE CIT HELD AS UNDER :- (PAGE NOS.4, 5 & 6) 5.2 THE VARIOUS SOURCES OF INCOME OF THE ASSESSEE AS GIVEN IN ITS INCOME AND EXPENDITURE STATEMENT ARE AS UNDER :- A. THE ASSESSEE DERIVES INCOME FROM ACQUIRING LAND FROM THE FARMERS, CONVERTING THE LAND USE, PLOTTING THE LAND AND SELLING IT AT A HIGHER PRICE, THEREBY MAKING A PROFIT, OR COLO NIZING ITSELF AND THEN SELLING THE HOUSES WITH PROFIT. THE ASSES SEE, FROM THE ABOVE MENTIONED ACTIVITIES EARNED APPROXIMATELY RS. 10 CRORES (SCHEDULE 8 OF ANNUAL STATEMENT) DURING A.Y. 2009-1 0 BY DOING SUCH ACTIVITIES. B. THE ASSESSEE MAKES PROFIT BY CONVERTING LEASE HO LD LAND TO FREE HOLD LAND, THEREBY INCREASING ITS VALUE AND RENDERI NG IT USEFUL FOR FURTHER SALE AND DEVELOPMENT BY BUILDERS, COLON IZERS AND COMMON PEOPLE. THE ASSESSEE EARNED RS.1,62,31,313/ - (SCHEDULE 9 OF ANNUAL STATEMENT) DURING THE RELEVAN T ASSESSMENT YEAR FROM SUCH ACTIVITIES. C. THE ASSESSEE OWNS AND REGULARLY GIVES SUCH PROPE RTIES/PUBLIC UTILITIES LIKE BUILDINGS, COMMUNITY CENTERS, PARKS, CONFERENCE HALLS, AUDITORIA (LIKE SURSADAN) ETC. ON HIRE FOR R ENT, AND EARNS PROFIT. ITA NO.166/AGR/2012 5 D. THE ASSESSEE SELLS ITS MASTER PLAN BOOK & TENDER FORMS AND GIVES SCOOTER & CAR STAND OPERATING LICENSES TO CON TRACTORS AND EARNS PROFIT. THE ASSESSEE EARNS FROM ADDITIONAL 2 % STAMP DUTY IMPOSED IN DEVELOPMENT AREAS. E. BY APPROVING BUILDING PLANS OF BUILDERS AND COMM ON MEN, THE ASSESSEE EARNED INCOME OF RS.29,42,424/- (SCHEDULE 12 OF ANNUAL STATEMENT). F. THE ASSESSEE ALLOTS PLOTS/HOUSES TO ALLOTTEES AN D FIXES A SCHEDULE OF INSTALLMENTS FOR PAYMENT. THESE INSTAL LMENTS INCLUDE PRINCIPAL PLUS INTEREST. THE ASSESSEE ALSO CHARGES PENAL INTEREST FOR ANY DEFAULT AND EARNS INCOME BY SUCH ACTIVITY. G. SECTION 2(DDD) OF THE UPUPD ACT, 1973 DEFINES C ITY DEVELOPMENT CHARGE AS THE CHARGE LEVIED ON A PRIVA TE DEVELOPER U/S. 38A FOR THE DEVELOPMENT OF LAND. TH E ASSESSEE EARNED PROFITS FROM SUCH BUSINESS. AS PER SCHEDULE 12 OF THE ANNUAL STATEMENT, THE ASSESSEE COLLECTED RS.3,71,99 ,997/- ON ACCOUNT OF SAID CHARGE DURING A.Y. 2009-10. H. SECTION 38A OF UPUPD ACT, 1973 PROVIDES FOR LAND USE CONVERSION CHARGE FOR THE CHANGE OF LAND USE IN THE MASTER PLAN. THIS SECTION EMPOWERS THE AUTHORITY TO CHARG E MONEY WHEN UN-AGRICULTURAL LAND IS CONVERTED TO RESIDENTI AL OR COMMERCIAL LAND OR RESIDENTIAL LAND IS CONVERTED TO COMMERCIAL LAND, THEREBY INCREASING ITS VALUATION. THE ASSESS EE EARNED PROFITS FROM SUCH BUSINESS DURING THE PERIOD UNDER CONSIDERATION. I. SECTION 39B OF UPUPD ACT, 1973 PROVIDES FOR IMPO SITION OF LICENSE FEE, ON A PRIVATE DEVELOPER WHO HAS BEEN AU THORIZED FOR ASSEMBLY AND DEVELOPMENT OF LAND IN THE DEVELOPMENT AREA. THE ASSESSEE EARNS PROFIT FROM SUCH ACTIVITY. J. SECTION 15 OF UPUPD ACT, 1973 PROVIDES FOR IMPOS ITION OF STACKING FEES FROM THE GENERAL PUBLIC WHO USE THE A UTHORITYS LAND FOR KEEPING BUILDING MATERIAL. THE ASSESSEE E ARNS PROFIT FROM SUCH ACTIVITY. K. THE ASSESSEE INVESTS THE SURPLUS MONEY AVAILABLE WITH IT IN FDRS AND OTHER DEPOSITS LIKE ANY REGULAR BUSINESSMA N AND ITA NO.166/AGR/2012 6 EARNS INCOME OF RS.25,16,16,113/- (SCHEDULE 14 OF A NNUAL STATEMENT). FROM THE ABOVE IT IS CLEAR THAT ALL THE ABOVE MENTI ONED ACTIVITIES OF THE ASSESSEE ARE IN THE NATURE OF COM MERCE OR BUSINESS OR THEY ARE RENDERING ANY SERVICE FOR TRADE OR COMMERC E AND ATTRACT PROVISO TO SECTION 2(15) AS SUCH. 6. THE ASSESSEE IS CARRYING ON THE ABOVE ACTIVITIES FOR A CESS OR FEE OR ANY OTHER CONSIDERATION. IT IS CLEAR FROM THE DISCUSSION ABOVE AND THE ANNUAL STATEMENT OF THE ASSESSEE, WHE RE IT HAS EARNED AN INCOME OF RS.42.24 CRORES. A BRIEF COMMENT ON CESS IS ALSO IN ORDER. CESS IS DEFINED AS A TAX OR A LEVY. SO, TH E WORD CESS USED IN PROVISO TO SECTION 2(15) BRINGS INTO AMBIT OF TAXAT ION THOSE BODY CORPORATES WHICH ARE ESTABLISHED BY SOME STATUTE AN D WHICH ARE AUTHORIZED TO COLLECT CESS OR TAX OR DUTY. THE A SSESSEE IS ONE SUCH STATUTORY BODY WHICH COLLECTS CESS, FEE ETC. 6. THE CIT CANCELLED REGISTRATION UNDER SECTION 12A W.E.F. A.Y. 2009-10 AS UNDER :- (PAGE NOS.12 & 13) THE ABOVE ARGUMENTS OF THE AR ARE FOUND TO BE INCO NSISTENT WITH THE ANNUAL STATEMENT/ACCOUNTS FURNISHED BY THE ASSESSEE TO THE DEPARTMENT, FACTS OF THE CASE & NATURE OF ACTIVITIE S PERFORMED BY THE ASSESSEE. THE ARGUMENTS HAVE BEEN ADVANCED WITHOUT ADDUCING ANY SUPPORTING EVIDENCE. AS OBSERVED ABOVE, THE ASSESS EE IS A BODY CORPORATE (AS DEFINED IN SECTION 4(2) OF UPUPD ACT, 1973) WHICH EARNED AN INCOME OF RS.44.24 CRORES, AS PER ITS BOO KS OF ACCOUNTS AND IT HAS SHOWN A GENERAL RESERVE OF RS.523 CRORES, AC CUMULATED OVER THE YEAS. THE SOURCES OF INCOME AND THEIR NATURE C LEARLY SHOW THAT THE ACTIVITY IS IN THE NATURE OF TRADE AND BUSINESS . 9. IN ADDITION TO ABOVE, ANOTHER NOTEWORTHY FACT IS THAT STATUTORY BODIES WITH SIMILAR OBJECTS AND ACTIVITIES LIKE PUN JAB URBAN DEVELOPMENT AUTHORITY, HARYANA URBAN DEVELOPMENT AU THORITY, INDORE DEVELOPMENT AUTHORITY, JALANDHAR DEVELOPMENT AUTHORITY ETC. WERE NOT PROVIDED WITH EXEMPTION U/S. 12AA EVEN WHE N PROVISO TO SECTION 2(15) WAS NOT ADDED BY THE FINANCE ACT, 20 08. EVEN AT THAT TIME THESE AUTHORITIES WERE HELD TO BE NOT FOR CHA RITABLE PURPOSE AS PER THE DEFINITION U/S 2(15). HONBLE ITAT, AMRITS AR IN THE CASE OF JALANDHAR DEVELOPMENT AUTHORITY VS. CIT (ITA NO.562 /AGR/2008) HAS ITA NO.166/AGR/2012 7 DISCUSSED VARIOUS CASE LAWS AND UPHELD THE ORDER OF CIT, JALANDHAR WHO HAD REJECTED THE REGISTRATION OF JALANDHAR DEVE LOPMENT AUTHORITY U/S. 12AA HOLDING THAT THE AUTHORITY IS NOT FOR CH ARITABLE PURPOSE AS MENTIONED IN SEC.2(15). THIS POSITION OF LAW HAS N OW CHANGED CONSIDERABLY BY INSERTION OF PROVISO TO SECTION 2(1 5) BY FINANCE ACT, 2008 WHICH HAS CONSIDERABLY RESTRICTED AND LIMITED THE EXEMPTION CLAIMED BY ASSESSEE WHOS CLAIMED ACTIVITY FOR CHA RITABLE PURPOSE FALLS IN THE FOURTH LIMB I.E. ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY. IN ITS REPLY THE ASSESSEE HAS DISCUSSED THE PROVISI ONS OF SECTION 12AA. THE CONTENTIONS OF THE ASSESSEE ARE IRRELEVA NT, WHEN THERE HAS BEEN AMENDMENT TO SECTION 2(15) BROUGHT BY FINANCE ACT, 2008, EFFECTIVE FROM A.Y. 2009-10. THE CASE LAWS RELIED UPON THE ASSESSEE, IN ITS REPLY DATED 23.03.2012, ARE OF NO HELP TO IT BECAUSE AFTER AMENDMENT TO SECTION 2(15) BROUGHT BY FINANCE ACT, 2008, EFFECTIVE FROM A.Y. 2009-10, THE LEGAL POSITION HAS CHANGED. 10. FROM THE FACTS DISCUSSED ABOVE, I AM FULLY CONV INCED THAT THE ACTIVITIES UNDER CONSIDERATION OF THE ASSESSEE ARE COVERED BY THE PROVISO TO SECTION 2(15) INSERTED BY FINANCE ACT, 2 008, AND ARE NOT FOR CHARITABLE PURPOSE. 7. DURING THE HEARING BEFORE US THE REVENUE REQUEST ED FOR ADMISSION OF ADDITIONAL EVIDENCE IN THE FORM OF AUDIT REPORT UND ER SECTION 142(A) OF THE ACT DATED 18.06.2012 FOR A.Y. 2009-10. THE APPLICATION UNDER RULE 29 FILED BY THE REVENUE HAS BEEN ACCEPTED BY US AS PER REASONS GIVE N IN ORDER SHEET ENTRY DATED 12.09.2012. AFTER HEARING THE CASE, THE REVENUE FI LED REJOINDER DATED 29.12.2012, THEREFORE, THE APPEAL WAS RE-FIXED FOR HEARING TO P ROVIDE OPPORTUNITY OF HEARING TO BOTH THE SIDES. 8. THE LD. AUTHORISED REPRESENTATIVE SUBMITTED THAT OBJECTS OF ASSESSEE WERE SAME WHEN REGISTRATION UNDER SECTION 12A WAS GRANTE D TO THE ASSESSEE ON ITA NO.166/AGR/2012 8 24.09.2003 W.E.F. 01.04.2003 AT THAT TIME SECTION 1 2AA(3) WAS NOT IN STATUE. THE LD. AUTHORISED REPRESENTATIVE SUBMITTED THAT THEREF ORE AUTHORITY GRANTING REGISTRATION HAD NO POWER TO CANCEL THE REGISTRATIO N. SECTION 12AA(3) IS INSERTED BY FINANCE (NO.2) ACT 2004 W.E.F. 01.10.2004. THE LD. AUTHORISED REPRESENTATIVE SUBMITTED THAT UNDER THIS SECTION 12AA(3) THE REGIS TRATION GRANTED UNDER SECTION 12(1)(B) COULD ONLY BE CANCELLED. THE REGISTRATION TO THE ASSESSEE WAS GRANTED UNDER SECTION 12A OF THE ACT AND NOT UNDER SECTION 12AA OF THE ACT. THE LD. AUTHORISED REPRESENTATIVE FURTHER SUBMITTED THAT SE CTION 12AA(3) HAS BEEN FURTHER AMENDED BY FINANCE ACT 2010 W.E.F. 01.06.2010. THU S, IT IS CLEAR THAT CANCELLATION UNDER SECTION 12AA(3) OF THE ACT CAN BE DONE ONLY W .E.F. 01.06.2010. HE FURTHER SUBMITTED THAT REGISTRATION CANNOT BE CANCELLED PRI OR TO 01.06.2010 AS THE AMENDMENT HAS PROSPECTIVE OPERATION NOT RETROSPECTI VE. 9. THE LD. AUTHORISED REPRESENTATIVE WITHOUT PREJUD ICE TO THE ABOVE, SUBMITTED THAT THE POWER OF CANCELLATION OF REGISTR ATION UNDER SECTION 12AA(3) IS BASED ON THE SATISFACTION OF CIT WHEN TH E ACTIVITIES OF SUCH TRUST, OR INSTITUTION ARE NOT GENUINE OR ARE NOT BEING CAR RIED OUT IN ACCORDANCE WITH THE OBJECTS AS WERE AVAILABLE AT THE TIME OF GRANT OF REGISTRATION. HE SUBMITTED THAT THE ASSESSEE IS DOING THE ACTIVITIES IN ACCORDANCE WITH THE OBJECTS AS WERE AVAILABLE AT THE TIME OF CONSTITUTI ON OF THE AUTHORITY AS WELL AS AT THE TIME OF GRANT OF REGISTRATION. ITA NO.166/AGR/2012 9 10. THE LD. AUTHORISED REPRESENTATIVE SUBMITTED THA T THE PROVISO TO SECTION 2(15) CAN BE APPLIED BY THE CIT WHILE GRANT ING FRESH REGISTRATION AFTER 01.04.2009 BUT IT DOES NOT ALLOW THE AUTHORIT Y TO REVIEW/WITHDRAW/CANCEL THE REGISTRATION U/S 12AA(3) WHICH WAS GRANTED EARLIER UNLESS THE ACTIVITIES ARE NOT BEING CARRIED OUT IN ACCORDANCE WITH ITS OBJECT, AND THAT IN THE CIRCUMSTANCES, THE REGISTRA TION GRANTED TO THE APPLICANT CANNOT LEGALLY BE REVIEWED/WITHDRAWN/CANCELLED. 11. THE LD. AUTHORISED REPRESENTATIVE IN SUPPORT OF HIS CONTENTION RELIED UPON FOLLOWING ORDERS :- 1) KALINGA INSTITUTE OF EDUCATIONAL TECHNOLOGY VS. CIT, 113 TTJ (CTK.) 906. 2) M.P. MADHYAM VS. JOINT CIT, 89 TTJ (INDORE) 770 (ITAT). 3) OXFORD ACADEMY FOR CAREER DEVELOPMENT VS. CCIT & OTHERS, 226 CTR (ALL) 606 (HC). 4) KAPOOR EDUCATIONAL SOCIETY VS. CIT, 134 TTJ (LUC KNOW) 250 (ITAT). 5) HIMACHAL PRADESH ENVIRONMENT PROTECTION & POLLUT ION CONTROL BOARD VS. CIT, 125 TTJ 98 (CHD) (ITAT). 6) KAILASHANAND MISSION TRUST VS. ACIT, 83 TTJ 418 (DELHI) (ITAT). 7) BHARTI VIDYAPEETH VS. ITO, 14 DTR 454 (PUNE) (IT AT). 8) GURU GOBIND SINGH EDUCATIONAL SOCIETY VS. CIT, 1 9 DTR 472 (ASR) (ITAT). 9) BOMBAY PRESIDENCY GOLF CLUB LTD. VS. DIT (EXEMPT IONS) (ITA NO.319/MUMBAI/2012). 10) AJIT EDUCATION TRUST VS. CIT, 134 TTJ (AHD) 483 . 11) GUJARAT CRICKET ASSOCIATION, ITAT A BENCH, AH MEDABAD (ITA NO.93/AHD./2011). 12) RAJASTHAN HOUSING BOARD, ITAT A BENCH, JAIPUR (ITA NO.100/JP/2012). 13) CIT VS. SARVODAYA ILAKKIYA PANNAI (TAX CASE APP EAL NO.641 OF 2011 (HIGH COURT, MADRAS). 14) JHANSI DEVELOPMENT AUTHORITY VS. CIT (ITA NO.45 9/AGRA/2007) ITA NO.166/AGR/2012 10 15) JODHPUR DEVELOPMENT AUTHORITY VS. CIT, 68 DTR ( JD) (TRIB.) 84 DT. 19.01.2012. 16) GUJARAT INDUSTRIAL DEVELOPMENT CORPORATION UDYO G BHAVAN VS. CIT (ITA NO.175/AHD/2011 DATED 13.01.2012). 17) SHRI N.H. KAPADIA VS. DIT (EXEMPTION) (ITA NO.1 420/AHD/2011, ITAT AHMEDABAD BENCH) DATED 03.02.2012. 18) AHMEDABAD DEVELOPMENT AUTHORITY VS. DIT (EXEMPT ION) (ITA NO.754/AHD/2010, ITAT AHMEDABAD BENCH) DATED 21.05. 2010. 19) DIT (EXEMPTION) VS. MOOL CHAND KHAIRATI RAM TRU ST, 243 CTR (DEL) 245, (HIGH COURT OF DELHI). 20) HANS RAJ SMARAK SOCIETY VS. DIT (E) ITAT DELHI (DATED 20.07.20123). 