M/s. Mool Chand Khairati Ram Trust, New Delhi V. DIT(E), New Delhi

ITA 3611/DEL/2009

• Counselvise Citation: [2010] 119 COUNSELVISE.COM (IT) 5687 (ITAT-DELHI)
• Duration Of Justice: 6 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-03-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 15-12-2009
• Assessment Year: misc
• Appeal Filed On: 21-08-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G S SAHOTA
• Keywords: Retrospective amendment
• Section: 12A; 12AA; 12

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH E: NEW DELHI BEFORE SHRI A.D. JAIN, JUDICIAL MEMBER AND SHRI DEEPAK R. SHAH, ACCOUNTANT MEMBER I.T.A.NO.3611/DEL/2009 ASSESSMENT YEAR : ------- M/S. MOOL CHAND KHAIRATI RAM TRUST, DIRECTOR OF IN COME TAX LAJPAT NAGAR-III, NEW DELHI. VS. (EXEMPTIONS), NE W DELHI. (APPELLANT) (RESPONDEN APPELLANT BY : SHRI GAUTAM JAIN, AR. RESPONDENT BY : SHRI G.S. SAHOTA, SR. DR. O R D E R PER DEEPAK R. SHAH, ACCOUNTANT MEMBER THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LEARNED DIRECTOR OF INCOME-TAX (EXEMPTIONS), DELHI, DATED 3 0 TH JUNE, 2009 BEING AN ORDER UNDER SECTION 12AA(1)(B) READ WITH SECTION 12 A OF THE INCOME-TAX ACT, 1961 (THE ACT). IN THE IMPUGNED ORDER REGISTR ATION EARLIER GRANTED UNDER SECTION 12A IS CANCELLED WITH EFFECT FROM ASSESSMEN T YEAR 2002-03. 2 2. THE LEARNED COUNSEL FOR THE ASSESSEE SHRI GAUTAM JAIN SUBMITTED THAT IN DECEMBER, 1974 THE LEARNED COMMISSIONER OF INCOM E-TAX, DELHI-II, AFTER HAVING SATISFIED HIMSELF WITH THE OBJECTS OF THE TR UST AND, THE ACTIVITIES CARRIED ON BY IT ARE IN ACCORDANCE WITH DEED OF TRU ST, GRANTED REGISTRATION UNDER SECTION 12A(A) OF THE ACT VIDE REGISTRATION N O. DLI(C)/T-168/1974-75 IN DECEMBER 1974. A COPY OF THE CERTIFICATE IS A LSO FURNISHED BEFORE US. IT WAS ACCORDINGLY SUBMITTED THAT WHEN THE TRUST WAS O RIGINALLY GRANTED REGISTRATION UNDER SECTION 12A(A) OF THE ACT BY THE COMMISSIONER, UNDER THE AMENDED PROVISION OF SECTION 12AA NO AUTHORITY CAN WITHDRAW REGISTRATION EARLIER GRANTED. FOR THIS PURPOSE RELIANCE WAS PLA CED ON THE FOLLOWING DECISIONS:- (1) ITAT ORDER DATED 23.10.2009 IN ITA NOS.3267/DEL/200 8 AND 3268/DEL/2008 IN THE CASE OF GURU NANAK PUBLIC SCHO OL, NEW DELHI; & (2) BHARATI VIDYAPEETH VS. ITO (2008) 119 TTJ (PUNE) 26 1. THE LEARNED DR SHRI G.S. SAHOTA ON THE OTHER HAND, SUBMITTED THAT THE REGISTRATION WAS GRANTED AS PER THE LAW APPLICABLE AT THAT POINT OF TIME. HOWEVER, IF SUBSEQUENTLY THE AUTHORITY IS SATISFIED THAT THE CONDITION PRESCRIBED UNDER SECTION 12A IS NOT SATISFIED, THE REGISTRATION CAN BE WITHDRAWN AND SUCH POWERS OF WITHDRAWAL ARE GRANTED UNDER THE AMENDED PROVISION OF SECTION 12AA(3), WHICH IS INSERTED BY FINANCE (NO.2) ACT, 2004 3 W.E.F. 1 ST OCTOBER, 2004. HE ALSO SUBMITTED THAT UNDER THE L AW THE AUTHORITY WHO IS ENTITLED TO GRANT REGISTRATION IS ALSO ENTIT LED TO WITHDRAW SUCH REGISTRATION. JUST AS THE POWER OF GRANTING REGIST RATION IS AVAILABLE, IN THE SAME FASHION THE POWER TO WITHDRAW SUCH REGISTRATIO N IS ALWAYS IMPLIEDLY AVAILABLE. THEREFORE, THE REGISTRATION WAS WITHDRA WN ON SATISFACTION THAT THE ACTIVITIES OF SUCH TRUST ARE NOT GENUINE. THEREFOR E, ON THIS LIMITED ISSUE, THE ORDER CANNOT BE SET ASIDE. 3. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. THE F ACTS REMAIN THAT ORIGINALLY THE ASSESSEE TRUST WAS GRANTED REGISTRAT ION AS PER ORDER OF THE COMMISSIONER OF INCOME-TAX, DELHI-II IN DECEMBER, 1974. THE REGISTRATION IS SOUGHT TO BE WITHDRAWN BY EXERCISING POWER VESTE D IN THE COMMISSIONER UNDER SEC. 12AA(3) OF THE ACT. THE DELHI BENCH OF THE TRIBUNAL IN THE CASE OF GURU NANAK PUBLIC SCHOOL (SUPRA) FOLLOWED THE DE CISION OF PUNE BENCH OF THE TRIBUNAL IN THE CASE OF BHARATI VIDYAPEETH, 28 SOT 32, WHEREIN IT HAS BEEN HELD 7. WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE MATERIAL ON RECORD AND DULY CONSIDERED FACTUAL MATRIX OF THE CASE AS ALSO THE APPLICABLE LEGAL POSITION. 8. THE PLEA OF THE ASSESSEE MEETS OUR APPROVAL. IN OUR CONSIDERED VIEW, A REGISTRATION GRANTED UNDER SECTI ON 12A OF THE ACT CANNOT BE WITHDRAWN OR CANCELLED BY THE CIT BY INVOKING THE PROVISIONS OF SECTION 12AA(3) OF THE ACT. SECTI ON 12AA(3) PROVIDES THAT WHERE A TRUST OR AN INSTITUTION HAS BEEN GRANTED 4 REGISTRATION UNDER CLAUSE (B) OF SUB-SECTION (1) AN D SUBSEQUENTLY THE CIT IS SATISFIED THAT THE ACTIVITI ES OF SUCH TRUST OR INSTITUTION ARE NOT GENUINE OR ARE NOT BEING CAR RIED OUT IN ACCORDANCE WITH THE OBJECTS OF THE TRUST OR INSTITU TION, AS THE CASE MAY BE, HE SHALL PASS AN ORDER IN WRITING CANC ELLING THE REGISTRATION OF SUCH TRUST OR INSTITUTION. A PLAIN READING OF THIS PROVISION SHOWS THAT SECTION 12AA EMPOWERS THE CIT TO GRANT THE REGISTRATION IN THOSE CASES WHERE THE ASSESSEE APPLIES FOR SUCH REGISTRATION UNDER SUB-SECTION (1) OF SECTION 12AA. SECTION 12AA(1), ON THE OTHER HAND, PROVIDES THAT T HE CIT, ON RECEIPT OF AN APPLICATION FOR REGISTRATION OF A TRU ST OR INSTITUTION MADE UNDER CLAUSE (A) [OR CLAUSE (AA) OF SUB-SECTIO N (1)] OF SECTION 12A, SHALL(A) CALL FOR SUCH DOCUMENTS OR I NFORMATION FROM THE TRUST OR INSTITUTION AS HE THINKS NECESSAR Y 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 OBJECTS OF THE TRUST OR INSTITUTION AND THE GEN UINENESS OF ITS ACTIVITIES, (I) HE SHALL PASS AN ORDER IN WRITING R EGISTERING THE TRUST OR INSTITUTION, OR (II) SHALL, IF HE IS NOT S O 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. A REGISTRATION UNDER SECTION 12AA(1)(B) IS TO BE GRANTED WHERE CIT IS SATISFIED ABOUT THE OBJECTS AND THE GENUINENESS OF THE ACTIVITIES CARRIED ON BY THE APPLICANT. SECTION 12AA(3) EMPOWE RS THE CIT TO CANCEL SUCH REGISTRATION IF HE IS SATISFIED THAT ACTIVITIES OF TRUST OR INSTITUTION ARE NOT GENUINE OR ARE NOT BEI NG CARRIED OUT IN ACCORDANCE WITH THE OBJECTS OF THE TRUST OR INST