M/s Punjab Cricket Association, Mohali V. CIT-II, Chandigarh

ITA 834/CHANDI/2012

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 1618 (ITAT-CHANDIGARH)
• Duration Of Justice: 3 year(s) 2 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-10-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 22-09-2015
• Assessment Year: misc
• Appeal Filed On: 08-08-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K MITTAL
• Assessee Lawyers: RAKESH MARWAHA
• Keywords: Charitable institution; Opportunity of being heard; Cancellation of registration
• Section: 143(3); 12A; 12AA; 12; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, CHANDIGARH BEFORE SHRI H.L.KARWA, VICE PRESIDENT AND MS. RANO JAIN, ACCOUNTANT MEMBER ITA NO.834/CHD/2012 (UNDER SECTION 12AA(3) OF THE ACT) M/S PUNJAB CRICKET ASSOCIATION, VS. THE C.I.T-II, SECTOR 63, SAS NAGAR, CHANDIGARH. MOHALI. PAN: AAATP3502C (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI RAKESH MARWAHA RESPONDENT BY : SHRI S.K.MITTAL, DR DATE OF HEARING : 24.09.2015 DATE OF PRONOUNCEMENT : 19.10.2015 O R D E R PER RANO JAIN, A.M . : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX-II, CHANDIGARH DATED 20.6.2012 PASSED UNDER SECTION 12A A(3) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) CA NCELLING THE REGISTRATION UNDER SECTION 12A FROM ASSESSMENT YEAR 2009-10 ONWARDS. 2. BRIEFLY, THE FACTS OF THE CASE ARE THAT THE REGISTRATION UNDER SECTION 12A OF THE ACT WAS GRANT ED TO THE ASSESSEE VIDE ORDER DATED 27.3.1998 BY THE COMMI SSIONER OF 2 INCOME TAX, CHANDIGARH. THE ASSESSMENT OF THE ASS ESSEE FOR ASSESSMENT YEAR 2009-10 WAS TAKEN UP UNDER SECTION 143(3) OF THE ACT BY THE ASSESSING OFFICER, WHEREBY HE DEN IED THE CLAIM OF THE ASSESSEE FOR EXEMPTION UNDER SECTION 1 1 OF THE ACT ON THE GROUND THAT THE ASSESSEE SOCIETY WAS ENG AGED IN COMMERCIAL AND BUSINESS ACTIVITIES AND, THEREFORE, THE ACTIVITIES WERE NOT CHARITABLE IN NATURE AS PER THE AMENDED PROVISIONS OF SECTION 2(15) OF THE ACT. THE ASSES SING OFFICER ALSO REFERRED THE MATTER TO THE COMMISSIONER OF INC OME TAX FOR CANCELLATION OF REGISTRATION GRANTED TO IT UNDE R SECTION 12A OF THE ACT. ON RECEIPT OF A SHOW CAUSE NOTICE DAT ED 15.3.2012 BY THE COMMISSIONER OF INCOME TAX PROPOS ING TO CANCEL THE REGISTRATION UNDER SECTION 12A OF THE AC T, IT WAS SUBMITTED BY THE ASSESSEE THAT THE REGISTRATION UND ER SECTION 12A OF THE ACT WAS ALSO CANCELLED EARLIER BY THE CO MMISSIONER OF INCOME TAX-II, CHANDIGARH VIDE ORDER DATED 31.3. 2009 ON THE GROUNDS THAT THE ACTIVITIES OF THE ASSESSEE WER E NOT CHARITABLE AND THAT THE SAID ORDER HAS BECOME SUBJE CT MATTER OF AN APPEAL FILED BY THE DEPARTMENT BEFORE THE HON 'BLE HIGH COURT OF PUNJAB & HARYANA HIGH COURT AS THE ASSESSE E HAD SUCCEEDED IN AN APPEAL BEFORE THE I.T.A.T. FURTHE R, IT WAS CONTENDED THAT THE AMENDMENT EFFECTED IN SECTION 12 AA(3) OF THE ACT SHOULD BECOME OPERATIVE W.E.F. 1.6.2010 AND NOT RETROSPECTIVELY. HENCE, THE ASSESSEE SHOULD AT LE AST CONTINUE TO ENJOY REGISTRATION UNDER SECTION 12A OF THE ACT TILL 1.6.2010 ON THE GROUNDS DECIDED