M/s Navy Welfare Fund Trust, Visakhapatnam V. The CIT-1, Visakhapatnam

ITA 192/VIZ/2011

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 56812 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 3 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-08-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2011-2012
• Appeal Filed On: 10-05-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D KOMALI KRISHNA
• Assessee Lawyers: C R HEMANT KUMAR
• Keywords: Retrospective amendment; Set aside
• Section: 80G; 12A; 12AA

Judgement Text

ITA NO 192 OF 2010 NAVY WELFARE FUND TRUST VISAKHAP ATNAM PAGE 1 OF 4 IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE: SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI BR BASKARAN, ACCOUNTANT MEMBER ITA NO.192/VIZAG/2011 ASSESSMENT YEAR: NA NAVY WELFARE FUND TRUST, VISAKHAPATNAM VS. COMMISSIONER OF INCOME TAX- 1 VISAKHAPATNAM (APPELLANT) PAN NO: AAATN 2110N (RESPONDENT) APPELLANT BY: SHRI C.R. HEMANT KUMAR, CA RESPONDENT BY: SMT. D. KOMALI KRISHNA, SR.DR DATE OF HEARING: 24/08/2011 DATE OF PRONOUNCEMENT: 29/ 08/2011 ORDER PER SHRI B. R. BASKARAN, ACCOUNTANT MEMBER: THE APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 11.04.2011 PASSED BY LEARNED CIT-1 VISAKHAPATNAM CA NCELING THE REGISTRATION GRANTED TO THE ASSESSEE UNDER SECTION 12A OF THE ACT BY PASSING AN ORDER UNDER SECTION 12AA(3) OF THE ACT. 2. THE LEARNED AUTHORISED REPRESENTATIVE SUBMITTED THAT THE IMPUGNED ORDER OF THE LEARNED CIT HAS NO LEGAL SANCTION AND HENCE LIABLE TO BE SET ASIDE. 3. THE FACTS RELATING TO THE ISSUE ARE STATED IN BR IEF. THE ASSESSEE TRUST WAS SAID TO HAVE BEEN GRANTED REGISTRATION UNDER SE CTION 12A OF THE ACT BY THE LEARNED CIT, VISAKHAPATNAM, VIDE PROCEEDING IN NO.1/12A/17/79-80 DATED 09-12-1980. THE TRUST WAS ALSO GRANTED RECOG NITION UNDER SECTION 80G OF THE ACT FROM TIME TO TIME, LAST BY ORDER DAT ED 23-5-2008 FOR THE PERIOD 1-4-2008 TO 31-3-2010. THE ASSESSEE FILED A N APPLICATION IN FORM NO.10G FOR RENEWAL OF RECOGNITION UNDER SECTION 80G OF THE ACT ON 14-2- 2010 FOR FURTHER PERIOD FROM 1.4.2010 AND THE SAME WAS TURNED DOWN BY ITA NO 192 OF 2010 NAVY WELFARE FUND TRUST VISAKHAP ATNAM PAGE 2 OF 4 THE LEARNED CIT BY HIS ORDER DATED 11.8.2010 FOR DE TAILED REASONS MENTIONED THEREIN. WHILE DOING SO, THE LEARNED CIT NOTICED THAT THE ASSESSEE TRUST COULD NOT PRODUCE BEFORE HIM THE ORI GINAL TRUST DEED AND FURTHER DID NOT FILE BEFORE HIM A COPY OF THE CERTI FICATE OF REGISTRATION GRANTED UNDER SECTION 12A OF THE ACT. CONSEQUENT TO HIS DECISION REFUSING TO RENEW THE RECOGNITION UNDER SECTION 80G OF THE A CT TO THE ASSESSEE TRUST, THE LEARNED CIT ALSO CANCELLED THE REGISTRATION GRA NTED UNDER SECTION 12A OF THE ACT BY INVOKING THE PROVISIONS OF SEC. 12AA(3) OF THE ACT. 4. WE HAVE HEARD THE RIVAL CONTENTIONS ON THE IMPUG NED ISSUE. THE LEARNED AUTHORISED REPRESENTATIVE RELIED UPON THE D