ITUTION AS THE CASE MAY BE. THE COMBINED READING OF BOTH THE SECTI ONS MAKES IT CLEAR THAT REGISTRATION CAN BE CANCELLED ONLY IN THOSE CASES WHERE THE REGISTRATION HAS BEEN GRANTED UNDER SUB-S ECTION (1B) OF SECTION 12AA. THIS SECTION NOWHERE EMPOWERS THE CIT TO CANCEL OR WITHDRAW THE REGISTRATION GRANTED UNDER S ECTION 12A. IN THE ABSENCE OF SUCH POWER, IN OUR OPINION, THE R EGISTRATION GRANTED UNDER SECTION 12A CANNOT BE WITHDRAWN OR CA NCELLED. THIS VIEW IS SUPPORTED BY THE DECISION OF THE TRIBU NAL IN THE CASE OF KAILASHANAND MISSION TRUST V. ASSTT. CIT (S UPRA) WHEREIN IT WAS HELD THAT SECTION 12A DOES NOT EMPOW ER THE CIT TO WITHDRAW OR CANCEL THE REGISTRATION GRANTED UNDE R THE SECTION. THIS VIEW WAS AGAIN TAKEN BY THE TRIBUNAL IN VARIOU S CASES 5 RELIED UPON BY THE LEARNED COUNSEL FOR THE ASSESSEE . HONBLE UTTARANCHAL HIGH COURT, IN THE CASE OF WELHAM BOYS SCHOOL SOCIETY (SUPRA) HAS ALSO HELD THAT THE CIT CANNOT W ITHDRAW OR CANCEL A REGISTRATION GRANTED UNDER SECTION 12A, AS HE CANNOT BE INFERRED TO HAVE ANY IMPLIED OR INHERENT POWER TO C ANCEL THE REGISTRATION. WE MAY ALSO ADD THAT PROVISIONS OF SU B-SECTION (3) OF SECTION 12AA WERE BROUGHT ON THE STATUTE BOOK WI TH EFFECT FROM 1-10-2004 BY FINANCE (NO. 2) ACT, 2004. THE PR OVISIONS OF THIS SECTION ARE SUBSTANTIVE IN NATURE SINCE THE SAME AFFECT THE VALUABLE RIGHT OF THE ASSESSEE AND THEREFORE, IN OU R OPINION ARE PROSPECTIVE AND CANNOT BE GIVEN RETROSPECTIVE EFFEC T, IN VIEW OF THE DECISION OF THE SUPREME COURT IN THE CASE OF SE DCO FOREX INTERNATIONAL DRILL INC. V. CIT [2005] 279 ITR 310 BHARATI VIDYAPEETH VS. ITO (SC) WHEREIN IT HAS BEEN HELD THAT EVEN TH E PROVISIONS OF AN EXPLANATION CANNOT BE GIVEN RETROS PECTIVE EFFECT UNLESS SPECIFICALLY PROVIDED BY THE STATUTE. IT IS NOT THE CASE OF THE REVENUE THAT LEGISLATURE SPECIFICALLY P ROVIDED THE RETROSPECTIVE EFFECT OF SUCH PROVISION. THEREFORE, IT IS ALSO TO BE HELD THAT EVEN ON THIS GROUND THE PROVISIONS OF SEC TION 12AA(3) CANNOT BE APPLIED TO THE REGISTRATION GRANTED UNDER SECTION 12A OF THE ACT. WE ALSO FIND THAT THE ISSUE IN APPEAL I S SQUARELY COVERED BY A NUMBER OF DECISIONS ON THIS ISSUE BY V ARIOUS CO- ORDINATE BENCHES AND THERE IS NO CONTRARY DECISION AVAILABLE, SO FAR AS THIS ASPECT OF THE MATTER IS CONCERNED. 9. LEARNED DEPARTMENTAL REPRESENTATIVE HAS STATED T HAT SUCH A VIEW WILL MAKE THE PROVISIONS OF THE ACT UNW ORKABLE AND THAT THE ONLY WAY TO MAKE THESE PROVISIONS WORK ABLE IS TO CONSTRUE THE SCOPE OF SECTION 12AA(3) IN SUCH A MAN NER SO AS TO EXTEND ITS SCOPE ALSO TO THE REGISTRATIONS GRANT ED UNDER SECTION 12A. WE ARE THUS URGED TO SUPPLANT THE LAW BY SUPPLYING A CASUS OMISSUS. WE ARE NOT PERSUADED BY THIS PLEA EITHER. CASUS OMISSUS, WHICH BROADLY REFERS TO THE PRINCIPLE THAT A MATTER WHICH HAS NOT BEEN PROVIDED IN THE STATUTE BUT SHOULD HAVE BEEN THERE, CANNOT BE SUPPLIED BY US, AS, TO D O SO