BY THE I.T.A.T., CHANDIG ARH BENCH 3 UNDER THE UN-AMENDED PROVISIONS OF SECTION 12AA OF THE ACT VIDE ITS ORDER DATED 27.8.2009. THE LEARNED COMMI SSIONER OF INCOME TAX FOUND HIMSELF NOT IN AGREEMENT WITH THE SUBMISSIONS OF THE ASSESSEE. HE OBSERVED THAT THE I.T.A.T., CHANDIGARH BENCH ALLOWED THE APPEAL OF THE ASSESSEE HOLDING THAT THE ORDER PASSED BY THE LEARNED COMMISSIONER O F INCOME TAX UNDER SECTION 12AA(3) OF THE ACT WAS UNSUSTAIN ABLE IN LAW FOR THE REASON THAT THE POWER FOR WITHDRAWING R EGISTRATION WAS EFFECTED IN SECTION 12AA(3) OF THE ACT BY FINAN CE (NO.2) ACT, 2004 WITH EFFECT FROM 1.4.2004 FOR THE ENTITIE S REGISTERED UNDER SECTION 12AA OF THE ACT AND COULD NOT OPERATE TO WITHDRAW OR CANCEL REGISTRATION GRANTED UNDER SECTI ON 12A OF THE ACT. THE DEPARTMENT HAS PREFERRED AN APPEAL A GAINST THE SAID ORDER BEFORE THE HON'BLE PUNJAB & HARYANA HIGH COURT, WHICH IS STILL PENDING. HOWEVER, THE LEARNED COMM ISSIONER OF INCOME TAX FURTHER OBSERVED THAT SUBSEQUENT TO THE DECISION OF THE I.T.A.T., THERE HAS BEEN AN AMENDMENT IN SEC TION 12AA(3) OF THE ACT WITH EFFECT FROM 1.6.2010, WHICH PROVIDES THAT REGISTRATION GRANTED UNDER SECTION 12A OF THE ACT BE ALSO COVERED FOR CANCELLATION OF REGISTRATION BY THE COM MISSIONER OF INCOME TAX. BY VIRTUE OF SUCH AMENDMENT IN SECT ION 12AA(3) OF THE ACT W.E.F. 1.6.2010, THE COMMISSIONE R OF INCOME TAX HAS BEEN EMPOWERED TO CONSIDER CANCELIN G REGISTRATION GRANTED UNDER SECTION 12A OF THE ACT. 3. ON THE MERITS OF THE CASE, THE LEARNED COMMISSI ONER OF INCOME TAX REPRODUCED THE ORDER OF THE COMMI SSIONER OF 4 INCOME TAX DATED 31.3.2009 ON THE BASIS OF WHICH RE GISTRATION WAS EARLIER CANCELLED. THE VIEW OF THE LEARNED CO MMISSIONER OF INCOME TAX WAS THAT THE POSITION REGARDING INCO ME AND EXPENDITURE STATEMENTS OF THE SOCIETY CONTINUES TO BE THE SAME AND THERE IS NO DIFFERENCE IN THE SUBSEQUENT Y EARS ALSO. THE CRUX OF THE ORDER OF THE LEARNED COMMISSIONER O F INCOME TAX IS AS FOLLOWS : I) ON ACCOUNT OF AMENDMENT TO SECTION 2(15) OF THE ACT, THE ASSESSEE HAS LOST THE STATUS OF CHARITABLE ORGANIZATION. II) ON ACCOUNT OF AMENDMENT IN SECTION 2(15) OF THE ACT, THE ASSESSEE HAS LOST THE STATUS OF CHARITABLE ORGANIZATION AS THE SAID SECTION IS APPLICABLE TO SPORTS ASSOCIATION AND IS NOT APPLICABLE TO EDUCATIONAL INSTITUTIONS. III) ON ACCOUNT OF AMENDMENT IN SECTION 2(15) OF THE ACT, THE ASSESSEE HAS LOST THE STATUS OF CHARITABLE ORGANIZATION AS ALL ITS ACTIVITIES ARE BEING CARRIE D ON COMMERCIAL LINE FOR CESS, FEE OR OTHER CONSIDERATIO N. IV) THE ASSESSEE SOCIETY HAS LOST THE NATURE OF CHARITABLE ACTIVITIES IN VIEW OF THE AMENDMENT IN SECTION 2(15) OF THE ACT AS THIS ORGANIZATION IS RUNNING ENTIRE AFFAIRS ON COMMERCIAL LINES. 