2016 (1) TMI 1302 - AT - Income Tax

Commissioner's jurisdiction affirmed on taxability, but cancellation of registration disallowed under specific section.

The Tribunal held that the Commissioner lacked jurisdiction to cancel the registration granted under section 12AA of the Income Tax Act by invoking ... Revision u/s 263 - cancelled the registration granted under section 12AA - Held that:- The meaning of the term ‘order’ is given to be an order of assessment made by the ACIT, DCIT, ITO on the direction of JCIT under section 144 of the Act, or an order made by the JCIT under section 120 of the Act. We observe that there is no reference to an order made by the Commissioner of Income Tax under section 12A of the Act. In view of this, the learned Commissioner of Income Tax has no jurisdiction under section 263 of the Act to cancel the registration earlier granted to the assessee under section 12AA of the Act. Specific powers have been granted to the Principal Commissioner or the Commissioner in this regard under section 12AA(3) of the Act. The Income Tax Act is a self contained code, whereby specific provisions have been provided for specific conditions under different Chapters and under different sections, sub-sections and clauses, etc. An authority can exercise its power to do any act under the specific provision provided under the Act and not from elsewhere. To cancel the registration, the Commissioner of Income Tax has to assume the power from the provisions of section 12AA(3) of the Act and not from section 263 of the Act, which is basically a power given to the Commissioner of Income Tax to review an erroneous order made by an Assessing Officer, which results in some prejudice to the revenue. Thus the Commissioner of Income Tax does not have power to cancel registration granted to the assessee earlier under section 12A of the Act, under the revisionery powers given to him in section 263 of the Act. - Decided in favour of assessee. Issues:1. Jurisdiction of Commissioner to cancel registration under section 12AA of the Act under section 263 of the Income Tax Act.2. Taxability of interest on Fixed Deposits under section 263 of the Income Tax Act.Issue 1: Jurisdiction of Commissioner to cancel registration under section 12AA of the Act under section 263 of the Income Tax Act.The appeal pertains to the cancellation of registration granted to the assessee under section 12AA of the Income Tax Act. The Commissioner of Income Tax (Exemptions) invoked section 263 of the Act to cancel the registration earlier granted to the assessee trust. The key contention was whether the Commissioner had the jurisdiction to cancel the registration under section 12AA of the Act by invoking section 263 of the Act. The provisions of section 263 empower the Principal Commissioner or Commissioner to revise any order passed by the Assessing Officer if it is deemed erroneous and prejudicial to the revenue. However, the critical point of contention was whether the registration under section 12AA, granted by the Commissioner himself, could be canceled under the revisional powers of section 263. The Tribunal analyzed the relevant sections and explanations to determine the scope of the Commissioner's jurisdiction in canceling the registration. It was observed that the Commissioner did not have the authority to cancel the registration granted under section 12AA of the Act under the revisionary powers of section 263. The Tribunal emphasized that specific powers for canceling registration were provided under section 12AA(3) of the Act, and the Commissioner could not derive this authority from section 263, which primarily dealt with reviewing erroneous orders made by Assessing Officers.Issue 2: Taxability of interest on Fixed Deposits under section 263 of the Income Tax Act.The assessee conceded during the hearing that the provisions of section 263 were rightly invoked concerning the taxability of interest on Fixed Deposits. However, the assessee contested the invocation of section 263 regarding the cancellation of registration under section 12AA of the Act. The Tribunal noted that while the taxability of interest on Fixed Deposits was rightly subject to section 263, the cancellation of registration under section 12AA fell outside the purview of the Commissioner's revisionary powers. The Tribunal referred to relevant judgments to support the distinction between the grant of exemption under section 11 and the grant of registration under section 12AA. The Tribunal highlighted that the power to cancel registration was specifically provided under section 12AA(3) of the Act, and the Commissioner could not exercise this authority under section 263. Consequently, the appeal was partly allowed, affirming the Commissioner's jurisdiction on the taxability of interest on Fixed Deposits but disallowing the cancellation of registration under section 12AA under section 263.In conclusion, the Tribunal's detailed analysis clarified the Commissioner's jurisdiction under section 263 of the Income Tax Act, distinguishing between the taxability of interest on Fixed Deposits and the cancellation of registration under section 12AA. The judgment provided clarity on the specific powers granted under different sections of the Act, ensuring a nuanced understanding of the Commissioner's authority in revising orders and canceling registrations.