TaxTMI 
TaxTMI 
2014 (1) TMI 1536
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....he Commissioner cancelling the registration granted to the appellant trust is sustainable and justifiable in law." 2. The assessee association was originally in the name and style of "Sri Vidya Mandir". The facts which are necessary for the disposal of this appeal are that the association by name Sri Vidya Mandir Association was registered under the provisions of the Societies Registration Act-Act No.21/1860 in S.No.267/1971 dated 30.04.1971 on the file of the Registrar of Assurances, Salem District. The object of the said association was to promote and advance the educational, medical, social and moral welfare of the people in general; to establish, maintain and manage colleges, schools and other educational institutions and libraries for the advancement of knowledge in any subject or language and to establish, maintain and manage any institution for imparting technical knowledge in any handicrafts or industries etc. Subsequently, the assessee association was formed by a deed of trust dated 19.01.1972 registered as Document No.328/1972. The objects of the assessee trust as could be seen from the trust deed was that "donors" were desirous of setting up of a "trust" with the prop....
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....stration granted to the assessee trust under Section 12A of the Act and called upon the assessee to file its objections. Further it was stated in the notice dated 09.09.2009 that the said notice may be read as notice under Section 12AA(3) of the Act and an opportunity was given to the assessee to state their objections in writing or in person on 05.11.2009. After affording an opportunity of personal hearing to the assessee, the Commissioner of Income-Tax, Salem, by order dated 25.02.2010, cancelled the registration granted earlier under Section 12A of the Act. Aggrieved by such order, the assessee preferred appeal before the Income Tax Appellate Tribunal. 5. The Income Tax Appellate Tribunal, after considering the contentions raised by the assessee agreed with the findings recorded by the Commissioner of Income Tax and dismissed the appeal by order dated 18.04.2013. Aggrieved by the said order of the Tribunal, the assessee is on Tax Case (Appeal) raising the above mentioned questions of law. 6. Learned counsel appearing for the assessee referred to the trust deed dated 19.01.1972 and the objects of the association, which was formed on 30.04.1971 as well as the terms and condi....
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....ent that such legislation should not offend the provisions of Part III of the Constitution. 8. We have carefully considered the submissions of the parties and perused the materials placed on record. 9. The short question that falls for consideration in this Tax Case (Appeal) is whether the Commissioner is justified in cancelling the registration granted to the appellant trust, which was executed on 19.01.1972 and if the cancellation was justified, on facts, whether the Commissioner could have invoked the power under Sub Section 3 of Section 12AA of the Act, which came to be inserted on 01.10.2004. 10. The assessee, in their reply to the notice issued by the Commissioner of Income Tax under Section 12AA(3) of the Act pointed out that the main object of the trust viz., the assessee trust was to assist the association which was registered in 1971. It was further contended that the association, which was registered as a society in 1971 was formed for the purpose of running educational institution and as per the terms of the trust deed dated 19.01.1972, the trust is to utilise the properties and income earned, for carrying out the education and other allied objects stated in Me....
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....d by the Commissioner that working relation that existed between the assessee trust and the 1971 association is no longer available due to the formation of the 1987 trust on 09.09.1987; the deed of the assessee trust was executed in 1971 and therefore, there cannot be any reference of the new trust created on 09.09.1987; there is no link between the 1971 association and the newly formed trust, which was formed in 1987 and if at all there is any link between the 1972 trust and the association formed on or after 09.09.1987, when the newly formed trust started administering the educational institutions and other activities of 1971 Society/Association, the working relation ceased to exist. Therefore, the findings of the Income Tax Appellate Tribunal was that the 1971 society has become functionally defunct and all its activities were taken over by the new trust; therefore, the Tribunal pointed out that there is no link between the assessee's 1971 trust and the newly formed trust and no link vice versa. 14. We have perused the documents viz., the Articles of Association of 1971 Association/Society, the trust deed dated 1972 and the trust deed dated 07.09.1987 and the findings recorde....
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....en brought about by the Finance Act of 2010, sub-section (3) of Section 12AA has been amended specifically to empower the Commissioner to cancel a registration obtained under Section 12A, as it stood prior to its amendment by the Finance (No.2) Act, 1996. Sub-section (3) was inserted into the provisions of Section 12AA by the Finance (No.2) Act, 2004, with effect from October 1, 2004. As it originally stood, under sub-section (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 sub-section (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, sub-section (3) was amended so as to empower the Commissioner to cancel the registration of a trust or an institution which has obtained registration at anytime under Section 12A (as it stood before its amendment by the Finance....
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....ich has already been registered in the past does not have a retrospective character; a law which operates with respect to an event which has occurred in the past is not necessarily retrospective; a provision is retrospective when it takes away a right which has vested or accrued in the past. Therefore, the Bombay High Court pointed out that the effect of the provision is to cancel the registration of the trust when the activities of the trust are not genuine or are not being carried out in accordance with the objects of the institution and such law cannot be regarded as a retrospective alteration of the law. It was further held that cancellation of registration of a trust on the ground that the activities of the trust or institution are not genuine or are not being carried out in accordance with the objects of the trust or institution cannot be construed as a conferment of arbitrary power to the Commissioner. 17. We fully agree with the view taken by the Bombay High Court. In the light of the same, the said amendment cannot be regarded as retrospective alteration of the law and the same cannot be considered as giving arbitrary power to the Commissioner. 18. Learned counsel fo....
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....with the objects of the trust or institution as the case may be, he may pass an order in writing cancelling the registration of such trust or institution. 20. As far as the present case is concerned, as is evident from the reading of the trust deed dated 19.01.1972, Shri Vidya Mandir Trust was constituted for the aim and purpose for which Sri Vidya Mandir registered under the Societies Registration Act was formed viz., for the purpose of running educational institution and other allied educational institutions mentioned in articles and memorandum of association. 21. A reading of those documents further reveal that Schedule A to D mentioned properties have been vested for the purpose of carrying out the object of Sri Vidya Mandir association, so as to enable the said Association to carry out its objects according to the direction and wishes of the trust. 22. Admittedly, the said association has become a trust as early as 1987. A copy of the trust deed enclosed in the typed set of papers before us reveal that the constitution of the trust/society cease to exist and wherever the word Vidya Mandir Association occurred in Sri Vidya Mandir trust, it shall be known and followed a....