4. TO BRING HOME THESE REASONS FOR WITHDRAWAL OF REGISTRATION UNDER SECTION 12A OF THE ACT, ELABORAT E DISCUSSION WAS MADE BY THE THEN COMMISSIONER OF INCOME TAX. IN VIEW OF THESE OBSERVATIONS, THE LEARNED COMMISSIONER OF INCOME 5 TAX HELD THAT THE ENTIRE CHARACTER AND FOCUS OF PC A IS PURELY OF COMMERCIAL INTENT WITH AN EYE ON GENERATING HUGE PROFITS WITH NO ELEMENT OF CHARITY IN SUCH ACTIVITIES. TH E LEARNED COMMISSIONER OF INCOME TAX ALSO HELD THAT THE ASSE SSEE DOES NOT QUALIFY TO BE REGARDED AS A CHARITABLE SOCIETY FOR THE REASONS DISCUSSED IN DETAIL BY THE EARLIER COMMISSI ONER OF INCOME TAX IN ORDER DATED 31.3.2009. SINCE THE A CTIVITIES OF THE ASSESSEE FALL IN THE CATEGORY OF ADVANCEMENT O F ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY AND THIS PHRASE A S PROVIDED IN SECTION 2(15) DOES NOT NOW CONSTITUTE A CHARITABLE PURPOSE, THEREFORE THE SAME IS PURELY COMMERCIAL IN NATURE. IN VIEW OF THESE FINDINGS, THE LEARNED COMMISSIONER OF INCOME TAX CANCELLED THE REGISTRATION GRANTED TO THE ASSESSEE UNDER SECTION 12A OF THE ACT. 5. AGGRIEVED BY THIS ORDER OF THE LEARNED COMMISSI ONER OF INCOME TAX, THE ASSESSEE HAS COME UP IN APPEAL B EFORE US. THOUGH AS MANY AS 11 GROUNDS HAVE BEEN RAISED BEFOR E US, THE ONLY GRIEVANCE OF THE ASSESSEE IS THAT THE CANC ELING OF REGISTRATION UNDER SECTION 12AA(3) OF THE ACT IS NO T AS PER LAW. WHILE ARGUING BEFORE US, THE LEARNED COUNSEL FOR THE ASSESSEE MADE TWO FOLD SUBMISSIONS. HIS FIRST CON TENTION WAS THAT AN AMENDMENT HAS BEEN BROUGHT ON THE STATU TE BY THE FINANCE ACT, 2010 IN THE PROVISIONS OF SECTION 12AA(3) OF THE ACT, WHEREBY POWER HAS BEEN GIVEN TO THE LEARNE D COMMISSIONER OF INCOME TAX TO CANCEL REGISTRATION UNDER SECTION 12A OF THE ACT., HOWEVER, THE SAID AMENDMEN T CANNOT BE CONSTRUED TO BE OPERATIVE RETROSPECTIVELY. FOR THIS, COPY 6 OF THE EXPLANATORY NOTES TO THE PROVISIONS OF FINAN CIAL ACT, 2010, CIRCULAR NO.1/2011(FNO.142/1/2011-SO(TPL), WH EREBY IT HAS BEEN CLEARLY PROVIDED THAT THE POWER TO CANC EL THE REGISTRATION GIVEN TO THE ASSESSEE UNDER SECTION 12 A OF THE ACT, HAS BEEN GIVEN TO COMMISSIONER OF INCOME TAX O NLY W.E.F.1.6.2010 AND ACCORDINGLY, APPLICABLE FOR ASSE SSMENT YEAR 2011-12 AND SUBSEQUENT ASSESSMENT YEARS. IT WAS BROUGHT TO OUR NOTICE THAT THE LEARNED COMMISSIONER OF INCOME TAX IN HIS ORDER UNDER SECTION 12AA(3) OF T HE ACT HAS MENTIONED AT MANY PLACES THAT HE INTENDS TO CANCEL THE REGISTRATION FROM ASSESSMENT YEAR 2009-10 ONWARDS, WHICH IS NOT AS PER LAW. 6. THE SECOND CONTENTION RAISED BY THE LEARNED COU NSEL FOR THE ASSESSEE WAS THAT THE ONLY REASON GIVEN BY THE LEARNED COMMISSIONER OF INCOME TAX WHILE WITHDRAWING THE REGISTRATION GRANTED UNDER SECTION 12A OF THE ACT I S THE AMENDMENT BROUGHT ON THE STATUTE BY THE FINANCE ACT , 2008 IN SECTION 2(15) OF THE ACT. IT WAS STATED THAT T HE DETAILED ANALYSIS MADE BY THE LEARNED COMMISSIONER OF INCOME TAX FOR WITHDRAWAL OF THE REGISTRATION WAS INTENDED TO LEAD TO THE ONLY CONCLUSION THAT DUE TO AMENDMENT TO SECTION 2(15) O F THE ACT, THE ASSESSEE HAS LOST ITS NATURE OF BEING A CHARITA BLE ORGANIZATION. IN HIS ORDER, THE LEARNED COMMISSIONE R OF INCOME TAX WHILE ANALYZING THE CASE OF THE ASSESSE E, AT THE END OF EVERY POINT HAS MENTIONED THAT IT HAS LOST T HE SAID CHARACTER OF BEING CHARITABLE IN NATURE IN VIEW OF THE INSERTION OF THE PROVISO TO SECTION 2(15) OF THE ACT. THE AR GUMENT OF THE 7 LEARNED