M/s Young Men's Christian Association, Chandigarh V. DCIT, Chandigarh

ITA 457/CHANDI/2015

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 8374 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 8 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-01-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 05-09-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 28-04-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: HARISH NAYYAR
• Keywords: Reopening of assessment; Business income; Depreciation; Charitable institution; Opportunity of being heard; Principle of natural justice; Cancellation of registration; Revenue expenditure; Capital expenditure
• Section: 12A; 12AA; 147; 148; 12; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, CHANDIGARH BEFORE MS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER AND SHRI RAVISH SOOD, JUDICIAL MEMBER ITA NO.457/CHD/2015 (ASSESSMENT YEAR :2009-10 ) YOUNG MENS CHRISTIAN ASSOCIATION, VS. THE D.C.I.T., SECTOR 11, CHANDIGARH. CIRCLE (1), CHANDIGARH PAN: AAATY0063F (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI HARISH NAYYAR RESPONDENT BY : SHRI MANOJ MISHRA, DR DATE OF HEARING : 27.12.2016 DATE OF PRONOUNCEMENT : 18.01.2017 O R D E R PER ANNAPURNA GUPTA, A.M . : THE APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-I, CHANDIGARH DATED 2.2.2015 RELATING TO ASSESSMENT YEAR 2009-10. 2. GROUND NO.1 RAISED BY THE ASSESSEE READS AS UNDER : 1) THAT THE ORDER PASSED BY THE LD. COMMISSIONER OF INCOME TAX(APPEALS), CHANDIGARH IS ERRONEOUS, DEVOID OF MERITS, HAS BEEN 2 PASSED IN HASTE WITHOUT TAKING INTO CONSIDERATION T HE FACTS OF THE CASE AND OVERLOOKING THE PROVISIONS OF LAW AND DESERVES TO BE QUASHED. 3. THE ABOVE GROUND BEING GENERAL IN NATURE NEEDS NO ADJUDICATION. 4. THE GROUND NO.2 RAISED BY THE ASSESSEE READS AS UNDER : 2) THAT THE LD. COMMISSIONER OF INCOME TAX(APPEALS) ,CHANDIGARH HAS ERRED BOTH ON FACTS AND LAW IN CONFIRMING THE ACTIO N OF AO OF REOPENING THE ASSESSMENT UNDER SECTION 147 OF THE A CT, WITHOUT APPRECIATING THAT THE REASONS FOR REOPENING THE ASS ESSMENT WERE IN CLEAR CONTRAVENTION OF THE INSTRUCTIONS LAID DOWN IN CIRC ULAR NO. 1/2011 ISSUED BY CBDT. REOPENING OF ASSESSMENT IS THUS ILLEGAL AN D HENCE DESERVES TO BE QUASHED. IT IS PRAYED THAT SINCE THE REOPENING OF THE ASSES SMENT IS NOT BASED UPON APPRECIATION OF CORRECT PROVISIONS OF LA W,'THE ORDER OF ASSESSMENT PASSED UNDER SECTION 147 OF THE INCOME T AX ACT IS VOID AB INITIO AND MAY KINDLY BE ORDERED TO BE QUASHED. 5. THIS IS A LEGAL GROUND RAISED BY THE ASSESSEE CHALLENGING VALIDITY OF THE ORDER PASSED UNDER SECT ION 147 OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) ON THE PREMISE THAT THE REASONS RECORDED FOR REOPENING WER E IN CONTRAVENTION OF THE INSTRUCTIONS LAID DOWN IN CIRC ULAR NO.1/2011 ISSUED BY THE CBDT AND HENCE, THE REOPENI NG WAS ILLEGAL. 3 6. BRIEF FACTS RELATING TO THE ISSUE ARE THAT THE ASSESSEE SOCIETY WAS GRANTED REGISTRATION UNDER SEC TION 12A OF THE ACT VIDE ORDER DATED 9.3.1992. SUBSEQ UENTLY, THE REGISTRATION GRANTED WAS CANCELLED BY APPLYING THE PROVISO TO SECTION 2(15) OF THE ACT, SINCE IT WAS F OUND THAT THE ASSESSEE WAS DERIVING RECEIPTS FROM BUSINESS BY RUNNING COACHING CENTRE IN THE NAME OF OLIVE GREEN S PROJECTS. AFTER CANCELLATION OF REGISTRATION THE ASSESSING OFFICER RECORDED REASONS UNDER SECTION 147 AND ISSU ED NOTICE UNDER SECTION 148 OF THE ACT FOR THE IMPUGNE D YEAR TO BRING TO TAX THE INCOME OF THE ASSESSEE WHICH IT HAD CLAIMED EXEMPT U/S 11 & 12 OF THE ACT ON ACCOUNT OF THE REGISTRATION GRANTED TO IT EARLIER. THE REASONS FOR REOPENING WERE DULY SUPPLIED TO THE ASSESSEE WHO VI DE HIS LETTER DATED 26.12.2013 FILED DURING THE COURSE OF ASSESSMENT PROCEEDINGS ARGUED THAT THE COMMISSIONER OF INCOME TAX WAS NOT EMPOWERED TO CANCEL REGISTRATION UNDER SECTION 12A AS THE SAME WAS DISTINCT FROM THA T UNDER SECTION 12AA OF THE ACT. THE ASSESSING OFFI CER DISPOSED OFF THE OBJECTION OF THE ASSESSEE VIDE ORD ERSHEET ENTRY DATED 26.12.2013 BY STATING