ECISION DATED 29-03- 2010 PASSED BY THIS BENCH IN THE CASE OF NAGARJUNA EDUCATIONAL SOCIETY IN ITA NO.93 & 94/VIZAG/2009 TO SUBMIT THAT THE LEARNE D CIT COULD NOT INVOKE THE POWERS GRANTED TO HIM UNDER SECTION 12AA(3) OF THE ACT IN ORDER TO CANCEL THE REGISTRATION GRANTED TO THE ASSESSEE TRU ST UNDER SECTION 12A OF THE ACT. WE HAVE GONE THROUGH THE SAID ORDER AND F OR THE SAKE OF CONVENIENCE, WE EXTRA BELOW THE RELEVANT OBSERVATIO NS MADE BY THIS BENCH IN THE CASE OF NAGARJUNA EDUCATIONAL SOCIETY (SUPRA ). 11. FROM A CAREFUL PERUSAL OF BOTH THE SECTIONS, I T IS AMPLY CLEAR THAT PRIOR TO THE INSERTION OF SECTION 12AA THE APPLICATIONS FOR REGISTRATION RECEIVED U/S 12A WERE TO BE PROCESSED UNDER THE SAME SECTION ITSELF. BUT LATER ON SEPARATE PROVISION I.E. 12AA WAS INTRODUCED TO DEAL WITH THE PROCEDURE FOR REGISTRATION. SECOND PROVISO TO SUB- SECTION 1 OF SECTION 12A FURTHER STATES THAT PROVISIONS OF CL AUSE 1(A) SHALL NOT APPLY IN RELATION TO ANY APPLICATIONS MAD E ON OR AFTER THE FIRST DAY OF JUNE, 2007. MEANING THEREBY , AFTER FIRST DAY OF JUNE, 2007 ALL APPLICATIONS FOR REGIST RATION U/S 12A ARE TO BE RECEIVED U/S 12AA AND THERE AFTER TO BE PROCESSED ONLY U/S 12AA OF THE ACT. 12. TURNING TO THE FACTS OF THE CASE, WE FIND THAT ASSESSEE WAS GRANTED REGISTRATION U/S 12A ON 4.11.1 974. AT THE TIME OF GRANT OF REGISTRATION SECTION 12AA WAS NOT ON THE STATUTE, AS SUCH, THE REGISTRATION WAS PROCESSED U/ S 12A OF THE ACT. NOW THE QUESTION ARISE WHETHER THE GENUIN ENESS OF THE ACTIVITIES OF THE TRUST OR THE INSTITUTION WHIC H WERE REGISTERED U/S 12A CAN BE EXAMINED BY THE COMMISSIO NER ITA NO 192 OF 2010 NAVY WELFARE FUND TRUST VISAKHAP ATNAM PAGE 3 OF 4 U/S 12AA (3) OF THE ACT. THE ANSWER IS CERTAINLY NO. THE REASON IS THAT SUB-SECTION 3 CATEGORICALLY DEALS WI TH THOSE REGISTRATIONS WHICH WERE GRANTED UNDER CLAUSE (B) O F SUB- SECTION 1 OF SECTION 12AA OF THE ACT. IT HAS NO RE LEVANCE WITH RESPECT TO THE REGISTRATIONS WHICH WERE GRANTE D U/S 12A OF THE I.T. ACT. MEANING THEREBY, ONCE THE REGISTRA TION IS GRANTED U/S 12A, IT CANNOT BE CANCELLED BY THE CIT IN AS MUCH AS IN THIS REGARD, WE DO NOT FIND ANY PROVISIO NS U/S 12A OF THE ACT. THE ONLY PROVISION AVAILABLE IN TH E ACT IS SUB-SECTION 3 OF SECTION 12AA OF THE ACT. THIS ISS UE WAS ALSO EXAMINED BY THE VARIOUS BENCHES OF THE TRIBUNA L. IN THE CASE OF BHARATHI VIDYAPEETH VS. ITO 119 TTJ 261 , THE TRIBUNAL HAS HELD THAT THE REGISTRATION GRANTED U/S 12A CANNOT BE WITHDRAWN OR CANCELLED BY THE CIT BY INVO KING THE PROVISIONS OF SECTION 12AA(3). THE PROVISIONS OF S UB-SECTION 3 OF SECTION 12AA WHICH WERE BROUGHT ON THE STATUTE BOOK BY THE FINANCE ACT (NO.2, 2004) ARE SUBSTANTIVE IN NATURE AND HAVE NO RETROSPECTIVE EFFECT. THE SIMILAR VIEW WAS TAKEN BY THE LUCKNOW BENCH OF THE TRIBUNAL IN THE C ASE OF ST. DON BOSCO EDUCATIONAL SOCIETY VS. CIT 90 ITD 47 7. THE UTTARANCHAL HIGH COURT IN