COUNSEL FOR THE ASSESSEE WAS THAT THE PURPO SE OF PROVISO TO SECTION 2(15) OF THE ACT IS TO HIT ANY A SSESSEE ONLY TO THE EXTENT THAT THE ASSESSEE WILL NOT BE ELIGIBL E FOR EXEMPTION UNDER SECTION 11 OF THE ACT, WHICH HAS TO BE VERIFIED BY THE ASSESSING OFFICER ON YEARLY BASIS D URING THE ASSESSMENT PROCEEDINGS. THE MERE FACT THAT THE AS SESSEE HAS BEEN GRANTED REGISTRATION UNDER SECTION 12A OF THE ACT OR 12AA OF THE ACT AS A CHARITABLE INSTITUTION WILL HA VE NO BEARING ON THE DENIAL OF REGISTRATION. THE FACT T HAT THE OBJECT OF THE ASSESSEE MAY BE HIT BY THE PROVISIONS OF SEC TION 2(15) OF THE ACT CANNOT HAVE ANY BEARING ON THE GRANT, DE NIAL OR WITHDRAWAL OF THE REGISTRATION UNDER SECTION 12A OF THE ACT. IN THE BACKGROUND OF THESE SUBMISSIONS, IT WAS PRAY ED THAT THE ORDER PASSED BY THE LEARNED COMMISSIONER OF INC OME TAX UNDER SECTION 12AA(3) OF THE ACT FOR CANCELLATION O F REGISTRATION UNDER SECTION 12A OF THE ACT BE HELD T O BE NOT AS PER LAW. 7. THE LEARNED D.R. RELIED UPON THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX AND STATED THAT IN VIEW OF THE AMENDMENT TO SECTION 2(15) OF THE ACT AND TH E DETAILED DISCUSSION MADE BY THE LEARNED COMMISSIONER OF INCO ME TAX, THE ASSESSEE HAS CERTAINLY LOST ITS CHARACTER OF BE ING A CHARITABLE ORGANIZATION. THEREFORE, THE ORDER PAS SED BY THE LEARNED COMMISSIONER OF INCOME TAX IS VALID AND AS PER LAW. 8. WE HAVE HEARD THE LEARNED REPRESENTATIVES OF BO TH THE PARTIES, PERUSED THE FINDINGS OF THE AUTHORITIE S BELOW AND CONSIDERED THE MATERIAL AVAILABLE ON RECORD. THE UNDISPUTED 8 FACTS OF THE CASE ARE THAT THE ASSESSEE IS A SOCIET Y REGISTERED UNDER SECTION 12A OF THE ACT. IN AN EARLIER ORDER PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX, CHANDIGARH DATED 31.3.2009, THE REGISTRATION SO GRANTED TO THE ASSES SEE WAS WITHDRAWN. ON AN APPEAL FILED BY THE ASSESSEE, TH E I.T.A.T., CHANDIGARH BENCH ALLOWED THE APPEAL OF THE ASSESSEE . ON PERUSAL OF THE ORDER OF THE I.T.A.T., CHANDIGARH BE NCH, WE SEE THAT THE TRIBUNAL ALLOWED THE APPEAL OF THE ASSESSE E HOLDING THAT THE ORDER PASSED BY THE LEARNED COMMISSIONER O F INCOME TAX UNDER SECTION 12AA(3) OF THE ACT WAS UNSUSTAIN ABLE IN LAW FOR THE REASON THAT THE POWER FOR WITHDRAWING R EGISTRATION WAS EFFECTED IN SECTION 12AA(3) OF THE ACT BY FINAN CE (NO.2) ACT, 2004 W.E.F. 1.4.2004 ONLY TO THE ENTITIES REGI STERED UNDER SECTION 12AA OF THE ACT AND COULD NOT OPERATE TO WI THDRAW OR CANCEL THE REGISTRATION GRANTED UNDER SECTION 12A O F THE ACT. IN HOLDING SO, THE TRIBUNAL RELIED UPON THE DECISIO N OF THE I.T.A.T., PUNE BENCH IN THE CASE OF BHARATI VIDYAP EETH VS. ITO (2008) 28 SOT 32. IN THE SAID DECISION, IT WA S HELD THAT SECTION 12AA(3) OF THE ACT EMPOWERS THE COMMISSIONE R OF INCOME TAX TO CANCEL REGISTRATION IN THOSE CASES WH ERE THE REGISTRATION HAD BEEN GRANTED UNDER SUB-SECTION (1B ) OF SECTION 12AA OF THE ACT AND THAT THIS SECTION NOWH ERE EMPOWERS THE COMMISSIONER OF INCOME TAX TO CANCEL O R WITHDRAW THE REGISTRATION GRANTED UNDER SECTION 12A OF THE ACT. PUNE BENCH OF THE TRIBUNAL FURTHER