12. THE LD. DEPARTMENTAL REPRESENTATIVE RELIED UPON THE ORDER OF CIT AND SUBMITTED THAT DECISIONS RELIED UPON BY THE LD. AUT HORISED REPRESENTATIVE ARE DISTINGUISHABLE ON FACTS. THE LD. DEPARTMENTAL REP RESENTATIVE SUBMITTED THAT SECTION 2(15) OF THE ACT IS VERY CLEAR ON THE ISSUE . SHE SUBMITTED THAT SOURCE OF INCOME AND THEIR NATURE CLEARLY SHOWS THAT THE ACTI VITIES ARE IN THE NATURE OF TRADE AND BUSINESS. SHE FURTHER SUBMITTED THAT FOR EXAMI NING WHETHER ACTIVITIES OF THE TRUST/INSTITUTION ARE GENUINE OR NOT, THAT CAN ONLY BE EXAMINED BY CONSIDERING INCOME AND EXPENDITURES. THE LD. DEPARTMENTAL REPR ESENTATIVE FILED WRITTEN SUBMISSION WHICH ARE AS UNDER :- IN SUPPORT OF ID. CIT-I, AGRA'S ORDER THE UNDERSIGN ED AVERS THAT THE ASSESSEE DOES NOT QUALIFY TO BE A CHARITABLE OR GANIZATION W.E.F. AY 2009-10 BECAUSE OF FOLLOWING REASONS DISCUSSED IN B RIEF: 1. FINANCE ACT, 2002 DELETED SECTION 10(20A) IN WHI CH SPECIFIC EXEMPTION WAS PROVIDED TO THE ASSESSEE. I T ALSO ADDED DEFINITION OF LOCAL AUTHORITY IN SECTION 10 (20) THEREBY EXCLUDING THE ASSESSEE FOR CLAIMING SHELTER U/S. 10(20) AS WELL. 2. FINANCE ACT, 2008 ADDED PROVISO TO SECTION 2(15) IN WHICH IT CLEARLY STATED THAT IF THE OBJECTS OF THE ITA NO.166/AGR/2012 11 ORGANIZATION FALLS UNDER THE FOURTH LIMB I.E. ADVAN CEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY AND I T CARRIES ON ANY ACTIVITY IN THE NATURE OF TRADE, BUSINESS OR COMMERCE AND RECEIVES ANY MONEY IN THE FORM OF CESS , FEES OR TAX OR ANY OTHER CONSIDERATION, THEN IT SHA LL NOT BE TREATED AS CHARITABLE ORGANIZATION. THE USE OF WOR DS LIKE CESS, FEE OR TAX IS UNUSUAL AND IT AGAIN SHOWS THE INTENT OF THE LEGISLATURE OF TAXING SUCH BODIES WHICH MAY BE COLLECTING MONEY IN THE FORM OF CESS, FEE OR TAX. THE ASSESSEE IS ONE SUCH BODY CORPORATE. FROM THE EXPL ICIT CONDITION AND RESTRICTION PROVIDED IN THE PROVISO T O SECTION 2(15), ASSESSEE DOES NOT REMAIN CHARITABLE ORGANIZATION W.E.F. A Y 2009-10. 3. EVEN ON DISSOLUTION, ALL THE ASSETS OF THE ASSES SEE WILL DEVOLVE TO THE STATE GOVERNMENT WITHOUT ANY RESTRIC TION TO ITS USE AND THERE IS NO RESTRICTION THAT THE FUN DS SHOULD ONLY BE USED FOR THE DEVELOPMENT OF THE CITY. THIS IS ONE OF THE CORE PRINCIPLES OF IRREVOCABLE CHARITABLE TR UST WHICH ASSESSEE IS IN VIOLATION OF. THIS VIEW OF THE ID. CIT-1, AGRA FINDS SUPPORT FROM THE FOLLOWING JUDGMENTS: - HON'BLE ITAT AMRITSAR BENCH JUDGMENT IN THE CASE OF JAMMU DEVELOPMENT AUTHORITY VS. CIT . - HON'BLE ITAT AMRITSAR BENCH JUDGMENT IN THE CASE OF JALANDHAR DEVELOPMENT AUTHORITY VS. CIT . - HON'BLE ITAT INDORE BENCH JUDGMENT IN THE CASE OF INDORE DEVELOPMENT AUTHORITY VS. CIT . - HON'BLE ITAT DELHI BENCH JUDGMENT IN THE CASE OF MORADABAD DEVELOPMENT AUTHORITY VS. ITO . - ITO VS. MORADABAD DEVELOPMENT AUTHORITY, 133 ITD 48 5 (DEL). - MALIK HASMULLAH ISLAMIC EDUCATIONAL VS. CIT (ITA NO.735/LKW/2011 DATED 03.07.2012) ITA NO.166/AGR/2012 12 ANOTHER QUESTION TO BE CONSIDERED IS REGARDING THE AUTHORITY OF THE COMMISSIONER OF INCOME-TAX AS PROVIDED U/S.12AA (3). THE ORDER PASSED BY THE ID. CIT-I, AGRA W.E.F. A.Y. 2009-10 I S TO BE CONSIDERED IN THE LIGHT OF ARGUMENTS BELOW: 1. FINANCE ACT, 2010 AMENDED SECTION 12AA(3) AND EX PLICITLY EMPOWERED THE CIT TO WITHDRAW EXEMPTION IN THE CASE OF REGISTRATION U/S.12A AS WELL W.E.F. 01.06.2010. IN THE CASE OF DIT (E) VS. MOOL CHAND KHAIRATI RAM TRUST, 243 CTR (DEL) 245, THE QUESTION BEFORE THE HON'BLE HIGH COURT WAS WHETHER THE DIT (E) WAS JUSTIFIED IN CANCELLING THE REGISTRATION UNDER SECTION 12M (3) W.E.F. 2002-03 VIDE HIS ORDER DATED 30TH JUNE, 2009 WHEN THE POWER TO CANCEL THE REGISTRATIO N OBTAINED UNDER SECTION 12A CAME TO BE INCORPORATED BY WAY OF AMENDMENT INTRODUCED IN SECTION 12AA(3) BY FINANCE ACT, 2010 W.E.F. 1.6.2010. THE RATIO DECIDENDI OF THE J UDGMENT OF HON'BLE DELHI HIGH COURT IN THIS CASE IS THAT NOW W .E.F. 1.6.2010, THE POWER VESTS WITH THE CIT EVEN TO CANC EL REGISTRATION GRANTED UNDER ANY OF THE CLAUSES OF SU B SECTION (1) OF SECTION 12A. AS THE SHOW-CAUSE AND THE ORDER OF CANCELLING REGIS TRATION IN THE CASE OF AGRA DEVELOPMENT AUTHORITY HAVE BEEN PA SSED AFTER 01.06.2010, SO THE ORDER IS CORRECT. THIS VIEW ALSO FINDS SUPPORT FROM THE JUDGMENT OF HON'BLE BOMBAY HIGH COURT IN T HE CASE OF SINHAGAD TECHNICAL EDUCATION SOCIETY WHEREIN THE HO N'BLE HIGH COURT DISMISSED ASSESSEE'S WRIT PETITION AGAIN ST THE FRESH SHOW-CAUSE NOTICE ISSUED BY THE CIT DATED 11 MARCH 2011 PROPOSING TO INVOKE THE POWERS UNDER THE AMENDED PR OVISIONS OF SECTION 12AA(3) FOR CANCELLATION OF THE REGISTRA TION W.E.F. A.Y. 1999-2000 FOR THE REASONS MENTIONED IN THE ORD ER DATED 9 OCTOBER 2007 AND HAS HELD: BY THE FINANCE ACT OF 2010, SUB-SECTION (3) WAS AME NDED SO AS TO EMPOWER THE COMMISSIONER 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) AC T, 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 ITA NO.166/AGR/2012 13 AMENDMENT IN 1996. EVERY STATUTORY PROVISION WHICH OPERATES IN RESPECT OF A TRUST, WHICH HAS ALREADY B EEN REGISTERED IN THE PAST DOES NOT HAVE A RETROSPECTIV E 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 I T TAKES AWAY A RIGHT WHICH HAS VESTED OR ACCRUED IN THE PAS T. 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 AR E 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 RETROSPECT IVE ALTERATION OF THE LAW . 2. SECOND QUESTION IS THAT WHETHER THE ID. CIT-I, A GRA IS CORRECT IN WITHDRAWING EXEMPTION W.E.F. AY 2009-10 AND IS THE ORDER RETROSPECTIVE IN CHARACTER? THE AMENDM ENT BY FINANCE ACT, 2008 AMENDED SECTION 2(15) IN SUCH A WAY THAT THE ASSESSEE DID NOT QUALIFY AS CHARITABLE ORGANIZATION W.E.F. AY 2009-10. SO, THE ASSESSEE L OST THE RIGHT OF EXEMPTION W.E.F. 01.04.2009 ITSELF. WHAT THE ORDER OF CIT-I, AGRA HAS DONE IS MANIFEST THIS SITU ATION AND MAKE IT EXPLICIT. THIS ORDER HAS NOT TAKEN AWAY ANY RIGHT WHICH THE ASSESSEE POSSESSED BUT HAS ONLY STA TED AND IMPLEMENTED WHAT THE LEGISLATURE HAS ALREADY SA ID THROUGH FINANCE ACT 2008. SO, ORDER OF CIT-I, AGRA IN NOT RETROSPECTIVE IN CHARACTER. THIS VIEW ALSO FIND S SUPPORT FROM THE JUDGEMENT OF MUMBAI HIGH COURT IN THE CASE OF SINHAGAD TECHNICAL EDUCATION SOCIETY . 