THAT THE ORDER OF THE COMMISSIONER OF INCOME TAX COULD BE CHALLENGED ONLY BEFORE APPROPRIATE APPELLATE FORUM. HE, THEREFORE, HELD THAT THE ASSESSMENT PROCEEDINGS TO BE IN ORDER AND AS PER LAW. 4 7. BEFORE THE LD. CIT (APPEALS), THE ASSESSEE RELI ED UPON CIRCULAR NO.1/2011 ISSUED BY THE CBDT AND STAT ED THAT THE REOPENING WAS IN CONTRAVENTION TO THE SAME . THE LD. CIT (APPEALS) REJECTED ASSESSEES CONTENTION AN D HELD THAT THE CIRCULAR WAS NOT RELEVANT TO GROUND RAISED BY THE ASSESSEE AND THE ONLY QUESTION TO BE SEEN AT THE ST AGE OF ISSUE OF NOTICE UNDER SECTION 148 OF THE ACT WAS WH ETHER THERE WAS RELEVANT MATERIAL ON THE BASIS OF WHICH A REASONABLE PERSON COULD HAVE FORMED THE REQUISITE B ELIEF OF ESCAPEMENT OF INCOME. THE LD. CIT (APPEALS) REL IED UPON THE JUDGMENT OF THE HON'BLE SUPREME COURT IN T HE CASE OF ACIT VS. RAJESH JHAVERI STOCK BROKERS PVT. LTD., 291 ITR 500 (SC) AND UPHELD THE ACTION OF THE ASSES SING OFFICER. 8. BEFORE US THE LD. COUNSEL FOR THE ASSESSEE REITERATED THE CONTENTION MADE BEFORE THE LD. CIT (APPEALS)/ASSESSING OFFICER AND STATED THAT THE BAS IC PREMISE FOR REOPENING I.E. THE CANCELLATION OF REGI STRATION UNDER SECTION 12AA(3) WAS ITSELF BAD SINCE IT WAS IN CONTRAVENTION OF THE DIRECTIONS OF THE CBDT IN THIS REGARD GIVEN IN CIRCULAR NO.1/2011 WHICH AS PER THE LD. CO UNSEL FOR THE ASSESSEE STATED THAT CANCELLATION OF REGIST RATION GRANTED UNDER SECTION 12A OF THE ACT COULD ONLY BE W.E.F. ASSESSMENT YEAR 2011-12 AND NOT EARLIER. THE LD. C OUNSEL FOR THE ASSESSEE ALSO RELIED UPON THE FOLLOWING CAS E LAWS IN SUPPORT OF ITS ABOVE CONTENTIONS. 5 1) AGRA DEVELOPMENT AUTHORITY VS. CIT (2013)141 ITD 336 (AGRA) 2) DIRECTOR OF INCOME TAX (EXEMPTIONS) VS. MOOL CHAND KHAIRATI RAM TRUST (2011) 339 ITR 622 9. THE LD. DR, ON THE OTHER HAND, RELIED UPON THE ORDER OF THE ASSESSING OFFICER AND STATED THAT THE ASSESSING OFFICER HAD RIGHTLY ASSUMED JURISDICTION UNDER SECTION 147 OF THE ACT ON THE BASIS OF CANC ELLATION OF REGISTRATION UNDER SECTION 12AA(3) OF THE ASSESSEE FOR THE IMPUGNED YEAR BY THE LD.CIT . THE LD. DR POINTED OUT THAT THE CORRECTNESS OF THE ORDER PASSED BY THE LD. CIT COULD NOT HAVE BEEN GONE INTO BY THE ASSESSING OFFI CER AND COULD BE TESTED ONLY IN APPELLATE PROCEEDINGS. 10. WE HAVE HEARD THE LEARNED REPRESENTATIVES OF BOTH THE PARTIES, PERUSED THE FINDINGS OF THE AUTHO RITIES BELOW AND CONSIDERED THE MATERIAL AVAILABLE ON RECO RD. THE LD. COUNSEL FOR THE ASSESSEE HAS CHALLENGED HE REOPENING ON THE GROUND THAT AS PER REASONS RECORDE D, THE ONLY GROUND FOR REOPENING WAS THE CANCELLATION OF REGISTRATION WHICH AS PER THE LD. COUNSEL FOR THE A SSESSEE WAS TO BE EFFECTIVE FROM ASSESSMENT YEAR 2011-12 ON LY AS PRESCRIBED BY THE CBDT AND VARIOUS JUDICIAL PRONOUNCEMENTS. THEREFORE, AS PER THE LD. COUNSEL FOR THE ASSESSEE, REGISTRATION FOR THE IMPUGNED YEAR WA S NOT CANCELLED AND THUS THE REASONS RECORDED FOR ASSUMIN G JURISDICTION TO REOPEN ASSESSEES CASE FOR THE IMPU GNED YEAR WERE INCORRECT. WE FIND NO MERIT IN THIS CONT ENTION 6 OF THE LD. COUNSEL FOR THE ASSESSEE. ADMITTEDLY, T HE REASONS FOR REOPENING WAS THE ORDER CANCELLING REGISTRATION GRANTED TO THE ASSESSEE, DATED 25.2.20 13. A PERUSAL OF THE SAME REVEALS THAT THE LD. COMMISSION ER OF INCOME TAX HAS CANCELLED REGISTRATION WHICH WAS GRA NTED VIDE ORDER DATED 9.3.1992. THE RELEVANT AND OPERAT IVE PART OF THE ORDER IS AS UNDER : FROM THE FOREGOING, 1 AM SATISFIED THAT THE A CTIVITIES OF THE YOUNG MEN CHRISTIAN ASSOCIATION. SECTOR 11, CHANDIG ARH HAVE NOT BEEN CARRIED OUT IN ACCORDANCE WITH THE OBJECTS OF THE TRUST IN TERMS OF SECTION 12AA (3) OF THE I.T. ACT, 1961. THEREFORE, REGISTRATION GRANTED U/S 12A OF THE ACT VIDE ORDER DATED 09.03.1 992 IS HEREBY CANCELLED. 