HELD THAT THE PROVISIONS OF SECTION 12AA(3) WERE NOT APPLICABLE T O REGISTRATION GRANTED PRIOR TO 1.10.2004 AS THE PROV ISIONS OF SECTION 12AA(3) OF THE ACT WERE INTRODUCED W.E.F. 1 .10.2004 9 AND THE SAME CANNOT BE INVOKED RETROSPECTIVELY. T HUS, THE I.T.A.T., PUNE BENCH NEGATED THE APPLICABILITY OF S ECTION 12AA(3) OF THE ACT IN RESPECT OF REGISTRATION GRANT ED UNDER SECTION 12A OF THE ACT. THE LEARNED COMMISSIONER OF INCOME TAX IN SECOND ROUND PROPOSED TO CANCEL THE REGISTR ATION GRANTED TO THE ASSESSEE UNDER SECTION 12A OF THE AC T IN VIEW OF THE FACT THAT BY VIRTUE OF AMENDMENT IN SECTION 12AA(3) OF THE ACT BY THE FINANCE ACT, 2010, THE POWER HAS BEE N CONFERRED TO THE COMMISSIONER OF INCOME TAX TO CANC EL THE REGISTRATION GRANTED UNDER SECTION 12A OF THE ACT A LSO. 9. TO THAT EXTENT, WE AGREE WITH THE OBSERVATION O F THE LEARNED COMMISSIONER OF INCOME TAX THAT THE APPEAL OF THE ASSESSEE BEING ALLOWED BY THE TRIBUNAL ON EARLIER O CCASION ON THE BASIS OF THE FACT THAT AT THAT TIME, THE LEARNE D COMMISSIONER OF INCOME TAX DID NOT HAVE ANY POWER TO DO SO HAS NO BEARING ON THE POWER OF THE LEARNED COMMISSI ONER OF INCOME TAX AFTER THE SAID AMENDMENT. HOWEVER, WE ALSO SEE THAT THE AMENDMENT TO SECTION 12AA(3) OF THE ACT GI VING POWER TO THE COMMISSIONER OF INCOME TAX TO CANCEL THE REG ISTRATION GRANTED UNDER SECTION 12A OF THE ACT HAS BEEN CONFE RRED BY THE FINANCE ACT,. 2010, WHICH EXPLICITLY PROVIDES T HAT THE SAID POWERS ARE AVAILABLE TO THE COMMISSIONER OF INCOME TAX W.E.F. 1.6.2010 AND THE SAME ACCORDINGLY CAN BE APPLIED FO R ASSESSMENT YEAR 2011-12 AND SUBSEQUENT ASSESSMENT Y EARS. FOR THIS, OUR ATTENTION WAS INVITED TO THE EXPLANAT ORY NOTES TO THE PROVISIONS OF FINANCE ACT, 2010 VIDE CIRCULAR N O. 10 1/2011(FNO.142/1/2011-SO(TPL) DATED 6.4.2011. THE RELEVANT PORTION OF THE SAID CIRCULAR READS AS UNDE R : 7. CANCELLATION OF REGISTRATION OBTAINED UNDER SEC TION 12A 7.1 SECTION 12AA PROVIDES THE PROCEDURE RELATING TO RE GISTRATION OF A TRUST OR INSTITUTION ENGAGED IN CHARITABLE ACTIVITIES. SECTION 12AA(3) PREVIOUSLY PROVIDED THAT I F THE ACTIVITIES OF THE TRUST OR INSTITUTION ARE FOUND TO BE NON-GENUINE OR ITS ACTIVITIES ARE NOT IN ACCORDANCE W ITH THE OBJECTS FOR WHICH SUCH TRUST OR INSTITUTION WAS ESTABLISHED, THE REGISTRATION GRANTED UNDER SECTION 12AA CAN BE CANCELLED BY THE COMMISSIONER AFTER PROVIDING THE TRUST OR INSTITUTION AN OPPORTUNITY OF BEING HEARD. 7.2 THE POWER OF CANCELLATION OF REGISTRATION IS INH ERENT AND FLOWS FROM THE AUTHORITY OF GRANTING REGISTRATION. HOWEVER, 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 PRO VIDE THAT THE COMMISSIONER CAN ALSO CANCEL THE REGISTRATION OBTAINE D UNDER SECTION 12A AS IT STOOD BEFORE AMENDMENT BY FINANCE (NO.2) ACT, 1996. 7.4 APPLICABILITY - THIS AMENDMENT HAS BEEN MADE APPL ICABLE WITH EFFECT FROM 1ST JUNE, 2010 AND SHALL ACCORDINGLY APPLY FOR ASSESSMENT YEAR 2011-12 AND SU BSEQUENT ASSESSMENT YEARS. 