3. THIRD QUESTION TO BE CONSIDERED IS THAT SECTION 12AA (3) ONLY EMPOWERS THE CIT TO WITHDRAW EXEMPTIO N WHEN THE ACTIVITIES OF THE TRUST ARE NOT GENUINE OR THAT THEY ARE NOT CARRIED ON AS PER THE OBJECTS OF THE T RUST. NOW, THE QUESTION BEGETS A FURTHER QUESTION: WHAT I S GENUINE AS PER SECTION 12A/12AA/11/12/13? ALL TH ESE SECTIONS DEAL WITH EXEMPTION FOR CHARITABLE PURPOS E ONLY. SO, WORD GENUINE CAN ONLY BE UNDERSTOOD IN THE BACKGROUND OR IN CONNECTION IN WHICH IT IS USED, I. E. THE OBJECTS, THEN ONLY WE CAN ARRIVE AT CORRECT UNDERSTANDING. OTHERWISE A PROFIT MAKING PRIVATE ITA NO.166/AGR/2012 14 COMPANY WHICH MAY ALSO BE INVOLVED IN 'GENUINE' ACTIVITIES AND WHICH ALSO MAY BE TRUE TO ITS 'OBJEC TS' WILL QUALIFY TO BE 'CHARITABLE ORGANIZATION'! THIS VIEW ALSO FINDS SUPPORT FROM THE ORDER OF ITAT , AGRA IN THE CASE OF SAMARPAN SAMITI VS. CIT-II, AGRA (ITA NO. 427/2011 AND 36/2012) DATED 22.6.2012 . VIDE PARAGRAPH 21 OF THE SAID ORDER IT IS NOTED THAT, AS REGARDS GENUINENESS OF THE ACTIVITIES OF THE TRUST OR INSTITUTION WHOSE OBJECTS DO NOT RUN CONTRARY TO TH E PUBLIC POLICY AND ARE, IN FACT, RELATED TO CHARITAB LE PURPOSES , THE CIT IS EMPOWERED TO MAKE ENQUIRY AS HE THINKS FIT. IN THE CASE OF AGRA DEVELOPMENT AUTHORITY ID. CIT-I , AGRA, MADE ENQUIRIES TO CONSIDER THE GENUINENESS OF ACTIVITIES AND IF THE OBJECTS ARE, IN FACT, RELATED TO CHARITABLE PURPOSES, WITH REFERENCE TO THE AMENDMEN T BROUGHT OUT IN SECTION 2(15) BY FINANCE ACT 2008 W. E.F. 1.4.2009 AND FOUND THAT THE ACTIVITIES OF THE ASSESSEE ARE NOT GENUINE IN SO FAR AS THEY ARE NOT FOR CHARITABLE PURPOSE AS DEFINED IN SECTION 2(15) W.E.F. AY 2009-10. 13. THE LD. DEPARTMENTAL REPRESENTATIVE FILED REJOI NDER IN CONTINUATION TO THE ABOVE WRITTEN SUBMISSION AS UNDER :- KINDLY REFER TO THE WRITTEN SUBMISSION FILED BEFOR E THE HONBLE BENCH DATED 21.9.2012, IN CONTINUATION OF THE EARLIER WRI TTEN SUBMISSION, IT IS FURTHER SUBMITTED FOR YOUR KIND CONSIDERATION THAT : FINANCE ACT 2012 HAS INSERTED CLAUSE (8) TO SECTION 13 OF THE INCOME TAX ACT, 1961, WITH RETROSPECTIVE EFFECT FROM 1.4.2 009. SECTION 13(8) STATES AS UNDER : (8) NOTHING CONTAINED IN SECTION 11 OR SECTION 12 S HALL OPERATE SO AS TO EXCLUDE ANY INCOME FROM THE TOTAL INCOME OF THE PREVIOUS YEAR OF THE PERSON IN RECEIPT THEREOF IF THE PROVISIONS OF THE FIRST PROVISO TO CLAUSE (15) OF S ECTION 2 ITA NO.166/AGR/2012 15 BECOME APPLICABLE IN THE CASE OF SUCH PERSON IN THE SAID PREVIOUS YEAR. SECTION 2(15) AFTER IT WAS AMENDED BY FINANCE ACT 2 008, W.E.F. 1.4.2009, DEFINES CHARITABLE PURPOSE AS : (15) CHARITABLE PURPOSE INCLUDES RELIEF OF THE PO OR, EDUCATION, MEDICAL RELIEF, [PRESERVATION OF ENVIRON MENT (INCLUDING WATERSHEDS, FORESTS AND WILDLIFE) AND PR ESERVATION OF MONUMENTS OR PLACES OR OBJECTS OF ARTISTIC OR HISTO RIC INTEREST,] AND THE ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY: PROVIDED THAT THE ADVANCEMENT OF ANY OTHER OBJECT O F GENERAL PUBLIC UTILITY SHALL NOT BE A CHARITABLE PURPOSE, I F IT INVOLVES THE CARRYING ON OF ANY ACTIVITY IN THE NATURE OF TR ADE, COMMERCE OR BUSINESS, OR ANY ACTIVITY OF RENDERING ANY SERVICE IN RELATION TO ANY TRADE, COMMERCE OR BUSINESS, FOR A CESS OR FEE OR ANY OTHER CONSIDERATION, IRRESPECTIVE OF THE NATURE OF USE OR APPLICATION, OR RETENTION, OF THE INCOME FRO M SUCH ACTIVITY. THEREFORE, IN VIEW OF SECTION 13(8), AS SOON AS THE PROVISO TO SECTION 2(15) BECOMES APPLICABLE, AS IN THE CASE OF AGRA DE VELOPMENT AUTHORITY, WHICH FALLS UNDER THE FOURTH LIMB OF THE DEFINITION OF CHARITABLE PURPOSE I.E. ADVANCEMENT OF ANY OTHER OB JECT OF GENERAL PUBLIC UTILITY, AND IT INVOLVES THE CARRYING ON OF ACTIVITIES AND RENDERING SERVICES IN THE NATURE OF TRADE, COMMERCE OR BUSINESS, FOR A CESS OR FEE OR ANY OTHER CONSIDERATION, IRRESPECTIV E OF THE NATURE OF USE OR APPLICATION, AS DISCUSSED IN DETAIL IN THE O RDER OF THE LD. CIT-I, AGRA, CANCELLING THE REGISTRATION GRANTED UNDER SEC TION 12A OF THE INCOME TAX ACT, NOTHING CONTAINED IN SECTION 11 OR 12 OF THE ACT SHALL OPERATE. THEREFORE, AS SOON AS AGRA DEVELOPMENT AU THORITY IS HIT BY THE PROVISO TO SECTION 2(15), SECTIONS 11 AND 12 BE COME INOPERATIVE. KEEPING IN VIEW THE EARLIER WRITTEN SUBMISSION AND THE PROVISIONS OF SECTION 13(8), IT IS HUMBLY PRAYED THAT THE ORDER O F LD. CIT-I, AGRA MAY KINDLY BE UPHELD. 14. WE HAVE HEARD THE LD. REPRESENTATIVES OF THE PA RTIES, RECORDS PERUSED AND GONE THROUGH THE DECISIONS CITED. SOME ADMITTED AN D OTHER IMPORTANT FACTS OF THE ITA NO.166/AGR/2012 16 CASE ARE THAT THE ASSESSEE, AGRA DEVELOPMENT AUTHOR ITY WAS GRANTED REGISTRATION UNDER SECTION 12A OF THE ACT W.E.F. 01.04.2003 VIDE ORDER DATED 24.09.2003. THE SAID REGISTRATION UNDER SECTION 12A OF THE ACT HAS BEEN CANCELLED BY THE CIT BY THE IMPUGNED ORDER DATED 04.04.2012 W.E.F. 2009-10. BE FORE THAT, I.E. TILL 31.03.2003 THE ASSESSEE WAS CLAIMING EXEMPTION UNDER SECTION 1 0(20A) OF THE ACT WHICH HAS BEEN OMITTED BY THE FINANCE ACT, 2002 W.E.F. 01.04. 2003. 15. UNDER THE FACTS AND CIRCUMSTANCES, THE ISSUE IS TO BE EXAMINED IN THE CASE UNDER CONSIDERATION THAT THE CIT WAS CORRECT IN CAN CELLATION OF REGISTRATION ALREADY GRANTED UNDER SECTION 12A OF THE ACT. TO EXAMINE T HE RELEVANT SCHEME OF THE ACT, WE WOULD LIKE TO REFER RELEVANT SECTIONS OF THE ACT , RELEVANT C.B.D.T. CIRCULARS AND RELEVANT JUDGEMENTS WHICH ARE AS UNDER :- 12A. CONDITIONS FOR APPLICABILITY OF SECTIONS 11 A ND 12 . 12A (1) THE PROVISIONS OF SECTION 11 AND SECTION 12 SHALL NOT APPLY IN RELATION TO THE INCOME OF ANY TRUST OR INSTITUTION UNLESS THE FOLLOWING CONDITIONS ARE FULFILLED, NAMELY : (A) THE PERSON IN RECEIPT OF THE INCOME HAS MADE AN APP LICATION FOR REGISTRATION OF THE TRUST OR INSTITUTION IN THE PRE SCRIBED FORM AND IN THE PRESCRIBED MANNER TO THE COMMISSIONER BEFORE THE 1S T DAY OF JULY, 1973, OR BEFORE THE EXPIRY OF A PERIOD OF ONE YEAR FROM THE DATE OF THE CREATION OF THE TRUST OR THE ESTABLISHMENT OF THE I NSTITUTION, WHICHEVER IS LATER AND SUCH TRUST OR INSTITUTION IS REGISTERE D UNDER SECTION 12AA. .. . PROCEDURE FOR REGISTRATION. 