TaxTMI 
TaxTMI 
2012 (3) TMI 262
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....e Petitioner, by charging capitation fees and donations in respect of admissions and by diverting them for personal gain to trustees, has ceased to carry on the activities of the Trust in accordance with the objects of the Trust. The registration was proposed to be withdrawn with effect from Assessment Year 2. The proceedings which were initiated pursuant to the notice to show cause culminated in an order of the Commissioner of Income Tax (Central), Pune dated 9 October 2007, cancelling the registration under Section 12AA(3). The order of cancellation was challenged in appeal before the Income Tax Appellate Tribunal. The Tribunal by its judgment dated 19 September 2008 came to the conclusion that under Section 12AA(3), as it then ....
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....ects of the trust or institution, as the case may be, he shall pass an order in writing cancelling the registration of such trust or institution: Provided that no order under this subsection shall be passed unless such trust or institution has been given a reasonable opportunity of being heard." (emphasis supplied). Following the amendment, the Commissioner of Income Tax has issued a fresh notice to show cause on 11 March 2011. The notice recites that in view of the amended provision of subSection (3) of Section 12AA, which were brought into force with effect from 1 June 2010, it is now provided that registration granted under Section 12A can also be cancelled by the Commissioner. The Commissioner has proposed to invoke his powers under ....
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.... Finance (No.2) Act, 2004 with effect from 1 October 2004. As it originally stood, under subsection (3), a power to cancel registration was conferred upon the Commissioner where a trust or an institution 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 genuine or are not being carried out in accordance with the objects of the trust or institution, as the case may be, was vested with the power to pass an order in writing cancelling the registration of such trust or institution. By the Finance Act of 2010, subsection (3) was amended so as to empower the Commissioner to cancel the registration of a trust or an ins....
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....ot being carried out in accordance with the objects of the trust or institution cannot be construed as a conferment of arbitrary power. Where a benefit is granted by the legislature, whether by way of an exemption or otherwise, 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 which are specified by the legislature in subsection (3) including observance of the principles of natural justice. A cancellation of registration under subsection (3) of Section 12AA is subject....
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....ation of the trust under Section 12AA in view of the amendment to sub section (3) to Section 12AA brought about with effect from 1 June 2010. The amendment to Sub Section 3 of Section 12AA empowers the Commissioner to cancel the registration of a trust which has been obtained at any time under Section 12A . The amendment to sub section(3) of Section 12AA gives wide powers to cancel a registration obtained at any time. In Sedco Forex (supra) the explanation to Section 9(1)(ii) was effective from 1 April 2000. Therefore, it was to be applicable post 1 April 2000 and was not to apply to assessment of income for earlier years. In this case the amendment to sub section 3 of Section 12AA is with effect from 1 June 2010. Therefore the amended sect....
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....ospectively. 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 are concerned, the earlier notice to show cause that was issued to the Petitioner on 31 July 2007, culminated in an order cancelling the registration 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 power to cancel the registration of a trust or institution granted under Section 12A. This decision of the Tribunal was rendered on 19 September 2008, which was prior to the amendment, which was brought in by the Finance Act of 2010. After....