10. ON PERUSAL OF THE ORDER OF THE LEARNED COMMISS IONER OF INCOME TAX FOR CANCELING THE REGISTRATION, WE S EE THAT AT THE BEGINNING OF THE ORDER AS WELL AS AT EVERY PLAC E WHILE CONCLUDING HIS FINDING, THE LEARNED COMMISSIONER OF INCOME TAX HAS REFERRED TO CANCELLATION OF REGISTRATION W .E.F. ASSESSMENT YEAR 2009-10 ONWARDS. HOWEVER, SINCE T HE AMENDMENT TO SECTION 12AA(3) OF THE ACT HAS BEEN SP ECIFICALLY PROVIDED TO BE APPLICABLE TO ASSESSMENT YEAR 2011-1 2 AND ONWARDS, THE LEARNED COMMISSIONER OF INCOME TAX CA NNOT ASSUME JURISDICTION TO CANCEL THE REGISTRATION FROM ASSESSMENT YEAR 2009-10 ONWARDS. IN VIEW OF THIS, THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX IN CANCEL ING THE 11 REGISTRATION UNDER SECTION 12A OF THE ACT IS HELD T O BE NOT AS PER LAW. 11. ON THE SECOND ISSUE THAT ON THE BASIS OF AMEND MENT TO SECTION 2(15) OF THE ACT, THE LEARNED COMMISSION ER OF INCOME TAX DOES NOT GET THE POWER TO WITHDRAW OR C ANCEL THE REGISTRATION, WE ARE GUIDED BY A LATEST ORDER OF TH E AMRITSAR BENCH OF THE I.T.A.T. IN THE CASE OF KAPURTHALA IMP ROVEMENT TRUST VS. CIT, 60 TAXMANN.COM 301 (AMRITSAR-TRIB.), WHEREBY IT HAS BEEN HELD THAT THE CONSIDERATION OF FIRST PR OVISO TO SECTION 2(15) OF THE ACT HAS NO ROLE TO PLAY IN MAT TERS RELATING TO REGISTRATION OF A TRUST OR INSTITUTION UNDER SE CTION 12A OF THE ACT IN RESPECT OF GRANTING OR DECLINING OF REGI STRATION OR IN RESPECT OF CANCELLATION. ON PERUSAL OF THE SAID O RDER, WE SEE THAT AFTER A DETAILED DISCUSSION ON VARIOUS PROVIS IONS OF THE INCOME TAX ACT RELATING TO THE CHARITABLE ACTIVITIE S TOGETHER WITH LEGISLATIVE HISTORY OF THE SAID PROVISIONS, TH E I.T.A.T., AMRITSAR BENCH HAS HELD SO. THE RELEVANT FINDINGS OF I.T.A.T., AMRITSAR BENCH ARE AT PARAS 9 AND 10 OF THE ORDER, WHICH READ AS UNDER : 9. WE FIND THAT, AS LEARNED COUNSEL RIGHTLY POINTS OUT . THE SCOPE OF POWERS OF THE COMMISSIONER UNDER SECTION 12A A(3) FOR CANCELLATION OF REGISTRATION ALREADY GRANTED IS VER Y LIMITED IN SCOPE IN AS MUCH AS IT CAN ONLY BE INVOKED ONLY WHEN (I) THAT THE ACTIVITIES OF THE TRUST ARE NOT GENUINE, AND(II)THAT THE ACTIVITIE S OF THE TRUST OR THE INSTITUTION ARE NOT BEING CARRIED OUT IN ACCORDANC E WITH THE OBJECTS OF THE TRUST OR THE INSTITUTION. SECTION 12 AA(3) SPECIFICALLY PROVIDES THAT WHEN THE CIT 'IS SATISFIED THAT THE A CTIVITIES OF SUCH TRUST OR INSTITUTION ARE NOT GENUINE OR ARE NOT BEI NG CARRIED OUT IN ACCORDANCE WITH THE OBJECTS OF THE TRUST OR 12 INSTITUTION, AS THE CASE MAY BE, HE SHALL PASS AN ORDE R IN WRITING CANCELLING THE REGISTRATION OF SUCH TRUST OR INSTITUTI ON'. IT IS NOT EVEN THE CASE OF THE CIT THAT THE ACTIVITIES OF THE ASSES SEE TRUST ARC 'NOT GENUINE' OR THAT THE 'ACTIVITIES OF THE ASSESSEE AR E NOT BEING CARRIED OUT IN ACCORDANCE WITH THE OBJECTS' OF THE ASSESSEE TRUST. THE CASE OF THE CIT RESTS ON THE FIRST PROVISO TO SECTION 2(1 5) COMING INTO PLAY ON THE FACTS OF THIS CASE BUT THEN SUCH A FACTOR CA NNOT WARRANT OR JUSTIFY THE POWERS UNDER SECTION12AA(3)BEING INVOKED . WE, THEREFORE, UPHOLD THE GRIEVANCE OF THE ASSESSEE THA T THE ACTION OF THE LEARNED COMMISSIONER, IN WITHDRAWING THE REGISTRA TION UNDER SECTION 12AA(3), WAS WELL BEYOND THE LIMITED SCOPE O F THE POWERS CONFERRED ON HIM BY THE STATUTE. THE ASSESSEE, THEREFO RE, MUST SUCCEED IN THE APPEAL FOR THIS SHORT REASON ALONE. 