11. IT IS EVIDENT FROM A BARE READING OF THE ABOVE THAT THE CANCELLATION OF REGISTRATION WAS W.E.F. TO ALL THE YEARS FOR WHICH THE REGISTRATION HAD BEEN GRANTED. SINCE THE REGISTRATION GRANTED WAS CANCELLED WITH NO PERI OD SPECIFIED AS SUCH FOR WHICH THE CANCELLATION WAS TO BE EFFECTIVE, THE ENTIRE PERIOD FOR WHICH REGISTRATION PERTAINED WAS EFFECTED BY THE CANCELLATION AND HAD INCLUDED THE PERIOD IN APPEAL BEFORE US I.E. ASSESS MENT YEAR 2009-10. THIS IS THE ONLY MEANING WHICH CAN B E DERIVED FROM THE CANCELLATION ORDER, ARMOURED WITH WHICH AND BASED UPON WHICH THE ASSESSING OFFICER BELIEVED THAT THE EXEMPTION UNDER SECTIONS 11 AND 12 FOR THE IMPU GNED YEAR HAD BEEN INCORRECTLY CLAIMED BY THE ASSESSEE A ND INCOME TO THAT EXTENT HAD ESCAPED ASSESSMENT. WE, THEREFORE, FIND NO ANOMALY IN THE REASONS RECORDED BY THE 7 ASSESSING OFFICER. THE ARGUMENTS OF THE LD. COUNSE L FOR THE ASSESSEE THAT THE CANCELLATION OF REGISTRATION COULD HAVE BEEN EFFECTIVE ONLY FROM ASSESSMENT YEAR 2011- 12 AND THUS CANNOT FORM THE BASIS THE BASIS FOR REOPEN ING OF ASSESSMENT OF THE IMPUGNED YEAR I.E. ASSESSMENT YEA R 2009-10, WE FIND, ARE RELEVANT FOR CHALLENGING THE ORDER PASSED U/S 12AA(3) AND NOT FOR CHALLENGING THE JURISDICTION ASSUMED BY THE AO FOR REOPENING THE CA SE OF THE ASSESSEE. EVEN OTHERWISE WE DO NOT FIND ANY MER IT IN THE CONTENTION OF THE ASSESSEE. THE LD. COUNSEL FO R THE ASSESSEE DERIVES SUPPORT FOR THIS CONSTRUCTION FROM THE CBDT CIRCULAR NO.1/2011 DATED 6.4.2011 AND CERTAIN JUDICIAL DECISIONS IN THIS REGARD. ON GOING THROU GH THE CBDT CIRCULAR WE FIND THAT WHAT THE CIRCULAR STATES IS THAT POWER OF CANCELLATION OF REGISTRATION, WHICH T ILL THEN WAS AVAILABLE ONLY TO REGISTRATIONS GRANTED UNDER S ECTION 12AA OF THE ACT, IS EXTENDED TO REGISTRATION GRANTE D U./S 12A OF THE ACT ALSO AND THIS POWER WAS TO BE EXERC ISED W.E.F. ASSESSMENT YEAR 2011-12. THE RELEVANT PORTI ON OF THE CIRCULAR READS AS UNDER : 7. CANCELLATION OF REGISTRATION OBTAINED UN DER SECTION 12.4 7.1 SECTION 12AA PROVIDES THE PROCEDURE RELATING TO REGISTRATION OF A TRUST OR INSTITUTION ENGAGED IN C HARITABLE ACTIVITIES. SECTION 12AA(3) PREVIOUSLY PROVIDED T HAT IF THE ACTIVITIES OF THE TRUST OR INSTITUTION ARE FOUND TO BE NON- GENUINE OR ITS ACTIVITIES ARE NOT IN ACCORDANCE WITH THE OBJECTS FOR WHICH SUCH TRUST OR INSTITUTION WAS ESTABLISHED , THE REGISTRATION GRANTEDUNDERSECTION12AACANBECANCELLEDBY THE COMMISSIONER AFTER PROVIDING THE TRUST OR INSTIT UTION AN 8 OPPORTUNITY OF BEING HEARD. 7.2 THE POWER OF CANCELLATION OF REGISTRATION IS INHERENT AND FLOWS FROM THE AUTHORITY OF GRANTING REGISTRATION. HOWE VER, JUDICIAL RULINGS IN SOME CASES HAVE HELD THAT THE COMMISSIONER DOES NOT HAVE THE POWER TO CANCEL THE REGISTRATION WHICH WAS OBTAINED EARLIER BY ANY TRUS T OR INSTITUTION UNDER PROVISIONS OF SECTION 12A AS IT IS NOT SPECIFICALLY MENTIONED IN SECTION 12AA. 7.3 THEREFORE, SECTION 12AA HAS BEEN AMENDED TO PROV IDE THAT THE COMMISSIONER CAN ALSO CANCEL THE REGISTRATION OBTAINED UNDER SECTION 12A AS IT STOOD BEFORE AMENDM ENT BY FINANCE (NO.2) ACT, 1996. 8.8 APPLICABILITY - THESE AMENDMENTS HAVE BEEN MAD E EFFECTIVE FROM 1ST APRIL 2011 AND WILL, ACCORDINGLY, A PPLY IN RELATION TO THE ASSESSMENT YEAR 2011-12 AND SUBSEQUE NT YEARS. (UNDERLINE SUPPLIED BY US) 12. THE LD. COUNSEL FOR THE ASSESSEE HAS INTERPRETE D THE ABOVE, DRAWING STRENGTH FROM VARIOUS CASE LAWS, TO MEAN THAT THE REGISTRATION CAN BE CANCELLED ONLY W.E.F. ASSESSMENT YEAR 2011-12. THE CASE LAWS RELIED UPON BY THE LD. COUNSEL FOR THE ASSESSEE DO NOT HELP THE ASSESSEES CASE. THE LD. COUNSEL FOR THE ASSESSEE H AS RELIED UPON THE DECISION OF THE I.T.A.T., AGRA BENC H IN THE CASE OF AGRA DEVELOPMENT AUTHORITY. WE FIND THAT T HE ISSUE IN THAT CASE WAS DIFFERENT DEALING WITH THE CANCELLATION OF REGISTRATION GRANTED UNDER SECTION 12A OF THE ACT, PRIOR TO 1.6.2010, WHEN EXPLICIT POWERS TO THIS EFFECT WERE NOT GRANTED BY THE LEGISLATURE UNDER ST ATUTE AND IT WAS HELD THAT PRIOR TO 1.6.2010 REGISTRATION GRANTED 9 UNDER SECTION 12A OF THE ACT COULD NOT BE CANCELLED . THE SAME PROPOSITION HAS BEEN LAID DOWN IN THE CASE OF DIT(EXEMPTIONS) VS. MOOL CHAND KHAIRATI RAM TRUST (SUPRA) RELIED UPON BY THE ASSESSEE. ON THE CONTRA RY, WE FIND THAT HON'BLE BOMBAY HIGH COURT IN THE CASE OF SINHAGAD TECHNICAL EDUCATION SOCIETY