TaxTMI 
TaxTMI 
2011 (10) TMI 471
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....ociety amongst other objects was to run, maintain, manage and administer Laxman Public School Society in Hauz Khas Area, New Delhi. Apart from this object, it has various other objects of charitable nature which has been provided in the by laws of the society. The assessee has applied for grant of a registration under sec. 12A(a) of the Income-tax Act, 1961which was granted to it vide registration No. 2887-88 dated 4.11.1982. Learned Director of Income-tax (Exemption) sought to cancel this registration and issued a notice for this purpose on 15.4.2010. After hearing the assessee, learned Director of Income-tax (Exemption) has passed the impugned order and cancelled the registration w.e.f. assessment year 2007-08. The learned counsel for the assessee on the strength of Hon'ble Delhi High Court's decision rendered in the case of DIT (Exemption) v. Mool Chand Khairati Lal Trust [2011] 199 Taxman 1/11 Taxmann.com 42 (Delhi) submitted that registration granted under sec. 12A(a) cannot be withdrawn by exercising the powers under sec. 12AA(3) of the Act which has been infused in the learned Director of Income-tax (Exemption) w.e.f. 11.10.2004, meaning thereby that once registration grante....
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....passed on 29.10.2010. Hon'ble Court has considered the provisions of sec. 12A, 12AA(1)(b) and 12AA(3) of the Income-tax Act, 1961. The discussion made by the Hon'ble Court in paragraph Nos. 5 to 7 reads as under: "5. There is also no dispute that the registration, which is sought to be withdrawn by the Authority, is by virtue of power vested in the Commissioner under Section 12AA(3) of the Act. The order which was passed by the DIT was under Section 12AA(1)(b) read with Section 12A of the Act. For proper appreciation of the rival submissions based on the interpretation of Sections 12A and 12AA(1)(b) and 12AA(3), it would be useful to reproduce relevant parts of these Sections, which are as under: "12A. [Conditions for applicability of sections 11 and 12.] - The provisions of section 11 and section 12 shall not apply in relation to the income of any trust or institution unless the following conditions are fulfilled, namely: (a) the person in receipt of the income has made an application for registration of the trust or institution in the prescribed form and in the prescribed manner to the [***] Commissioner before the 1st day of July, 1973, or before the expiry of a p....
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..... with effect from 1st April, 1997. It is also noted that Section 12A was inserted in the statute book by the Finance Act, 1972 with effect from 1st April, 1973. It was omitted and was again restored with effect from 1st April, 1989. Section 12A, as it stood at the time when it provided for registration of trust, nowhere provided for cancellation of the registration once granted. It is also pertinent to note that the words 'such trust or institution is registered under Section 12AA' were also substituted in this Section with effect from 1st April, 1997. In fact, this Section even now nowhere stipulates about the cancellation or withdrawal of the registration, once granted under the said Section. It is only under Section 12AA, which came in the statute book with effect from 1st April, 1997 that a fresh procedure for registration of the trust or institution is prescribed. Even under this Section 12AA, there was no provision for cancellation of registration once granted till the enactment of sub-Section (3) with effect from 1st October, 2004. There is no dispute with regard to this fact that the provision regarding cancellation of registration came to be introduced for the first time ....
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....iew that there was no power vested with the Commissioner to cancel or withdraw the registration granted to the assessee under Section 12A(a) in the year 1974". 5. Thus, if we compare the facts of both the cases then it would reveal that there is no disparity. The distinguishing feature between the two cases is that the impugned order has been passed by the learned Director of Income-tax (Exemption) on 29.10.2010 i.e. subsequent to the amendment effected in sub-section (3) of sec. 12AA whereby Learned Commissioner has been empowered to cancel the registration granted under sec. 12A(a) of the Act. This amendment has been effected w.e.f. 1.6.2010. Learned Commissioner had issued a notice for cancellation of the registration on 15.4.2010. At that point of time, he was not having any power to cancel such registration. Therefore, the very foundation to initiate proceedings against the assessee for cancellation of the registration is erroneous. Had the Learned Commissioner issued the notice after 1.6.2010, then probably issue could be deserves to be examined on merit whether such registration can be cancelled or not. But on 15.4.2010, learned Director of Income-tax (Exemption) was not ....