10. THERE IS, HOWEVER, A MUCH MORE FUNDAMENTAL A RE ASON FOR THE ASSESSEE SUCCEEDING IN THIS APPEAL. IN OUR CONSIDERED VIEW, THE CONSIDERATIONS WITH RESPECT TO T HE-FIRST PROVISO TO SECTION 2(15) COMING INTO THE PLAY AND, FOR THAT R EASON, THE OBJECTS OF AN ASSESSEE TRUST OR INSTITUTION BEING HELD TO BE NOT COVERED BY THE DEFINITION OF CHARITABLE PURPOSES', HAV E NO ROLE TO PLAY IN THE MATTERS RELATING TO REGISTRATION OF A TRUST O R INSTITUTION UNDER SECTION 12A OR 12AA - WHETHER IN RESPECT OF GRANTING OR DECLINING OF A REGISTRATION OR IN RESPECT OF CANCELLATION, EVEN IF OTHERWISE PERMISSIBLE, OF A REGISTRATION. A CLOSE LOOK AT TH E SCHEME OF THE ACT WOULD UNAMBIGUOUSLY SHOW THIS ASPECT OF THE MATTER. 12. ON A CLOSER LOOK AT THE SAID ORDER OF THE I.T. A.T., AMRITSAR BENCH, WE FIND THAT THE PROPOSITION SO LAI D DOWN BY THE I.T.A.T., AMRITSAR BENCH IS BASED ON THE FOLLOW ING REASONS : I) THE SCOPE OF POWERS OF THE COMMISSIONER UNDER S ECTION 12AA(3) FOR CANCELLATION OF REGISTRATION ALREADY GRANTED IS VERY L IMITED IN SCOPE IN AS MUCH AS IT CAN ONLY BE INVOKED ONLY WHEN (I) T HAT THE ACTIVITIES OF THE TRUST ARE NOT GENUINE, AND (IT) THAT THE ACT IVITIES OF THE TRUST 13 OR THE INSTITUTION ARE NOT BEING CARRIED OUT IN ACCORDANCE WITH THE OBJECTS OF THE TRUST OR THE INSTITUTION. II) THE CONSIDERATIONS OF FIRST PROVISO TO SECTION 2 (15) HAVE NO ROLE TO PLAY IN THE MATTERS RELATING TO REGISTRATION OF A TRUST OR INSTITUTION UNDER SECTION 12A OR 12AA -WHETHER IN RESPECT OF GRANTING OR DECLINING OF A REGISTRATION OR IN RESPECT OF CANCELLATION. III) WHAT IS CLEAR FROM THE RIDERS IN THE DEFINITION OF CHARITABLE PURPOSES' IS THAT RIDER SET OUT THEREIN, UNDER FIRS T PROVISO TO SECTION 2(15), CAN ONLY COME INTO PLAY ON YEAR TO YEAR BASI S AND NOT IN ABSOLUTE TERMS. THE SAFEGUARD AGAINST THE OBJECTS OF THE TRUST BEING VITIATED INSOFAR AS THEIR CHARACTER OF 'CHARI TABLE ACTIVITIES' IS CONCERNED, IS INBUILT IN THE PROVISIONS OF SECTION 13(8) WHICH WAS BROUGHT INTO EFFECT WITH EFFECT FROM THE SAME POINT OF TIME WHEN PROVISO, TO SECTION 2(15)WAS INTRODUCED - I.E. WITH EFFEC T FROM 1-4- 2009, SECTION 13(8). IV) THE FACT THAT THE OBJECTS OF THE ASSESSEE MAY BE HIT BY THE PROVISO TO SECTION 2(15) CANNOT HAVE ANY BEARING ON THE GRAN T, DENIAL OR WITHDRAWAL OF THE REGISTRATION UNDER SECTION 12AA. V) IN ORDER THAT THE BENEFITS UNDER SECTION 11 ARE D ECLINED TO THE ASSESSEE ON THE GROUND THAT IT IS ENGAGED IN SUCH A CTIVITIES AS MAY BE HIT BY THE FIRST PROVISO TO SECTION 2(15) NOT ON LY THE ASSESSEE MUST BE ENGAGED IN CARRYING OUT SUCH ACTIVITIES AS MAY HIT THE FIRST PROVISO TO SECTION 2(15) BUT ALSO THE RECEIPTS OF THE AS SESSEE FROM SUCH ACTIVITIES MUST EXCEED A SPECIFIED LIMIT. THE SE COND LIMB OF THIS DISABILITY CLAUSE NEEDS TO BE SATISFIED WITH R ESPECT TO EACH ASSESSMENT YEAR. OBVIOUSLY, THEREFORE, THIS ASPECT OF TH E MATTER CANNOT BE EXAMINED AT THE STAGE OF THE GRANT OR WIT