VS. CIT (2012 ) 343 ITR 23(BOM) ON A CHALLENGE TO THE CONSTITUTIONAL VA LIDITY OF THE AMENDMENT MADE TO SECTION 12AA(3) EMPOWERING COMMISSIONERS TO CANCEL REGISTRATIONS GRANTED U/S 1 2A W.E.F. 01.06.2010, HAS UPHELD THE CONSTITUTIONAL V ALIDITY OF THE SAME HOLDING THAT IT IS NOT RETROSPECTIVE IN NATURE AND POWERS UNDER THE SECTION CAN BE EXERCISED EVEN IN RESPECT OF TRUSTS REGISTERED PRIOR TO 01-06-2010 U/ S 12A OF THE ACT.FURTHER THE HIGH COURT REFUSED TO INTERF ERE WITH A SHOW CAUSE NOTICE RELATING TO PERIODS PRIOR TO JU NE 1 ,2010. THE HONBLE HIGH COURT HELD AS FOLLOWS: 5.THERE IS NO MERIT IN THE CHALLENGE TO THE CONSTI TUTIONAL VALIDITY OF THE PROVISION. AS A RESULT OF THE AMENDMENT, WHICH HAS BEEN BROUGHT ABOUT BY THE FINANCE ACT OF 2010, SUBSECTION (3) OF SECTION 12AA HAS BEEN AMENDED SPECIFICALLY TO EMPOWER THE COMMISSION ER TO CANCEL A REGISTRATION OBTAINED UNDER SECTION 12A AS IT STOOD PRIOR TO ITS AMENDMENT BY THE FINANCE (NO.2) ACT, 1996. SUB SECT ION (3) WAS INSERTED INTO THE PROVISIONS OF SECTION 12AA BY THE FINANCE (NO.2) ACT, 2004 WITH EFFECT FROM 1 OCTOBER 2004. AS IT ORIGINA LLY STOOD, UNDER SUBSECTION (3), A POWER TO CANCEL REGISTRATION WAS CONFERRED UPON THE COMMISSIONER WHERE A TRUST OR AN INSTITUTION 1 (200 5) 279 ITR 310 (SC) HAD BEEN GRANTED REGISTRATION UNDER CLAUSE (B) OF SUBSECTION (1) OF SECTION 12AA. THE COMMISSIONER, AFTER SATISFYING HIMSELF THAT THE OBJECTS OF THE TRUST OR AN INSTITUTION ARE NOT GENU INE OR ARE NOT BEING CARRIED OUT IN ACCORDANCE WITH THE OBJECTS OF THE T RUST OR INSTITUTION, AS THE CASE MAY BE, WAS VESTED WITH THE POWER TO PASS AN ORDER IN WRITING CANCELLING THE REGISTRATION OF SUCH TRUST O R INSTITUTION. BY THE FINANCE ACT OF 2010, SUBSECTION (3) WAS AMENDED SO AS TO EMPOWER THE COMMISSIONER TO CANCEL THE REGISTRATION OF A TR UST OR AN INSTITUTION WHICH HAS OBTAINED REGISTRATION AT ANY TIME UNDER S ECTION 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 INST ITUTION WHICH HAS OBTAINED REGISTRATION UNDER SECTION 12A AS IT STOOD PRIOR TO ITS AMENDMENT IN 1996. EVERY STATUTORY PROVISION WHICH OPERATES IN RESPECT OF A TRUST, WHICH HAS ALREADY BEEN REGISTER ED IN THE PAST DOES NOT HAVE A RETROSPECTIVE CHARACTER. A LAW WHICH OPE RATES WITH RESPECT 10 TO AN EVENT WHICH HAS OCCURRED IN THE PAST IS NOT N ECESSARILY RETROSPECTIVE. A PROVISION IS RETROSPECTIVE WHEN IT TAKES AWAY A RIGHT WHICH HAS VESTED OR ACCRUED IN THE PAST. THE EFFECT OF THE PROVISION IS TO EMPOWER THE COMMISSIONER TO CANCEL THE REGISTRAT ION OF A TRUST WHERE HE IS SATISFIED THAT THE ACTIVITIES OF THE TR UST ARE NOT GENUINE OR ARE NOT BEING CARRIED OUT IN ACCORDANCE WITH THE OB JECTS OF THE TRUST OR INSTITUTION. THIS CANNOT BY ANY STRETCH OF IMAGINAT ION, BE REGARDED AS A RETROSPECTIVE ALTERATION OF THE LAW. IN ANY EVENT, PARLIAMENT HAS PLENARY POWERS AS A LEGISLATIVE BODY TO ENACT LEGIS LATION EITHER WITH RETROSPECTIVE OR PROSPECTIVE EFFECT SUBJECT ONLY TO THE REQUIREMENT THAT SUCH LEGISLATION SHOULD NOT OFFEND THE PROVISIONS O F PART III OF THE CONSTITUTION. EMPOWERING THE COMMISSIONER TO CANCEL THE REGISTRATION OF A TRUST OR INSTITUTION ON THE GROUND THAT THE AC TIVITIES OF THE TRUST OR INSTITUTION ARE NOT GENUINE OR ARE NOT BEING CARRIE D OUT IN ACCORDANCE WITH THE OBJECTS OF THE TRUST OR INSTITUTION CANNOT BE CONSTRUED AS A CONFERMENT OF ARBITRARY POWER. W HERE A BENEFIT IS GRANTED BY THE LEGISLATURE, WHETHER BY WAY OF AN EXEMPTION OR OTHE RWISE, THE LEGISLATURE IS ENTITLED TO ENSURE THAT THE BENEFIT CONFERRED BY THE STATUTE IS UTILIZED ONLY FOR THE PURPOSE FOR WHICH IT IS CONFERRED. A PROVISION ENACTED FOR THE WITHDRAWAL OF THE BENEFIT CONFERRED FOR BREACH OF THE UNDERLYING PURPOSE CANNOT BE REGARDED AS ARBITRARY. THE POWER IS CAREFULLY STRUCTURED BY THE REQUIREMENTS W HICH ARE SPECIFIED BY THE LEGISLATURE IN SUBSECTION (3) INCLUDING OBSE RVANCE OF THE PRINCIPLES OF NATURAL JUSTICE. A CANCELLATION OF RE GISTRATION UNDER SUB- SECTION (3) OF SECTION 12AA IS SUBJECT TO AN APPEAL BEFORE THE TRIBUNAL UNDER SECTION 253(1)(C). A JUDICIAL REMEDY IS AVAIL ABLE AGAINST A CANCELLATION OF REGISTRATION. 6. IN OUR VIEW, THE DECISION IN SEDCO FOREX (SUPRA) IS INAPPLICABLE TO THE FACTS OF THE PRESENT CASE. THE ISSUE INVOLVED I N SEDCO FOREX WAS WHETHER THE SUBSTITUTED EXPLANATION TO SECTION 9(1) (II), BROUGHT IN BY THE FINANCE ACT, 1999 WAS RETROSPECTIVE IN NATURE. THE FINANCE ACT, 1999 SPECIFICALLY PROVIDED THAT THE SUBSTITUTED EXP LANATION WOULD COME INTO EFFECT FROM 1 APRIL 2000. IN THE ABOVE CASE, I T WAS CONTENDED BY THE APPELLANT THAT THE EXPLANATION WOULD NOT APPLY WHILE ASSESSING INCOME FOR THE YEARS 199293 AND 199394. THE SUPREME COURT OBSERVED THAT THE HIGH COURT HAD WHILE DEALING WITH THE APPEAL FROM THE DECISION OF THE TRIBUNAL PURPORTED TO GIVE RETR OSPECTIVE EFFECT TO THE EXPLANATION INTRODUCED IN 1999. THIS ACCORDING TO THE SUPREME COURT WAS NOT PERMISSIBLE AS THE EXPLANATION HAD NO T COME INTO EFFECT DURING THE ASSESSMENT YEARS IN QUESTION. THE SUPREM E COURT FURTHER HELD THAT A CARDINAL PRINCIPLE OF TAX LAW IS THAT T HE LAW TO BE APPLIED IS THAT WHICH IS IN FORCE DURING THE RELEVANT ASSESSME NT YEARS UNLESS OTHERWISE PROVIDED EXPRESSLY OR BY NECESSARY IMPLIC ATION. IN THAT VIEW IT WAS HELD THAT THE EXPLANATION WAS NOT RETROSPECT IVE. 7. IN THE PRESENT CASE, THE ISSUE IS NOT WITH REGAR D TO THE ASSESSMENT OF INCOME OF THE PETITIONERS AS IN THE CASE OF SEDCO FOREX (SUPRA). THE ISSUE IN THIS CASE IS WITH REGARD TO THE POWER TO CANCEL REGISTRATION OF THE TRUST UNDER SECTION 12AA IN VIEW OF THE AMEN DMENT TO SUB SECTION (3) TO SECTION 12AA BROUGHT ABOUT WITH EFFE CT FROM 1 JUNE 2010. THE AMENDMENT TO SUB SECTION 3 OF SECTION 12A A EMPOWERS THE COMMISSIONER TO CANCEL THE REGISTRATION OF A TR UST WHICH HAS BEEN OBTAINED AT ANY TIME UNDER SECTION 12A . THE AMENDMENT TO SUB SECTION(3) OF SECTION 12AA GIVES WIDE POWERS TO CAN CEL A REGISTRATION OBTAINED AT ANY TIME. IN SEDCO FOREX (SUPRA) THE EXPLANATION TO SECTION 9(1)(II) WAS EFFECTIVE FROM 1 APRIL 2000. T HEREFORE, IT WAS TO BE APPLICABLE POST 1 APRIL 2000 AND WAS NOT TO APPLY T O ASSESSMENT OF INCOME FOR EARLIER YEARS. IN THIS CASE THE AMENDMEN T TO SUB SECTION 3 OF SECTION 12AA IS WITH EFFECT FROM 1 JUNE 2010. TH EREFORE THE AMENDED SECTION 12AA BECOMES EFFECTIVE FROM 1 JUNE 2010. CONSEQUENTLY FROM 1 JUNE 2010 THE COMMISSIONER CAN EXERCISE THE POWER UNDER SECTION 12AA(3) AND CANCEL THE REGISTRA TION OF A TRUST REGISTERED UNDER SECTION 12A. PARLIAMENT WHILE EMPO WERING THE 11 COMMISSIONER TO CANCEL REGISTRATION OF A TRUST REGI STERED UNDER SECTION 12A HAS DELIBERATELY USED THE WORDS 'OBTAIN ED REGISTRATION AT ANY TIME UNDER SECTION 12A'. THEREFORE, POWER UNDER SECTION 12AA(3) CAN BE EXERCISED BY THE COMMISSIONER IN RESPECT OF A TRUST REGISTERED PRIOR TO 1 JUNE 2010. THE MERE FACT THAT A PART OF THE REQUISITES FOR THE ACTION UNDER SECTION 12 AA (3) IS DRAWN FROM A TIME PRIOR TO ITS PASSING NAMELY REGISTRATION AS A CHARITABLE TRUST U NDER SECTION 12A PRIOR TO 2010 WOULD NOT MAKE THE AMENDMENT RETROSPE CTIVE IN OPERATION. THE AMENDMENT DOES NOT TAKE AWAY ANY VES TED RIGHT NOR DOES IT CREATE NEW OBLIGATIONS IN RESPECT OF PAST A CTIONS. THEREFORE, THE DECISION IN SEDCO FOREX (SUPRA) IS INAPPLICABLE TO THE FACTS OF THE PETITIONERS CASE. 8. IN THE PRESENT CASE, BY AND AS A RESULT OF THE A MENDMENT BY THE FINANCE ACT OF 2010, THE COMMISSIONER HAS BEEN EMPO WERED TO INITIATE STEPS FOR THE CANCELLATION OF THE REGISTRA TION OF A TRUST OR INSTITUTION WHERE THE ACTIVITIES OF THE TRUST/INSTI TUTION ARE NOT GENUINE OR ARE NOT BEING CARRIED OUT IN ACCORDANCE WITH THE OBJECTS THEREOF EVEN IN RELATION TO A TRUST WHICH WAS REGISTERED UN DER SECTION 12A AS IT THEN STOOD. SUCH AN AMENDMENT CANNOT BE REGARDED AS TAKING AWAY A VESTED RIGHT RETROSPECTIVELY. ALTERNATELY, EVEN IF IT IS CONSTRUED TO BE RETROSPECTIVE, IT CANNOT BE HELD TO BE VIOLATIVE OF ARTICLE 14. 