THE CASE OF WELHAM BOYS SCHOOL SOCIETY VS. CBDT 285 ITR 74 HAS ALSO TAKEN THE SIMI LAR VIEWS. THEIR LORDSHIP HAVE CATEGORICALLY HELD THAT THE SUB- SECTION 3 WAS INCORPORATED IN SECTION 12AA W.E.F. 1 .10.2004. THEREFORE PRIOR TO THE SAID DATE, THE AUTHORITY GRA NTING REGISTRATION U/S 12AA HAD NO INHERENT POWERS TO WIT HDRAW OR REVOKE THE REGISTRATION ALREADY GRANTED. WHILE DEA LING WITH THE ARGUMENT THAT PARTY WHICH GRANTS THE REGISTRATI ON IS ALSO EMPOWERED TO CANCEL THE SAME, THEIR LORDSHIP HAVE H ELD THAT WHAT IS TO BE RESCINDED BY THE CIT IS NOT A NO TIFICATION, RULE OR BY-LAW. WHAT IS RESCINDED IS A QUASI-JUDIC IAL ORDER WHICH HAD BEEN PASSED BY THE CIT U/S 12A. SUCH A Q UASI- JUDICIAL ORDER DOES NOT FALL IN THE CATEGORY OF ORD ERS MENTIONED IN THE SECTION 21 OF THE GENERAL CLAUSES ACT, 1897. THUS BY VIRTUE OF SECTION 21, THE CIT HAD NO POWER TO RESCIND THE ORDER PASSED EARLIER BY THE CIT GRANTIN G REGISTRATION TO THE ASSESSEE/PETITIONER SOCIETY. W E HAVE ALSO GONE THROUGH THE OTHER CASE LAWS REFERRED TO BY THE ASSESSEES AND WE FIND THAT IN ALL THOSE CASE LAWS S IMILAR VIEW WAS EXPRESSED EITHER BY THE TRIBUNAL OR THE HI GH COURT. 13. FOLLOWING THE AFORESAID CASES, WE ARE OF THE CONSIDERED VIEW THAT CIT HAS NO JURISDICTION TO CAN CEL THE REGISTRATION, EARLIER, GRANTED U/S 12A TO THE ASSES SEES. WE THEREFORE SET ASIDE THE ORDER OF THE CIT DENYING TH E REGISTRATION. ONCE THE ORDER OF THE CIT DENYING TH E REGISTRATION U/S 12A IS SET ASIDE, THE ASSESSEE IS ENTITLED FOR ITA NO 192 OF 2010 NAVY WELFARE FUND TRUST VISAKHAP ATNAM PAGE 4 OF 4 THE RENEWAL OF EXEMPTION U/S 80G OF THE ACT BECAUSE IT WAS ONLY DENIED FOR THE REASONS THAT REGISTRATION U/S 1 2A WAS CANCELLED. WE THEREFORE, SET ASIDE THIS ORDER OF T HE CIT DENYING THE EXEMPTION U/S 80G OF THE ACT AND DIRECT THE CIT TO GRANT RENEWAL OF EXEMPTION U/S 80G OF THE ACT. WE ALSO NOTICE THE HON'BLE ALLAHABAD HIGH COURT HAS ALSO TAKEN SIMILAR VIEW IN THE CASE OF OXFORD ACADEMY FOR CAREER DEVELOPMEN T VS. CCI (2009) (315 ITR 382) AND CIT VS. MANAV VIKAS AVAM SEWA SAMSTHAN (2011)(336 ITR 250). CONSISTENT WITH THE VIEW TAKEN IN THE ABOVE CITED CASES, WE HOLD THAT THE LD CIT HAS NO JURISDICTION TO CANCEL THE REGIST RATION GRANTED EARLIER UNDER SECTION 12A OF THE ACT TO THE ASSESSEE BY INV OKING THE PROVISIONS OF SEC. 12AA(3) OF THE ACT. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLO WED. PRONOUNCED IN THE OPEN COURT ON 29 TH AUGUST, 2011. SD/- SD/- (SUNIL KUMAR YADAV) (B R BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER PVV/SPS VISAKHAPATNAM, DATE:29-08-2011 COPY TO 1 THE NAVY WELFARE FUND TRUST, BASE LOGISTICS OFFIC E, C/O FLEET MAIL OFFICE, VISAKHAPATNAM 2 THE COMMISSIONER OF INCOME TAX-1, VISAKHAPATNAM 3 4. THE CIT 1, VISAKHAPATNAM THE ADDL.CIT RANGE-5, VISAKHAPATNAM 5 THE DR, ITAT, VISAKHAPATNAM. 6 GUARD FILE. BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM