TaxTMI 
TaxTMI 
2016 (5) TMI 1221
X X X X Extracts X X X X
X X X X Extracts X X X X
....the learned Commissioner of Income-tax, Bangalore - I, Bangalore passed under section 12AA(3) of the Act is opposed to law, equity, weight of evidence, probabilities and the facts and circumstances in the Appellant's case. 2. The order of cancellation under section 12AA(3) is not in accordance with law and requires to be set-aside on the facts and circumstances of the case. 3. Grounds on Cancellation of registration of a trust registered under Section 12 A of the Act: a. The learned CIT erred in not appreciating that cancellation of registration granted 12A has to always be prospectively and consequently the order passed is bad in law and requires to be cancelled. b. The learned CIT was not justified in cancelling the regist....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... and circumstances of the case. 5. Grounds on merits of the matter: a. The learned CIT failed to appreciate that the twin conditions essential for the purpose of cancellation the registration arc not satisfied in the Appellant's case and consequently passed a perverse order on the facts and circumstances of the case. b. The learned CIT has not given any finding on the issue of activities are not genuine nor has the trust not being carried in accordance with the objects of the trust. In the absence of these two conditions precedent the CIT was precluded from exercising his powers under 12AA(3) of the Act on the facts and circumstances of the case. c. The learned CIT erred in holding that the Appellant is not carrying on the a....
X X X X Extracts X X X X
X X X X Extracts X X X X
..../- was paid to the assesseesociety on 23/12/2010. While fact stood thus, the CIT, Hubli initiated proceedings u/s 12A(3) to cancel registration granted u/s 12A and show cause notice was served upon the assessee-society vide letter dated 6/3/2014 for the following reasons: i. The society was formed only for the benefit of Brahmin community which violates the provisions of sub-sec.(3) of sec.13 of the Act. ii. The society is not carrying on any activities towards objects of the trust. iii. There was no element of charity running old-age home as the society was collecting deposits from inmates. In response to above show-cause notice, assessee-society has submitted that though the society was formed by Brahmin, benefits are extended to p....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... is about legality of the order passed by the CIT under the provisions of subsec.( 3) of 12AA of the Act. The provisions of sub-sec.(3) of sec.12AA of the Act empower the CIT to cancel registration granted under clause (b) of sub-sec.(1) of sec.12A of the Act, where the CIT is satisfied that the activities of the trust or institution are not genuine and are not carried out in accordance with objects of the trust/institution. Therefore, conditions to be satisfied by the CIT before invoking provisions of sub-sec.(3) of sec.12AA are that the objects of the trust are not genuine or not being carried on in accordance with objects of the trust. The Hon'ble High Court of Karnataka, in the case of Director of Income-tax (Exemption) vs. Venkatesha E....
X X X X Extracts X X X X
X X X X Extracts X X X X
....thdraw registration of trust earlier registered under the provisions of sec.12A of the Act with retrospective effect. It may be noted that w.e.f. 01/04/1997 a new provision i.e. a new section i.e. 12AA was enacted by the Parliament governing the procedure for registration of trust or institution. Even under this new section, in the beginning there was no provision for cancellation of registration once granted till the enactment of sub-sec.(3) w.e.f. 01/10/2004. This power of cancellation was confined only to trusts registered under the provisions of new section i.e. 12AA of the Act. However, subsequently by the amendment introduced by the Finance Act, 2010 w.e.f. 01/06/2010, power to cancel registration registered under sec.12A was conferre....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... M.K. Kandaswami [(1975) 36 STC 191, 198 (SC)], in interpreting a provision, a construction which would defeat its purpose and, in effect, obliterate it from the statute book should be eschewed. If more than one construction is possible, that which preserves its workability and efficacy is to be preferred to the one which would render it otiose or sterile. In that view of the matter, the court should not adopt a construction which would upset or even impair the purpose in introducing a particular provision in the statute [Calcutta Jute Manufacturing Co. v. CTO, (1997) 106 STC 433, 439 (SC)]. Therefore, we hold that the CIT is very much empowered to cancel registration of the trust once registered u/s 12A of the Act with retrospective effect....