9. IN SO FAR AS THE MERITS OF THE PRESENT MATTER AR E CONCERNED, THE EARLIER NOTICE TO SHOW CAUSE THAT WAS ISSUED TO THE PETITIONER ON 31 JULY 2007, CULMINATED IN AN ORDER CANCELLING THE RE GISTRATION WHICH WAS PASSED ON 9 OCTOBER 2007. THE ONLY GROUND ON WHICH THE TRIBUNAL INTERFERED WITH THE ORDER WAS THAT UNDER SUBSECTION (3) OF SECTION 12AA, AS IT THEN STOOD, THE COMMISSIONER HAD NO POW ER TO CANCEL THE REGISTRATION OF A TRUST OR INSTITUTION GRANTED UNDE R SECTION 12A. THIS DECISION OF THE TRIBUNAL WAS RENDERED ON 19 SEPTEMB ER 2008, WHICH WAS PRIOR TO THE AMENDMENT, WHICH WAS BROUGHT IN BY THE FINANCE ACT OF 2010. AFTER THE AMENDMENT BY THE FINANCE ACT WIT H EFFECT FROM 1 JUNE 2010, THE COMMISSIONER HAS ISSUED A FRESH NOTI CE DATED 11 MARCH 2011 PROPOSING TO INVOKE THE POWERS UNDER THE AMENDED PROVISIONS OF SECTION 12AA(3) FOR CANCELLATION OF T HE REGISTRATION FOR THE REASONS MENTIONED IN THE ORDER DATED 9 OCTOBER 2007. THE NOTICE WHICH HAS BEEN ISSUED BY THE COMMISSIONER IS A NOTI CE TO SHOW CAUSE AND IT WOULD BE OPEN TO THE PETITIONER TO SUBMIT A REPLY TO THE NOTICE ON ALL GROUNDS, INCLUDING THOSE WHICH ARE CONTAINED IN THE ORDER DATED 9 OCTOBER 2007. IN OTHER WORDS, THE CONTENTS OF THE ORDER DATED 9 OCTOBER 2007 SHALL BE TREATED AS A NOTICE TO SHOW C AUSE TO THE PETITIONER TO WHICH THE PETITIONER SHALL BE AT LIBE RTY TO FILE A REPLY BEFORE THE COMMISSIONER. WE DECLINE TO EXERCISE OUR JURISDICTION UNDER ARTICLE 226 OF THE CONSTITUTION, AT THE PRESENT STA GE, TO INTERDICT THE HEARING OF THE NOTICE TO SHOW CASE. WE CLARIFY THAT WE HAVE NOT EXPRESSED ANY OPINION ON THE ALLEGATION LEVELLED AG AINST THE PETITIONER, THE CORRECTNESS OF WHICH IS LEFT OPEN TO BE DETERMI NED BY THE COMMISSIONER IN THE COURSE OF THE PROCEEDINGS. 10. THE PETITION IS ACCORDINGLY REJECTED. NO ORDER AS TO COSTS. 13. WE, THEREFORE, REJECT THE CONTENTION OF THE LD . COUNSEL FOR THE ASSESSEE THAT THE CANCELLATION OF REGISTRATION DID NOT AFFECT THE ASSESSMENT YEAR PRI OR TO 2011-12. IN VIEW OF THE ABOVE, WE HOLD THAT THE RE ASON RECORDED BY THE ASSESSING OFFICER OF REOPENING OF 12 ASSESSMENT ON THE BASIS OF CANCELLATION OF REGISTRA TION BY THE COMMISSIONER OF INCOME TAX WAS IN ORDER. THE G ROUND OF APPEAL RAISED THE ASSESSEE, IS THEREFORE, DISMIS SED. 14. GROUND NO.3 RAISED BY THE ASSESSEE READS AS UNDER : 3) THAT THE LD. COMMISSIONER OF INCOME TAX, (APPEAL S), CHANDIGARH HAS ERRED BOTH ON FACTS AND LAW IN CONFIRMING THE A CTION OF ASSESSING OFFICER OF NOT ALLOWING EXEMPTION UNDER S ECTION 11 AND 12 OF THE INCOME TAX ACT. THE ORDERS OF LD.COMMISSIONER O F INCOME TAX (APPEALS), CHANDIGARH, HAVE BEEN PASSED OVER LOOKIN G THE INSTRUCTIONS CONTAINED IN CIRCULAR NO 01/201 1ISSUED BY CBDT. TH E ACTION OF THE ASSESSING OFFICER OF NOT ALLOWING EXEMPTION UNDER S ECTION11AND 12 OF THE INCOME TAX ACT IS UNJUST, ILLEGAL, NOT IN CONSO NANCE WITHPROVISIONSOF LAW AND DESERVES TO BE STRUCK OFF. IT IS PRAYED THAT NECESSARY DIRECTIONS MAY BE GIVEN TO THE AO TO RE- ASSESS THE INCOME AFTER ALLOWING EXEMPTION UNDER SE CTION 11 AND 12 OF THE INCOME TAX ACT. 15. IN THE ABOVE GROUND THE ASSESSEE HAS CHALLENGE D DENIAL OF EXEMPTION UNDER SECTIONS 11 AND 12 OF THE ACT. THE CONTENTION OF THE LD. COUNSEL FOR THE ASSESSEE IS THAT THE CANCELLATION DID NOT AFFECT THE REGISTRATION GR ANTED IN THE IMPUGNED YEAR AND WAS IN RELATION TO ASSESSMENT YEAR 2011-12 AND THEREAFTER ONLY. 16. WE HAVE ALREADY DEALT WITH THIS ISSUE IN GROUN D NO.2 RAISED BY THE ASSESSEE WHEREIN WE HAVE HELD TH AT THE CANCELLATION CAN BE OF PERIOD PRIOR TO 2011-12 ALSO AS HELD BY THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF 13 SINHAGAD TECHNICAL EDUCATION SOCIETY (SUPRA). EVEN OTHERWISE, THE LEARNED COMMISSIONER OF INCOME TAX VIDE HIS ORDER DATED 25.2.2013 HAS CANCELLED THE REGISTR ATION GRANTED TO THE ASSESSEE SOCIETY W.E.F. 1992. IN TH E ABSENCE OF REGISTRATION THE ASSESSEE HAD, THEREFORE , NO BASIS FOR CLAIMING EXEMPTION UNDER SECTIONS 11 AND 12 OF THE ACT AT ALL AS RIGHTLY HELD BY THE COMMISSIONER OF INCOME TAX. THIS GROUND OF APPEAL OF THE ASSESSEE IS, THEREFORE, DISMISSED. 