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....ssee did not file these documents. It pointed out that the documents containing receipt for payment and agreement to sell have been misplaced. Assessing Officer has observed that auditors have pointed out that purchase of land was subject to verification, meaning thereby that auditors were not satisfied about the claim of assessee. According to the Assessing Officer, Mrs. SK Aggarwal, chair person is an individual, falling within the ambit of sec. 13(3) of the Act, therefore, any benefit provided to a specified person as per sec. 13(3) then the benefit of sec. 11 and 12 for exemption of tax would not be available. The assessee failed to provide any evidence justifying the claim that land was purchased for the society and it was purchased for fulfilment of its objects. Hence, he did not grant benefit of sections 11 and 12 on this amount. 9. Appeal to the learned CIT(Appeals) did not bring any relief to the assessee. 10. Before us also, learned counsel for the assessee failed to produce the copy of the sale deed, copy of the agreement and any other evidence exhibiting the fact that the land was purchased for the objects of the society. He only raised peripheral issue that Mrs. ....
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....r exclusion of such income from the taxability. Admittedly, Mrs. S.K. Aggarwal is a specified person, no dispute has been raised by the learned counsel for the assessee at the time of arguments. She is the chair-person of the institution and an advance of Rs. 1,18,05,316 was given to her. It was not used for the purpose of the objects of the society, rather it was used for the benefit of Mrs. Aggarwal, meaning thereby section 11 will not be applicable on this amount in order to exclude this amount from the total income of the assessee for the purpose of the tax. In other words, section 11 exempts the income of the trust from taxation but sec. 13 provides taxability of certain incomes if these were not applied or used for the fulfillment of the objects of the trust. In view of the above discussion, we do not find any merit in this ground of appeal. It is rejected. 14. Ground Nos. 2 & 3 are inter-connected to each other. In these grounds of appeal, the contention of the assessee is that Learned CIT(Appeals) has erred in holding that the contribution towards benevolent fund amounting to Rs. 57,70,000 is an income of the assessee. Similarly, the amount of Rs. 18,31,266 received towa....
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....have been claimed in the total expenses while working out the income and expenditure account for the purpose of application of income. He shall also look into that the expenses should not have been incurred on the persons specified in sec. 13(3) of the Act. They should be for the object of the society. Any excess would be included in the total income of the assessee. Ground No. 3 is allowed partly for statistical purposes whereas ground No. 2 is rejected. 16. In ground No. 4, assessee has pleaded that Learned CIT(Appeals) has erred in treating the sum of Rs. 29,50,000 as income instead of corpus donation claimed by the assessee. The learned counsel for the assessee did not press this ground of appeal, therefore, it is rejected. 17. Ground Nos. 5, 7 and 8 are inter-connected to each other. In these grounds, assessee has pleaded that Learned CIT(Appeals) has erred in upholding the taxation over the assessee in the status of AOP and application of tax rate at maximum marginal rate. Assessee also pleaded that Learned CIT(Appeals) was wrong to uphold the computation of income by applying the provisions of Chapter IV of the Income-tax Act, 1961. Learned DR at the very outset submit....
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...., in the computation of the total income. The same be excluded in the facts of the case and as per law. 4. That the Learned CIT(Appeals) was wrong to confirm the inclusion of Rs. 2076068 in respect of the development fund and Rs. 118806 in respect of the medical fund in the total income. 5. That the Learned CIT(Appeals) was wrong to confirm the following receipts as income: (i) Rs. 735486 received in account of Parent Teachers Association. (ii) Rs. 257500 received as Caution money from the Students. (iii) Rs. 7025000 received as Corpus Donation. 6. That the Learned CIT(Appeals) has wrongly confirmed: (i) the computation of income under Chapter IV of the I.T. Act. (ii) to calculate the Tax payable by applying the maximum marginal rate. (iii) To charge interest u/s. 234A of the Act. (iv) To determine the status of the assessee as an A.O.P. 7. That the Learned CIT(Appeals) was wrong to reject the contention that the assessee is a mutual society and that its income is not liable to tax. 8. That the Learned CIT(App....