12AA. (1) THE [***] COMMISSIONER, ON RECEIPT OF AN APPLI CATION FOR REGISTRATION OF A TRUST OR INSTITUTION MADE UNDER C LAUSE (A) [OR CLAUSE (AA) OF SUB-SECTION (1)] OF SECTION 12A, SHALL ITA NO.166/AGR/2012 17 (A) CALL FOR SUCH DOCUMENTS OR INFORMATION FROM TH E TRUST OR INSTITUTION AS HE THINKS NECESSARY IN ORDER TO SATI SFY HIMSELF ABOUT THE GENUINENESS OF ACTIVITIES OF THE TRUST OR INSTITUTI ON AND MAY ALSO MAKE SUCH INQUIRIES AS HE MAY DEEM NECESSARY IN THIS BEH ALF; AND (B) AFTER SATISFYING HIMSELF ABOUT THE OBJECTS OF THE TRUST OR 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 OR DER IN WRITING REFUSING TO REGISTER THE TRUST OR INSTITUTION, AND A COPY OF SUCH ORDER SHALL BE SENT TO THE APPLICANT : PROVIDED THAT NO ORDER UNDER SUB-CLAUSE (II) SHALL BE PASSED UNLESS THE APPLICANT HAS BEEN GIVEN A REASONABLE OPPORTUNITY O F BEING HEARD. [(1A) ALL APPLICATIONS, PENDING BEFORE THE CHIEF C OMMISSIONER ON WHICH NO ORDER HAS BEEN PASSED UNDER CLAUSE (B) OF SUB-SECTION (1) BEFORE THE 1ST DAY OF JUNE, 1999, SHALL STAND TRANS FERRED ON THAT DAY TO THE COMMISSIONER AND THE COMMISSIONER MAY PROCEED W ITH SUCH APPLICATIONS UNDER THAT SUB-SECTION FROM THE STAGE AT WHICH THEY WERE ON THAT DAY.] (2) EVERY ORDER GRANTING OR REFUSING REGISTRATION U NDER CLAUSE (B) OF SUB- SECTION (1) SHALL BE PASSED BEFORE THE EXPIRY OF SI X MONTHS FROM THE END OF THE MONTH IN WHICH THE APPLICATION WAS RECEIVED UND ER CLAUSE (A) [OR CLAUSE (AA) OF SUB-SECTION (1)] OF SECTION 12A.] [(3) WHERE A TRUST OR AN INSTITUTION HAS BEEN GRAN TED REGISTRATION UNDER CLAUSE (B) OF SUB-SECTION (1) [OR HAS OBTAINE D REGISTRATION AT ANY TIME UNDER SECTION 12A [AS IT STOOD BEFORE ITS AMEN DMENT BY THE FINANCE (NO. 2) ACT, 1996 (33 OF 1996)]] AND SUBSEQUENTLY T HE COMMISSIONER IS SATISFIED THAT THE ACTIVITIES OF SUCH TRUST OR INST ITUTION ARE NOT GENUINE OR ARE NOT BEING CARRIED OUT IN ACCORDANCE WITH THE OB JECTS OF THE TRUST OR INSTITUTION, AS THE CASE MAY BE, HE SHALL PASS AN O RDER IN WRITING CANCELLING THE REGISTRATION OF SUCH TRUST OR INSTIT UTION: PROVIDED THAT NO ORDER UNDER THIS SUB-SECTION SHALL BE PASSED UNLESS SUCH TRUST OR INSTITUTION HAS BEEN GIVEN A REASONABLE OP PORTUNITY OF BEING HEARD.] 16. SECTION 2(15) HAS BEEN SUBSTITUTED BY THE FINAN CE ACT, 2008, W.E.F. 01.04.2009 AS UNDER :- ITA NO.166/AGR/2012 18 2(15) CHARITABLE PURPOSE INCLUDES RELIEF OF THE POOR, EDUCATION, MEDICAL RELIEF, [PRESERVATION OF ENVIRONMENT (INCLU DING WATERSHEDS, FORESTS AND WILDLIFE) AND PRESERVATION OF MONUMENTS OR PLACES OR OBJECTS OF ARTISTIC OR HISTORIC INTEREST,] AND THE ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY: PROVIDED THAT THE ADVANCEMENT OF ANY OTHER OBJECT OF GENERA L PUBLIC UTILITY SHALL NOT BE A CHARITABLE PURPOSE, IF IT IN VOLVES THE CARRYING ON OF ANY ACTIVITY IN THE NATURE OF TRADE, COMMERCE OR BUSINESS, OR ANY ACTIVITY OF RENDERING ANY SERVICE IN RELATION TO AN Y TRADE, COMMERCE OR BUSINESS, FOR A CESS OR FEE OR ANY OTHER CONSIDERAT ION, IRRESPECTIVE OF THE NATURE OF USE OR APPLICATION, OR RETENTION, OF THE INCOME FROM SUCH ACTIVITY:] [ PROVIDED FURTHER THAT THE FIRST PROVISO SHALL NOT APPLY IF THE AGGREGATE VALUE OF THE RECEIPTS FROM THE ACTIVITIES REFERRED TO THEREIN IS [TWENTY-FIVE LAKH RUPEES] OR LESS IN THE PREVIOU S YEAR;] (IN OLD SECTION 2(15) THE PROVISO WAS NOT THERE IN STATUTE.) 17. THE C.B.D.T. HAS ISSUED SOME CIRCULARS EXPLAINI NG AMENDMENTS IN THE RELEVANT SECTIONS WHICH ARE AS UNDER:- FINANCE (NO. 2) ACT, 1996 - CIRCULAR NO.762, DATED 18.2.1998 REGISTRATION OF CHARITABLE AND RELIGIOUS TRUSTS 19.1 UNDER THE EXISTING PROVISIONS OF THE INCOME-TAX AC T, EXEMPTION FROM INCOME-TAX IN RESPECT OF THE INCOME OF A CHARI TABLE OR RELIGIOUS TRUST OR INSTITUTION IS AVAILABLE ONLY IF THE CONDITIONS SPECIFIED IN THAT SECTION ARE SATISFIED. ONE OF THESE CONDITIONS IF THAT THE PERSON IN RECEIPT OF THE INCOME SHALL MAKE AN APPLICATION FOR REGISTRATION O F THE TRUST OR INSTITUTION IN THE PRESCRIBED FORM AND IN THE PRESC RIBED MANNER TO THE CHIEF COMMISSIONER OR COMMISSIONER OF INCOME-TAX WI THIN THE SPECIFIED TIME. HOWEVER, THERE WAS NO PROVISION IN THE INCOME -TAX FOR PROCESSING OF SUCH AN APPLICATION AND GRANTING OR REFUSAL OF R EGISTRATION TO THE CONCERNED TRUST OR INSTITUTION. ITA NO.166/AGR/2012 19 FINANCE (NO. 2), ACT, 1996 19.2 HENCE THE ACT NOW PROVIDES FOR A PROCEDURE TO BE FOLLOWED FOR GRANT OF REGISTRATION TO A TRUST OR INSTITUTION. AC CORDING TO THIS PROCEDURE, THE CHIEF COMMISSIONER OR COMMISSIONER SHALL CALL F OR DOCUMENTS AND INFORMATION AND CONDUCT ENQUIRIES TO SATISFY ABOUT THE GENUINENESS OF THE TRUST OR INSTITUTION. AFTER HE IS SATISFIED ABOUT T HE CHARITABLE OR RELIGIOUS NATURE OF THE OBJECTS AND GENUINENESS OF THE ACTIVI TIES OF THE TRUST OR INSTITUTION, HE WILL PASS AN ORDER GRANTING REGISTR ATION. IF HE IS NOT SO SATISFIED, HE WILL PASS AN ORDER REFUSING REGISTRAT ION. HOWEVER, AN OPPORTUNITY OF BEING HEARD SHALL HAVE TO BE PROVIDE D TO THE APPLICANT BEFORE AN ORDER OF REFUSAL TO GRANT REGISTRATION IS PASSED BY THE CHIEF COMMISSIONER OR COMMISSIONER. THE REASON FOR REFUSA L OF REGISTRATION SHALL ALSO HAVE TO BE MENTIONED IN THAT ORDER. THE ORDER GRANTING OR REFUSING REGISTRATION HAS TO BE PASSED WITHIN SIX M ONTHS FROM THE END OF THE MONTH IN WHICH THE APPLICATION FOR REGISTRATION IS RECEIVED BY THE CHIEF COMMISSIONER OR COMMISSIONER AND A COPY OF SU CH ORDER SHALL BE SENT TO THE APPLICANT. INCOME-TAX : EXPLANATORY NOTES TO THE PROVISIONS O F THE FINANCE ACT, 2010 CIRCULAR NO. 1/2011 [F.NO. 142/1/2011-SO(TPL)], DAT ED 6-4-2011 ... 7. CANCELLATION OF REGISTRATION OBTAINED UNDER SEC TION 12A 7.1 SECTION 12AA PROVIDES THE PROCEDURE RELATING TO REG ISTRATION OF A TRUST OR INSTITUTION ENGAGED IN CHARITABLE ACTIVITI ES. SECTION 12AA(3) PREVIOUSLY PROVIDED THAT IF THE ACTIVITIES OF THE T RUST OR INSTITUTION ARE FOUND TO BE NON-GENUINE OR ITS ACTIVITIES ARE NOT I N ACCORDANCE WITH THE OBJECTS FOR WHICH SUCH TRUST OR INSTITUTION WAS EST ABLISHED, THE REGISTRATION GRANTED UNDER SECTION 12AA CAN BE CANC ELLED BY THE COMMISSIONER AFTER PROVIDING THE TRUST OR INSTITUTI ON AN OPPORTUNITY OF BEING HEARD. 7.2 THE POWER OF CANCELLATION OF REGISTRATION IS INHERE NT AND FLOWS FROM THE AUTHORITY OF GRANTING REGISTRATION. HOWEVER, JU DICIAL 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 ITA NO.166/AGR/2012 20 UNDER PROVISIONS OF SECTION 12A AS IT IS NOT SPECIF ICALLY MENTIONED IN SECTION 12AA. 7.3 THEREFORE, SECTION 12AA HAS BEEN AMENDED TO PROVIDE THAT THE COMMISSIONER CAN ALSO CANCEL THE REGISTRATION OBTAI NED UNDER SECTION 12A AS IT STOOD BEFORE AMENDMENT BY FINANCE (NO.2) ACT, 1996. 