17. GROUND NO.4 RAISED BY THE ASSESSEE IS AS UNDER : 4) THAT THE LD. COMMISSIONER OF INCOME TAX, (APPEAL S), CHANDIGARH, HAS ERRED BOTH ON FACTS AND LAW IN CONF IRMING THE ACTION OF ASSESSING OFFICER IN HOLDING THAT THE SUM OF RS.993327 INCURRED UNDER THE HEAD 'REPAIR AND MAINTENANCE' WAS CAPITAL EXPENDITURE AND ALLOWING ONLY DEPRECATION THEREON A ND THUS MAKING A DISALLOWANCE OF A SUM RS.884305. THE ACTION OF THE A.O IN HOLDING REVENUE EXPENSE DEBITED UNDER THE HEAD 'REPAIR AND MAINTENANCE' AS CAPITAL EXPENDITURE IS NOT ONLY UNJUST, BUT IS ALSO ILLEGAL AS THE SAME IS NOT BASED UPON CORRECT APPRECIATION OF FACTS AND DE SERVES TO BE QUASHED. IT IS PRAYED THAT ACTION OF THE A.O. HOLDING THE RE VENUE EXPENSE AS CAPITAL EXPENDITURE TO THE EXTENT OF RS.993327 MAY BE QUASH ED AND THE A.O MAY BE DIRECTED TO DELETE THE ADDITIONS OF RS.884305 MADE ON THIS GROUND. 18. THE ABOVE GROUND IS IN RELATION TO DISALLOWANC E OF EXPENSES INCURRED ON ACCOUNT OF REPAIR AND MAINTENANCE HOLDING THE SAME TO BE CAPITAL IN NATUR E AS AGAINST THE REVENUE CLAIMED BY THE ASSESSEE. 14 19. BRIEFLY STATED, DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER FOUND THAT THE A SSESSEE HAD DEBITED AN AMOUNT OF RS.11,22,484/-UNDER THE HE AD REPAIR AND MAINTENANCE. THE DETAILS OF THE ABOVE EXPENSES WERE CALLED FOR DURING THE ASSESSMENT PROCEEDINGS. AFTER GOING THROUGH WHICH THE ASSESSI NG OFFICER HELD THAT THE EXPENDITURE AMOUNTING TO RS.9,93,327/- WAS CAPITAL IN NATURE. ACCORDINGLY, AFTER ALLOWING DEPRECIATION ON THE SAME, THE BALANCE AMOU NTING TO RS.8,84,305/- WAS DISALLOWED AND ADDED BACK TO T HE INCOME OF THE ASSESSEE. 20. THE MATTER WAS CARRIED IN APPEAL BEFORE THE CI T (APPEALS) WHERE THE ASSESSEE STATED THAT THE DISALL OWANCE HAD BEEN MADE ON AN ADHOC BASIS WITHOUT GIVING ANY FINDINGS AS TO WHY HE EXPENSES WERE CAPITAL IN NATU RE. THE LD. CIT (APPEALS) DISMISSED ASSESSEES GROUND A ND UPHELD THE ADDITION MADE, STATING THAT THE ASSESSIN G OFFICER HAD GIVEN FINDINGS IN HIS ORDER THAT AS PER THE DETAILS SUBMITTED EXPENSES INCURRED ON ACCOUNT OF H OSTEL, FURNITURE, BUILDING AND VEHICLE WERE IN THE NATURE OF CAPITAL EXPENSES AND THIS FINDING HAS NOT BEEN CONTRADICTED. 21. BEFORE US THE LD. COUNSEL FOR THE ASSESSEE STA TED THAT ALL RELEVANT DETAILS RELATING TO THE IMPUGNED EXPENSES WERE FILED BEFORE THE ASSESSING OFFICER AND IT WAS EVIDENT FROM THE SAME THAT ONLY PETTY EXPENSES WERE INCURRE D 15 WHICH WERE IN THE NATURE OF REPAIR AND MAINTENANCE EXPENSES AND THUS WERE REVENUE IN NATURE. 22. THE LD. DR, ON THE OTHER HAND, RELIED UPON THE ORDER OF THE ASSESSING OFFICER AS WELL AS THE LD. C IT (APPEALS). 23. WE HAVE HEARD THE LEARNED REPRESENTATIVES OF BOTH THE PARTIES, PERUSED THE FINDINGS OF THE AUTHO RITIES BELOW AND CONSIDERED THE MATERIAL AVAILABLE ON RECO RD. WE FIND THAT THE ASSESSEE HAD FILED NECESSARY DETAI LS OF THE EXPENSES INCURRED, COPIES OF WHICH WERE FILED B EFORE US AT PAPER BOOK PAGE 14-52, BEING COPIES OF ACCOUN T OF THE RELEVANT EXPENSES AS ALSO COPIES OF BILLS OF CE RTAIN EXPENSES. A PERUSAL OF THE ORDER OF THE ASSESSING OFFICER AND THE LD. CIT (APPEALS) SHOWS THAT THERE WAS NO B ASIS TO HOLD THE EXPENSES AS CAPITAL IN NATURE. IN FACT , WHAT TRANSPIRES, IS THAT THEY HAVE NOT EVEN GONE THROUGH THE DETAILS FILED BY THE ASSESSEE AND CURSORILY HELD TH E EXPENSE TO BE CAPITAL IN NATURE WITHOUT GIVING ANY BASIS FOR THIS FINDING AT ALL. THE ASSESSING OFFICER WHI LE MAKING THE DISALLOWANCE HELD AT PARA 5 TO 6.2 AS FOLLOWS : 5. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF IMPARTING COACHINGS/TUITIONS ETC. A PERUSAL OF P&L A/C SHOWS TH AT THE ASSESSEE HAS EARNED RENTAL INCOME AMOUNTING TO RS.11,53,392/-, AFTER CLAIMED DEDUCTION U/S 24(A) AT RS.3,67,378/-, THE INCOME OF HOUSE PROPERTY COME TO RS.8,57,215/-. THE ASSESSEE HAS ALSO SHOWN INCOME FRO M BUSINESS AND PROFESSION AMOUNTING TO RS.17,12,403/- (INCLUDING RENTAL INCOME). AFTER EXCLUDING RENTAL INC OME OF 16 RS.11,53,392/-, BUSINESS INCOME COMES TO RS.5,59,01 1/- WHICH IS ADDED TO THE TOTAL INCOME OF THE ASSESSEE. 