WILL BE CLEARLY BEYOND THE CALL AND SCOPE OF OUR DUTY WHICH IS ONLY TO INTERPRET THE LAW AS IT EXISTS. HONBLE SUPREME COU RT, IN THE CASE OF SMT. TARULATA SHYAM V. CIT [1977] 108 ITR 345 (SC) AT P. 356 HAS OBSERVED AS FOLLOWS : WE HAVE GIVEN ANXIOUS 6 THOUGHT TO THE PERSUASIVE ARGUMENTS..., (WHICH) IF ACCEPTED, WILL CERTAINLY SOFTEN THE RIGOUR OF THIS EXTREMELY DRAST IC PROVISION AND BRING IT MORE IN CONFORMITY WITH LOGIC AND EQUI TY. BUT, THE LANGUAGE OF SECTIONS ... IS CLEAR AND UNAMBIGUOUS. THERE IS NO SCOPE FOR IMPORTING INTO THE STATUTE THE WORDS WHIC H ARE NOT THERE. SUCH INTERPRETATION WOULD BE, NOT TO CONSTRU E, BUT TO AMEND THE STATUTE. EVEN IF THERE BE A CASUS OMISSUS , THE DEFECT CAN BE REMEDIED ONLY BY LEGISLATION AND NOT BY JUDI CIAL INTERPRETATION..... THIS WAS CLEARLY A CASE IN WHI CH SUPPLYING A CASUS OMISSUS WOULD HAVE SOFTENED THE RIGOUR OF LAW FOR THE ASSESSEE, AND YET HONBLE SUPREME COURT DECLINED TO SUPPLY THE CASUS OMISSUS. IN A SITUATION LIKE THE ONE THAT WE ARE IN SEISIN OF, WHERE ASSESSEE WOULD STAND TO A DISADVANTAGE AS A RESULT OF CASUS OMISSUS BEING SUPPLIED, AT LEAST THE SAME, IF NOT MORE STRINGENT, YARDSTICKS MUST APPLY. WHEN THE HONBLE SUPREME COURT DECLINES TO SUPPLY CASUS OMISSUS EVEN IN A CA SE WHERE THEIR LORDSHIPS HAVE NOTED THAT THE PROVISIONS IN Q UESTION ARE EXTREMELY DRASTIC AND SUPPLYING A CASUS OMISSUS WIL L MAKE THESE PROVISIONS MORE IN CONFORMITY WITH LOGIC AND EQUITY, IT IS INDEED FUTILE TO SUGGEST THAT SUCH A CASUS OMISSUS CAN BE SUPPLIED BY THIS TRIBUNAL. WE ARE NOT INCLINED TO A CCEPT THE PLEA CANVASSED BY THE LEARNED DEPARTMENTAL REPRESENTATIV E TO THE EFFECT THAT WE SHOULD INTERPRET THE SCOPE OF SECTIO N 12AA(3) SO AS TO GIVE IT AN EXTENDED MEANING BEYOND WHAT IS LA ID DOWN BY SPECIFIC WORDS OF THE STATUTE. 10. FOR THE REASONS SET OUT ABOVE, AND RESPECTFULLY FOL LOWING THE DECISIONS OF VARIOUS CO-ORDINATE BENCHES ON THE SCOPE OF POWERS UNDER SECTION 12AA(3), WE HOLD THAT THE IMPU GNED ORDER WAS VITIATED IN LAW INASMUCH AS THE LEARNED C IT DID NOT HAVE POWERS TO CANCEL THE REGISTRATION GRANTED UNDE R SECTION 12A. ACCORDINGLY, THE IMPUGNED ORDER IS HEREBY VACA TED AND, AS A COROLLARY THERETO, THE REGISTRATION GRANTED TO THE ASSESSEE UNDER SECTION 12A STANDS RESTORED. 11. IN THE RESULT, THE APPEAL IS ALLOWED. SINCE THE FACTS IN THE PRESENT CASE AND THAT BEFORE ITAT PUNE AND DELHI BENCHES WERE SAME, FOLLOWING THE ORDERS OF TRIBUNAL , WE CANCEL THE 7 IMPUGNED ORDER AND CONSEQUENTLY IT IS TO BE HELD TH AT THE ASSESSEE IS ENTITLED TO REGISTRATION UNDER SECTION 12A OF THE ACT. 4. IN THE RESULT, THE APPEAL IS ALLOWED. PRONOUNCED IN THE OPEN COURT ON 12 TH MARCH, 2010. SD/- SD/- (A.D. JAIN) (DEEPAK R. SHAH) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 12 TH MARCH, 2010. COPY OF THE ORDER FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR BY ORDER *MG DEPUTY REGISTRAR, ITAT.