7.4 APPLICABILITY - THIS AMENDMENT HAS BEEN MADE APPLICABLE WITH EFF ECT FROM 1ST JUNE, 2010 AND SHALL ACCORDINGLY APPLY FOR ASSESSMENT YEAR 2011-12 AND SUBSEQUENT ASSESSMENT YEARS. 18. THE ALLAHABAD HIGH COURT IN CIT V. MANAV VIKAS AVAM SEWA SANSTHAN [IT APPEAL NO. 161 OF 2007, DATED 24-2-2010], WHEREIN R ELIANCE WAS PLACED IN THE CASE OF LUCKNOW BENCH IN OXFORD ACADEMY FOR CAREER DEVELOPMENT V. CHIEF CIT [2009] 315 ITR 382 (ALL.), WHEREIN IT WAS HELD AS UNDER :(PAGE NO. 390) REGARDING CANCELLATION OF REGISTRATION WHICH WAS GR ANTED ON APRIL 1, 1999, UNDER SECTION 12A OF THE ACT, IT IS TRUE THAT THERE WAS NO EXPRESS PRO VISION IN SECTION 12A OF THE ACT FOR CA NCELLATION OF THE REGISTRATION. THE APPLICABILITY OF SECTION 21 OF TH E GENERAL CLAUSES ACT, 1897, WAS DISCUSSED BY THE UTTARANCHAL HIGH CO URT IN THE CASE OF WELHAM BOY'S SCHOOL SOCIETY [2006] 285 ITR 74 (UTTARANCHAL), WHERE IT WAS OBSERVED THAT ANY ORDER PASSED BY THE COMMISSIONER OF INCOME-TAX UNDER SECTION 12A IS A QUASI-JUDICIAL OR DER, WHICH DOES NOT FALL IN THE CATEGORY OF 'ORDERS' MENTIONED IN S ECTION 21 OF THE GENERAL CLAUSES ACT, 1897, BY RELYING THE RATIO LAI D DOWN IN THE CASE OF GHAURUL HASAN V. STATE OF RAJASTHAN, AIR 1967 SC 107. THE HIGH COURT OBSERVED THAT BY VIRTUE OF SECTION 21 OF THE GENERAL CLAUSES ACT, THE COMMISSIONER OF INCOME-TAX HAD NO POWER TO RESCIND THE ORDER PASSED EARLIER BY THE COMMISSIONER GRANTING R EGISTRATION TO THE PETITIONER'S SOCIETY. IT MAY BE MENTIONED THAT SECT ION 12AA(3) WAS INCORPORATED WITH EFFECT FROM OCTOBER 1, 2004, TO E MPOWER THE COMMISSIONER TO CANCEL THE REGISTRATION GRANTED TO A TRUST OR INSTITUTION. THE SAME IS NOT APPLICABLE RETROSPECTI VELY AND IN THE ASSESSEE'S CASE FOR THE ASSESSMENT YEARS UNDER CONS IDERATION. THE OBJECT OF THIS PROVISION IS NOT CLARIFICATORY OR EX PLANATORY, SO PRIOR TO THAT DATE, THE AUTHORITIES GRANTING REGISTRATION HA D NO INHERENT POWER ITA NO.166/AGR/2012 21 TO WITHDRAW OR REVOKE THE REGISTRATION ALREADY GRAN TED. THE ORDER CANCELLING THE REGISTRATION GRANTED TO A TRUST OR I NSTITUTION UNDER SECTION 12AA OF THE ACT BEING A QUASI-JUDICIAL ORDE R DOES NOT FALL WITHIN THE CATEGORY OF ORDERS MENTIONED UNDER SECTI ON 21 OF THE GENERAL CLAUSES ACT, 1897, WHICH PROVIDES THAT THE POWER CONFERRED ON AN AUTHORITY EMPOWERS TO ISSUE ORDERS INCLUDING THE POWER TO RESCIND SUCH ORDERS AND THE COMMISSIONER WOULD NOT HAVE POWER TO RESCIND THE ORDER PASSED BY THE COMMISSIONER EARLIE R GRANTING THE REGISTRATION TO A TRUST OR INSTITUTION. 19. THE HEADING OF SECTION 12A CONDITIONS FOR APPL ICABILITY OF SECTIONS 11 AND 12 WAS SUBSTITUTED WITH EFFECT FROM 01.06-2007 IN PLACE OF PREVIOUS TITLE CONDITIONS AS TO REGISTRATION OF THE TRUSTS ETC. IT MEANS THAT PRIOR TO 01.06.2007, THIS SECTION ITSELF PROVIDED CONDITIONS REGARDING R EGISTRATION OF TRUST ETC. IT IS NOTED HERE BECAUSE WITH THE SUBSTITUTION OF THE PRESENT T ITLE, THIS SECTION NO LONGER PROVIDES FOR REGISTRATION OF TRUST ETC. A SPECIAL PROVISION HAS BEEN ENACTED IN SECTION 12AA PROVIDING FOR PROCEDURE FOR REGISTRATI ON OF TRUST ETC., WITH EFFECT FROM 01.04.1997. IT IS ALSO NOTED THAT SECTION 12A WAS INSERTED IN THE STATUTE BOOK BY THE FINANCE ACT, 1972 WITH EFFECT FROM 01.04.1973. IT WAS OMITTED AND WAS AGAIN RESTORED WITH EFFECT FROM 01.04.1989. SECTION 12A, AS IT STOOD AT THE TIME WHEN IT PROVIDED FOR REGISTRATION OF TRUST, NOWHERE PROVIDE D FOR CANCELLATION OF THE REGISTRATION ONCE GRANTED. IT IS ALSO PERTINENT TO NOTE THAT THE WORDS SUCH TRUST OR INSTITUTION IS REGISTERED UNDER SECTION 12AA WERE ALSO SUBSTITUTED IN THIS SECTION WITH EFFECT FROM 01.04.1997. IN FACT, THIS SECTION EVEN NOW NOWHERE STIPULATES ABOUT THE CANCELLATION OR WITHDRAWAL OF THE REGISTR ATION, ONCE GRANTED UNDER THE SAID SECTION. IT IS ONLY UNDER SECTION 12AA, WHICH CAME IN THE STATUTE BOOK WITH ITA NO.166/AGR/2012 22 EFFECT FROM 01.04.1997 THAT A FRESH PROCEDURE FOR R EGISTRATION OF THE TRUST OR INSTITUTION IS PRESCRIBED. EVEN UNDER THIS SECTION 12AA, THERE WAS NO PROVISION FOR CANCELLATION OF REGISTRATION ONCE GRANTED TILL THE ENACTMENT OF SUB-SECTION (3) WITH EFFECT FROM 01.10-2004. THERE IS NO DISPUTE WITH R EGARD TO THIS FACT THAT THE PROVISION REGARDING CANCELLATION OF REGISTRATION CA ME TO BE INTRODUCED FOR THE FIRST TIME BY VIRTUE OF SUB-SECTION (3) IN SECTION 12AA W ITH EFFECT FROM 1-10-2004. THIS SUB-SECTION (3) PROVIDES THAT WHEN A TRUST OR AN IN STITUTION HAS BEEN GRANTED REGISTRATION UNDER CLAUSE (B) OF SUB-SECTION (1) AN D SUBSEQUENTLY THE COMMISSIONER IS SATISFIED THAT THE ACTIVITIES OF SUCH TRUST OR I NSTITUTION ARE NOT GENUINE OR ARE NOT BEING CARRIED OUT IN ACCORDANCE WITH THE OBJECTS OF THE TRUST OR INSTITUTION, AS THE CASE MAY BE, HE SHALL PASS AN ORDER IN WRITING CANC ELLING THE REGISTRATION OF SUCH TRUST OR INSTITUTION. FROM THE CONJOINT READING OF SUB-SECTION (1) CLAUSE (B) AND SUB- SECTION (3) OF SECTION 12AA, IT WOULD BE SEEN THAT THE CANCELLATION OF THE REGISTRATION WAS PROVIDED WHERE THE REGISTRATION WA S GRANTED UNDER CLAUSE (B) OF SUB-SECTION (1). FURTHER CANCELLATION UNDER SUB-SEC TION (3) WAS ALSO PROVIDED WHERE THE REGISTRATION WAS OBTAINED AT ANY TIME UNDER SEC TION 12A [MAY BE UNDER CLAUSE (A) OR CLAUSE (AA) OF SUB-SECTION (1) OF SECTION 12 A]. 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 01.06.2010. THAT BEING THE INTERPRETATION OF SUB-SECTION (3), I T IS AMPLY CLEAR THAT THE POWER TO CANCEL THE REGISTRATION ONCE GRANTED WAS ONLY CONFI NED TO THE REGISTRATION GRANTED UNDER CLAUSE (B) OF SUB-SECTION (1) OF SECTION 12AA TILL BEFORE 01.06.2010. OF ITA NO.166/AGR/2012 23 COURSE, NOW WITH EFFECT FROM 01.06.2010, THE POWER VESTS WITH THE COMMISSIONER EVEN TO CANCEL THE REGISTRATION GRANTED UNDER ANY O F THE CLAUSES OF SUB-SECTION (1) OF SECTION 12A. THUS, FOR EXERCISING POWER OF CANCE LLATION OF REGISTRATION UNDER SECTION 12A/12AA AND UNDER SECTION 12AA(3) OF THE A CT BY THE CIT ONLY ON THE FOLLOWING CONDITIONS:- I) THAT THE TRUST OR SOCIETY HAS ALREADY BEEN GRANT ED REGISTRATION UNDER SECTION 12AA(1)(B) OF THE ACT. OR II) W .E .F. 01.06.2010 - REGISTRATION HAS BEEN GRANTED AT ANY TIME UNDER SECTION 12A AS STOOD BEFORE ITS AMENDMENT BY THE (F INANCE NO.2) ACT 1996 III) THE CIT SUBSEQUENTLY FOUND AND SATISFIED THAT :- A) ACTIVITIES OF SUCH TRUST OR INSTITUTION ARE NOT GENUINE, OR B) ARE NOT BEING CARRIED OUT IN ACCORDANCE WITH THE OBJECTS OF THE TRUST OR INSTITUTION. 