6. FURTHER, DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE HAS DEBITED AN AMOUNT OF RS. 11,22,484/- UN DER THE HEAD 'REPAIR AND MAINTENANCE' DETAILS WHICH ARE AS UNDER: SI.NO. EXPENDITURE AMOUNT. 1. ELECTRICITY 43,602/ 2. HOSTEL 1,50,593/ 3. FURNITURE 97,292/ - 4. OFFICE EQUIPMENT 23,083 / - 5. BUILDING 7,02, 257/ - 6. SANITARY 62,472/ - 7. VEHICLE 43,185/ - TOTAL: - 11,22,,484/ - 6.1 DURING THE COURSE OF ASSESSMENT PROCEEDINGS, TH E COUNSEL OF THE ASSESSEE WAS ASKED TO EXPLAIN THE NATURE OF T HESE EXPENDITURE AND WHY NOT THESE EXPENDITURES TREATED AS CAPITAL NATURE AND DISALLOWED AS REVENUE EXPENDITURE. THE C OUNSEL OF THE ASSESSEE HAS STATED THAT THESE EXPENSES ARE IN THE NATURE OF CURRENT REPAIRS HOWEVER, PERUSAL OF DETAILS SHOWN B Y THE ASSESSEE REVEAL THAT OUT OF THE ABOVE THE EXPENSES INCURRED ON HOSTEL, FURNITURE, BUILDING AND VEHICLES ARE IN THE NATU RE OF CAPITAL EXPENDITURE AS THESE HAVE AN ENDURING LONG LAST ING BENEFIT FOR THE ASSESSEE. THE DETAILS OF THESE EXPE NDITURES CLEARLY SHOW THAT THESE EXPENDITURES ARE CAPITAL IN NATURE AND NOT REVENUE/CURRENT REPAIRS. 6.2 IN VIEW OF THE ABOVE FACTS, IT IS CLEAR THAT TH E EXPENDITURE AMOUNT OF RS.9,93,327/- IS CAPITAL IN NATURE . SO AFTER DEPRECIATION DISALLOWANCE ON A/C OF THESE E XPENDITURE IS WORKED OUT AS UNDER: SI.NO . EXPENDITURE AMOUNT. RATE OF DEPRECI ATION DEPRECIAT ION AMOUNT 1. HOSTEL 1,50,593 15% 22,589/ - 1,28,00 2. FURNITURE 97,292/ - 10% 9,729/ - 87,563/ 3. BUILDING 7,02,257 10% 70,226/ - 6,32,03 4. VEHICLE 43,185/ - 15% 6 ,478/ - 36,707/ - TOTAL: - 9,93,327 1,09,022/ 8,84,30 17 24. THE LD. CIT (APPEALS) UPHELD THE ADDITION BY HOLDING AS FOLLOWS AT PARA 6 TO 6.2 OF THE ORDER AS FOLLOWS: 6. GROUND OF APPEAL NO. 4 IS THAT THE ASSESSING OFFICER HAS ERRED IN HOLDING THAT THE AMOUNT OF RS.9,93,327/- INCURRED ON ACCOUNT OF REPAIR AND MAINTENANCE WAS OF CAPITAL NATURE AND IN MAKING DISALLOWANCE OF RS. 8,84,305/- AFTER ALLOWING DEPRECIATION. 6.1 DURING THE COURSE OF APPELLATE PROCEEDINGS, THE L-D. COUNSEL FOR THE APPELLANT HAS FILED A WRITTEN SUBMISSION, RELEVANT PORTION OF WHICH IS REPRODUCED BELOW: 'THE ASSESSING OFFICER WITHOUT GIVING ANY FINDING REGARDING THE ITEMS/ ASSETS, WHICH WERE REQUIRED TO BE CAPITALISED BY THE ASSESSES MADE AN ADDITION OF RS. 884305. THE ADDITIONS MADE BY THE ASSESSING OFFICER ON ADHOC BASIS AND WITHOUT GIVING ANY FINDINGS IN THIS REGARD THEREFORE DESERVES TO BE DELETED.' 6.2 I HAVE CONSIDERED HE SUBMISSION OF THE LD. COUN SEL. THE APPELLANT HAS NOT FILED ANY EVIDENCE ABOUT THE N ATURE OF EXPENSES ON ACCOUNT OF HOSTEL', FURNITURE', 'BUILD ING' AND VEHICLE' TO PROVE THAT THESE WERE OF THE NATURE OF R EPAIR AND MAINTENANCE, EITHER BEFORE THE ASSESSING OFFICER OR BE FORE THE UNDERSIGNED IN THE APPELLATE PROCEEDINGS. THE ASSESSING OFFICER HAS GIVEN HIS FINDINGS IN PARA 6. 2 OF HIS ORDER THAT AS PER THE DETAILS SUBMITTED, THE EXPENSE S INCURRED ON ACCOUNT OF HOSTEL, FURNITURE, BUILDING A ND VEHICLE WERE IN THE NATURE OF CAPITAL EXPENSES AND THIS FINDING OF THE ASSESSING OFFICER HAS NOT BEEN CONTR ADICTED. THEREFORE, IT IS HELD THAT THE ASSESSING OFFICER WAS RIGHT IN TREATING THIS EXPENDITURE AS CAPITAL EXPENDITURE AND I N DISALLOWING THE IMPUGNED AMOUNT. THE ADDITION MADE ON 18 THIS ACCOUNT IS, THEREFORE, CONFIRMED. GROUND OF AP PEAL NO. 4 IS DISMISSED. 25. IN VIEW OF THE SAME, IN THE INTEREST OF JUSTIC E, WE CONSIDER IT FIT TO RESTORE THE ISSUE BACK TO THE FI LE OF THE ASSESSING OFFICER TO VERIFY THE NATURE OF EXPENSES INCURRED AND THEREAFTER PASS A SPEAKING ORDER IN ACCORDANCE WITH LAW. WE MAY ADD THAT THE ASSESSEE BE GRANTED DUE OPPORTUNITY OF HEARING IN THIS REGARD AND IS FREE T O ADDUCE ALL EVIDENCES ON WHICH HE WISHES TO PLACE RELIANCE. THIS GROUND OF APPEAL RAISED BY THE ASSESSEE IS, THEREFO RE, PARTLY ALLOWED. 26. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (RAVISH SOOD) (ANNAPURNA GUPTA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 18 TH JANUARY, 2017 *RATI* COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. THE CIT 5. THE DR ASSISTANT REGISTRAR, ITAT, CHANDIGARH