HDRAWAL OF REGISTRATION SINCE THE REGISTRATION EXERCISE IS A ON E TIME EXERCISE AND NOT SOMETHING WHICH MUST BE DONE FOR EACH ASSESS MENT YEAR SEPARATELY. THAT IS PRECISELY THE REASON, AS NOTED IN THE EXPLANATORY MEMORANDUM, AS TO WHY THE REMEDY FOR TH E ACTIVITIES BEING HIT BY THE FIRST PROVISO TO SECTION 2(15) LIE S NOT IN GRANT, DECLINE OR WITHDRAWAL OF REGISTRATION BUT IN DECLINI NG THE BENEFITS OF EXEMPTION UNDER SECTION 11 ON THAT COUNT, ON YEAR TO YEAR BASIS, NOTWITHSTANDING THE STATUS OF REGISTRATION. 14 VI) THE DISENTITLEMENT FOR EXEMPTION UNDER SECTION 1 1, AS A RESULT OF THE ACTIVITIES OF AN ASSESSEE BEING HELD TO BE N OT FOR CHARITABLE PURPOSES UNDER SECTION 2(15) READ WITH P ROVISOS THERETO, IS IN RESPECT OF ENTIRE INCOME OF THE ASSE SSEE TRUST OR INSTITUTION BUT ONLY FOR THE ASSESSMENT YEAR IN RES PECT OF WHICH THE FIRST PROVISO TO SECTION 2(15) IS TRIGGERED. VII) IF THE STATUS OF REGISTRATION IS TO BE DECLINED TO AN ASSESSEE ONLY ON THE GROUND THAT SOME OF THE OBJECTS MAY BE HIT BY T HE FIRST PROVISO TO SECTION 2(15) BUT THE ASSESSEE'S RECEIPTS FROM SUCH ACTIVITIES DO NOT EXCEED SPECIFIED THRESHOLD I N A PARTICULAR ASSESSMENT YEAR, THE ASSESSEE WILL BE SUBJECT ED TO UNDUE HARDSHIP IN THE SENSE THAT WHILE THE ASSESSEE WILL BE DISENTITLED TO EXEMPTION UNDER SECTION 11 D UE TO DENIAL OF REGISTRATION UNDER SECTION 12A OR 12AA WHICH IS SIN E QUA NON FOR ADMISSIBILITY OF EXEMPTION UNDER SECTION 11. VIII) THE CONSIDERATIONS ABOUT THE POSSIBILITIES OF FIRST PROVISO TO SECTION 2(15) INTO PLAY ARE WHOLLY EXTRA NEOUS. 13. IN VIEW OF THE ABOVE, RESPECTFULLY FOLLOWING T HE ORDER OF THE COORDINATE BENCH OF THE I.T.A.T., AMRITSAR, WE HOLD THAT THE AMENDMENT TO SECTION 2(15) OF THE ACT CANNOT BE THE BASIS FOR CANCELLATION OF REGISTRATION GRANTED EARLIER UN DER SECTION 12A OF THE ACT. 14. BEFORE PARTING, WE WOULD ALSO LIKE TO HOLD THA T THE TWO BASIC REQUIREMENTS FOR CANCELLATION OF REGISTRA TION AS PROVIDED UNDER SECTION 12AA(3) OF THE ACT, VIZ, THE FINDINGS OF THE LEARNED COMMISSIONER OF INCOME TAX TO THE EFFE CT THAT THE ACTIVITIES OF THE ASSESSEE ARE NOT GENUINE OR THE A CTIVITIES ARE NOT BEING CARRIED OUT IN ACCORDANCE WITH THE OBJECT S ON THE BASIS OF WHICH REGISTRATION UNDER SECTION 12A OF TH E ACT WAS GRANTED TO IT, HAVE ALSO NOT BEEN FULFILLED IN THIS CASE. THE 15 LEARNED COMMISSIONER OF INCOME TAX HAS NOWHERE GIVE N A FINDING IN THIS REGARD. IT IS NOT THE CASE OF THE COMMISSIONER OF INCOME TAX THAT THE ACTIVITIES OF THE ASSESSEE A RE NOT GENUINE OR NOT BEING CARRIED OUT IN CONSONANCE WITH THE OBJECTS OF THE ASSESSEE. IN THIS VIEW ALSO, THE A CTION OF THE LEARNED COMMISSIONER OF INCOME TAX IN CANCELING T HE REGISTRATION IS NOT AS PER LAW. 14. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS A LLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 19 TH DAY OF OCTOBER, 2015. SD/- SD/- (H.L.KARWA) (RANO JAIN) VICE PRESIDENT ACOUNTANT MEMBER DATED : 19 TH OCTOBER, 2015 *RATI* COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT(A)/TH E CIT/THE DR. ASSISTANT REGISTRAR, ITAT, CHANDIGARH