20. IN THE LIGHT OF ABOVE DISCUSSION, IF WE CONSIDE R THE FACTS OF THE CASE UNDER CONSIDERATION AS DISCUSSED ABOVE, WE FIND THAT THE CIT IS NOT CORRECT IN CANCELLING THE REGISTRATION UNDER SECTION 12AA(3) OF THE ACT W HICH HAS BEEN GRANTED UNDER SECTION 12A OF THE ACT ON THE FOLLOWING GROUNDS AND REASONS :- I) SECTION 12AA(3) OF THE ACT EMPOWERS THE CIT TO CANCEL SUCH REGISTRATION IF HE SATISFY THAT ACTIVITIES OF THE TRUST OR INSTITUTION S ARE NOT GENUINE OR ARE NOT BEING CARRIED OUT IN ACCORDANCE WITH OBJECTS OF THE TRUST OR INSTITUTION AS THE CASE MAY BE. ITA NO.166/AGR/2012 24 THE COMBINED READING OF BOTH THE SECTIONS MAKES IT CLEAR THAT BEFORE 01.06.2010 REGISTRATION CAN BE CANCELLED ONLY ON THOSE CASES W HERE THE REGISTRATION HAS BEEN GRANTED UNDER SECTION 12AA(1)(B) OF THE ACT. BEFO RE 01.06.2010 THIS SECTION 12AA(3) NOWHERE EMPOWERS THE CIT TO CANCEL OR WITHD RAW REGISTRATION UNDER SECTION 12A OF THE ACT. IN ABSENCE OF SUCH POWER, THE REGISTRATION GRANTED UNDER SECTION 12A CANNOT BE WITHDRAWN OR CANCELLED BEFORE 1.6.2010. THE POWER OF CANCELLATION OF REGISTRATION UNDER SECTION 12A OF T HE ACT CAME TO BE INCORPORATED BY WAY OF AMENDMENT INTRODUCED BY FINANCE ACT 2010 W.E.F. 01.06.2010. THE C.B.D.T. CIRCULAR NO.1/2011 DATED 06.04.2011 EXPLAI NS THAT THIS AMENDMENT WILL APPLY FOR A.Y. 2011-12 AND SUBSEQUENT YEARS. WHERE AS, IN THE CASE UNDER CONSIDERATION, THE CIT CANCELLED REGISTRATION UNDER SECTION 12A OF THE ACT FOR A.Y. 2009-10 WHICH IS NOT IN ACCORDANCE WITH THE LAW. T HIS VIEW IS FORTIFIED BY THE JUDGMENT OF HONBLE DELHI HIGH COURT IN THE CASE OF DIT(E) VS. MOOL CHAND KHAIRATI RAM TRUST, 339 ITR 622 (DELHI) AND ORDER O F I.T.A.T. IN THE CASE OF DIRECTOR OF INCOME-TAX (EXEMPTION), AHMADABAD VS. N .H. KAPADIA EDUCATION TRUST, 136 ITD 111 (AHD) WHEREIN THE I.T.A.T., AHME DABAD HAS FOLLOWED THE JUDGMENT OF HONBLE DELHI HIGH COURT. II) EVEN OTHERWISE ALSO, AS WE NOTICE THAT REGISTRA TION UNDER SECTION 12A/12AA CAN BE CANCELLED IN THE CIRCUMSTANCES PROVIDED IN S ECTION 12AA(3) OF THE ACT OF WHICH DETAIL HAS BEEN DISCUSSED ABOVE IN PARA NO 1 9 OF THIS ORDER. IF WE APPLY THE SAID CONDITION STIPULATED IN SECTION 12AA(3), WE FI ND THAT THERE IS NO FINDING OF THE ITA NO.166/AGR/2012 25 CIT THAT ACTIVITIES OF THE ASSESSEE, AGRA DEVELOPME NT AUTHORITY ARE NON-GENUINE OR NOT BEING CARRIED OUT IN ACCORDANCE WITH THE OBJ ECT OF THE ASSESSEE, AGRA DEVELOPMENT AUTHORITY. EVEN FOR THE SAKE OF ARGUMEN T IF WE ACCEPT THE VIEW OF CIT, THERE MAY BE A CASE OF ACTIVITIES WHICH ARE NO T CHARITABLE BUT IT CANNOT BE SAID THAT THOSE ACTIVITIES OF THE ASSESSEE, AGRA DEVELOP MENT AUTHORITY, ARE NON-GENUINE OR NOT BEING CARRIED OUT IN ACCORDANCE WITH THE OBJ ECT OF THE ASSESSEE. THE ACTIVITIES AND OBJECTS OF THE ASSESSEE, AGRA DEVELO PMENT AUTHORITY ARE THE SAME WHICH WERE THERE AT THE TIME OF GRANTING REGISTRATI ON UNDER SECTION 12A OF THE ACT AND AT THE TIME WHEN CIT CANCELLED THE REGISTRATION GRANTED UNDER SECTION 12A W.E.F FROM 2009-2010. THUS, WE FIND THAT THIS COND ITION OF CANCELLATION OF REGISTRATION ALREADY GRANTED UNDER SECTION12A HAS N OT BEEN SATISFIED. WHERE THE CONDITION STIPULATED UNDER SECTION 12AA (3) IS NOT SATISFIED, THE CIT CANNOT CANCEL OR WITHDRAW REGISTRATION GRANTED UNDER SECTION 12A OF THE ACT. IN THE CASE UNDER CONSIDERATION, THE CONDITION STIPULATED IN SECTION 12AA(3), THAT ACTIVITIES OF THE ASSESSEE, AGRA DEVELOPMENT AUTHORITY ARE NON-GENUIN E OR NOT BEING CARRIED OUT IN ACCORDANCE WITH THE OBJECT OF THE ASSESSEE, AGRA DE VELOPMENT AUTHOR IS NOT SATISFIED. THE CIT BY HIS OWN MOTION ADDED ONE MOR E CONDITION IN SECTION 12AA (3) THAT THE OBJECT OF THE ASSESSEE, AGRA DEVELOPME NT AUTHORITY IS NOT CHARITABLE AS PER AMENDED PROVISIONS OF SECTION 2(15) OF THE ACT FOR WHICH THE CIT IS NOT EMPOWERED TO ADD SUCH OWN CONDITION IN THE STATUTE. SIMILAR VIEW HAS BEEN TAKEN BY THE I.T.A.T., AHMEDABAD IN THE CASE OF AHMADABAD URBAN DEVELOPMENT AUTHORITY VS. DIT, ITA NO.754/AHD/ 2010, ORDER DATE D 21.5.2010. ITA NO.166/AGR/2012 26 21. NOW WE COME TO THE JUDGEMENTS RELIED UPON BY THE REVENUE. THE CIT & LD. DEPARTMENTAL REPRESENTATIVE RELIED UPON A JUDGEMENT OF HONBLE BOMBAY HIGH COURT IN THE CASE OF SINHAGAD TECHNICAL EDUCATION S OCIETY VS. CIT WRIT PETITION NO.2545 OF 2011 JUDGEMENT DATED 01.02.2012. THE CI T WAS OF THE VIEW THAT AS PER THE SAID JUDGEMENT, THE CIT CAN CANCEL REGISTRA TION UNDER SECTION 12A/12AA OF THE ACT EVEN FOR EARLIER YEARS. THE CIT IS NOT FUL LY CORRECT IN READING THE SAID JUDGEMENT, FIRSTLY THE FACTS AND ISSUE BEFORE THE C OURT WAS WHETHER POWERS GRANTED BY CIT UNDER SECTION 12AA(3) OF THE ACT WAS VALID A S PER THE CONSTITUTION. THE COURT HELD THAT POWER UNDER SECTION 12AA(3) CAN BE EXERCISED BY THE COMMISSIONER IN RESPECT OF TRUSTS REGISTERED PRIOR TO 01.06.2010. NOWHERE HAS IT BEEN HELD BY THE COURT THAT SAID POWER IS APPLICABL E TO EARLIER YEARS/ASSESSMENT YEARS. THE COURT HAS ALSO HELD THAT AMENDMENT DOES NOT TAKE AWAY ANY VESTED ARIGHT NOR DOES IT CREATE NEW OBLIGATION IN RESPECT OF PAST ACTIONS. THE COURT DID NOT EXPRESS THEIR OPINION ON MERIT OF THE CASE. TH US, WE FIND THAT THE CIT WRONGLY APPLIED THE SAID JUDGEMENT TO THE FACTS OF THE CASE UNDER CONSIDERATION. 21.1. THE CIT AND LD. DEPARTMENTAL REPRESENTATIVE RELIED UPON CERTAIN ORDERS OF I.T.A.T. WHERE IN THE ISSUE WAS DIFFERENT. THE ISS UE IN THOSE CASES WERE PERTAINING TO GRANT FRESH REGISTRATION UNDER SECTION 12AA OF T HE ACT AND NOT CANCELLATION OF REGISTRATION UNDER SECTION 12A OF THE ACT UNDER SEC TION 12AA (3) OF THE ACT. SOME OF THE DECISIONS OF I.T.A.T. ARE CONTRARY TO THE JU DGEMENT OF HONBLE DELHI HIGH COURT IN THE CASE OF DIRECTOR OF INCOME TAX (EXEMPT ION) VS. MOOL CHAND KHAIRATI ITA NO.166/AGR/2012 27 RAM TRUST, 339 ITR 622 (DELHI). THEREFORE, THOSE D ECISIONS ARE DISTINGUISHABLE ON FACTS AND DID NOT HELP TO REVENUE. 21.2. THE LD. DEPARTMENTAL REPRESENTATIVE RELIED UPON THE ORDERS OF I.T.A.T. IN THE CASES OF JAMMU DEVELOPMENT AUTHORITY VS. CIT (ITAT, AMRITSAR BENCH), JALANDHAR DEVELOPMENT AUTHORITY VS. CIT. (ITAT, AMR ITSAR BENCH), INDORE DEVELOPMENT AUTHORITY VS. CIT. (ITAT, INDORE BENCH) & MORADABAD DEVELOPMENT AUTHORITY VS. ITO (ITAT, DELHI BENCH) A FTER AMENDMENT IN SECTION 2(15), AS PER PROVISO TO SECTION 2(15) ASSESSEE DOE S NOT REMAIN CHARITABLE W.E.F. 2009-10 DOES NOT HELP TO THE ASSESSEE AS WE HAVE NO T EXPRESSED ANY OPINION ON THE ISSUE. 21.3. ONE OF THE CONTENTION OF THE LD. DEPARTMENT AL REPRESENTATIVE THAT SECTION 12AA(3) HAS BEEN AMENDED W.E.F. 01.06.2010 WHEREIN POWER HAS BEEN GIVEN TO CANCEL REGISTRATION UNDER SECTION 12A(1) OF THE ACT . IN THAT CASE THE CIT CANCELLED REGISTRATION UNDER SECTION 12A OF THE ACT AFTER 01. 06.2010, THEREFORE, THE FACT IS DIFFERENT THAN CASE UNDER CONSIDERATION. THIS CONT ENTION OF THE LD. DEPARTMENTAL REPRESENTATIVE IS NOT ACCEPTABLE IN THE LIGHT OF AB OVE DISCUSSIONS THAT THE CIT CANCELLED REGISTRATION UNDER SECTION 12A W.E.F. 200 9-10 WHICH IS THE PERIOD PRIOR TO 01.06.2010. THE C.B.D.T. HAS ALSO CLARIFIED THAT T HE AMENDMENT IN SECTION 12AA(3) IS APPLICABLE FROM A.Y. 2011-12. ITA NO.166/AGR/2012 28 22. IN THE LIGHT OF ABOVE DISCUSSION, THE ORDER OF CIT IS NOT IN ACCORDANCE WITH LAW. WE, THEREFORE, SET ASIDE THE ORDER OF CIT AND RESTORE THE REGISTRATION UNDER SECTION 12A OF THE ACT WHICH HAS BEEN CANCELLED W.E .F. 2009-10. SINCE THE ISSUE RAISED IN GROUNDS NUMBER 1, 2 & 4 HAVE BEEN DECIDED IN FAVOUR OF THE ASSESSEE ON THE BASIS AND REASONS DISCUSSED ABOVE, SO UNDER THE FACTS AND CIRCUMSTANCES, THE GROUNDS ON MERIT RAISED IN GROUNDS NUMBER 3, 5, 6, 7 & 8 WHEREIN THE CIT HELD THAT THE ACTIVITIES OF THE ASSESSEE, AGRA DEVELOPME NT AUTHORITY, IS NOT CHARITABLE, WE ARE NOT EXPRESSING ANY OPINION ON THESE GROUNDS OF APPEAL. GROUNDS NUMBER 9 & 10 ARE GENERAL IN NATURE, REQUIRE NO INDEPENDENT FIND ING. 23. BEFORE PARTING FROM THE MATTER IT IS STATED T HAT THE ORDER OF CANCELLATION OF REGISTRATION HAS BEEN SIGNED AS CHIEF COMMISSIONER OF INCOME TAX (OSD), IT WAS CLARIFIED THAT HE HAS BEEN PROMOTED FROM CIT TO CCI T AND CHARGE OF CIT WAS WITH HIM. 24. THE ANOTHER ASPECT OF THE MATTER IS THAT THE CI T WHILE CANCELLING THE REGISTRATION UNDER SECTION 12A OF THE ACT OF THE AS SESSEE OBSERVED REGARDING EARLIER ORDER OF THE I.T.A.T. IN ITA NO.447/AGR/2011, ORDER DATED 02.03.2012 AT PAGE NO.11 OF HIS ORDER, ACCORDINGLY, EVEN EARLIER NOTI CE UNDER SECTION 293C WAS VALID IN THE EYES OF LAW WHEREAS THIS ORDER OF THE CIT H AS BEEN SET ASIDE BY THE TRIBUNAL IN ABOVE ORDER DATED 02.03.2012. THE CIT AND CCIT IN HIERARCHY ARE SUBORDINATE AUTHORITIES TO THE I.T.A.T. AND CERTAIN JUDICIAL DI SCIPLINES ARE APPLICABLE TO THEM, ITA NO.166/AGR/2012 29 THAT THE ORDERS OF HIGHER APPELLATE AUTHORITIES SHO ULD BE RELIGIOUSLY FOLLOWED BY THE SUBORDINATE AUTHORITIES OTHERWISE; ENTIRE JUDICIAL SYSTEM WOULD LEAD TO CHAOS. IN THIS REGARD, WE WOULD LIKE TO REFER FOLLOWING OBSER VATIONS OF HONBLE DELHI HIGH COURT IN THE CASE OF NOKAI CORPORATION VS. DIRECTOR OF INCOME TAX (INTERNATIONAL TAXATION) [2007] 162 TAXMAN 369 (DELHI). 12. THE SUPREME COURT STATED, MANY YEARS AGO, IN UNIO N OF INDIA V. KAMLAKSHI FINANCE CORPN. LTD. [1991] (55) ELT 43 3 AS FOLLOWS : ...THE PRINCIPLES OF JUDICIAL DISCIPLINE REQUIRE T HAT THE ORDERS OF THE HIGHER APPELLATE AUTHORITIES SHOULD B E FOLLOWED UNRESERVEDLY BY THE SUBORDINATE AUTHORITIES.... (P . 436) IT WAS FURTHER OBSERVED BY THE SUPREME COURT THAT I F THE ORDER OF AN APPELLATE AUTHORITY IS THE SUBJECT-MATTER OF FURTHE R APPEAL, THAT CANNOT FURNISH ANY GROUND FOR NOT FOLLOWING IT, UNL ESS ITS OPERATION HAS BEEN SUSPENDED BY A COMPETENT COURT. THE SUPREM E COURT WENT ON TO SAY THAT IF THIS HEALTHY RULE IS NOT FOLLOWED ; THE RESULT WILL NOT ONLY BE UNDUE HARASSMENT TO ASSESSEES BUT CHAOS IN THE ADMINISTRATION OF TAX LAWS. 13. IN CIT V. RALSON INDUSTRIES LTD. [2007] 2 SCC 326 , THE SUPREME COURT HELD : 9. WHEN AN ORDER IS PASSED BY A HIGHER AUTHORITY, THE LOWER AUTHORITY IS BOUND THEREBY KEEPING IN VIEW THE PRIN CIPLES OF JUDICIAL DISCIPLINE.... (P. 330) THE SUPREME COURT DREW SUPPORT FROM BHOPAL SUGAR IN DUSTRIES LTD. V. ITO [1960] 40 ITR 618 WHEREIN IT WAS HELD : IF A SUBORDINATE TRIBUNAL REFUSES TO CARRY OUT DIR ECTIONS GIVEN TO IT BY A SUPERIOR TRIBUNAL IN THE EXERCISE OF ITS APPELLATE POWERS THE RESULT WILL BE CHAOS IN THE ADMINISTRATION OF JUSTICE.... (P. 622) ITA NO.166/AGR/2012 30 IT WAS FURTHER OBSERVED IN BHOPAL SUGAR INDUSTRIES LTD.S CASE (SUPRA) : ...THE JUDICIAL COMMISSIONER WAS NOT SITTING IN AP PEAL OVER THE TRIBUNAL AND WE DO NOT THINK THAT, IN THE CIRCU MSTANCES OF THIS CASE, IT WAS OPEN TO HIM TO SAY THAT THE ORDER OF THE TRIBUNAL WAS WRONG AND, THEREFORE, THERE WAS NO INJ USTICE IN DISREGARDING THAT ORDER. AS WE HAVE SAID EARLIER, S UCH A VIEW IS DESTRUCTIVE OF ONE OF THE BASIC PRINCIPLES OF TH E ADMINISTRATION OF JUSTICE. (P. 623) 14. SIMILARLY, IN TRIVENI CHEMICALS LTD. V. UNION OF INDIA [2007] 2 SCC 503, THE SUPREME COURT REITERATED THE PRINCIP LE THAT ADJUDICATING AUTHORITIES ARE BOUND BY THE DOCTRINE OF JUDICIAL DISCIPLINE. 25. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS ALLOWED. (ORDER PRONOUNCED IN THE OPEN COURT) SD/- SD/- (BHAVNESH SAINI) (A.L. GEHLOT) JUDICIAL MEMBER ACCOUNTANT MEMBER PBN/* COPY OF THE ORDER FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT (APPEALS) CONCERNED 4. CIT CONCERNED 5. D.R., ITAT, AGRA BENCH, AGRA 6. GUARD FILE. BY ORDER SR. PRIVATE SECRETARY INCOME-TAX APPELLATE TRIBUNAL, AGRA TRUE COPY