TaxTMI 
TaxTMI 
2021 (3) TMI 1191
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....elling the registration of the Appellant is without jurisdiction and, hence, void ab initio. b) The PCIT failed to appreciate that the power of cancellation of registration vests in the authority who has the jurisdiction to grant registration. Admittedly the Commissioner of Income-tax (Exemption) ['CIT(E)'] is the authority who can grant registration, therefore, he is the only authority who can cancel the registration under section 12AA(3)/(4) of the ITA. c) The PCIT failed to appreciate that when the Trust was registered on 10.12.1990, it was merely communicated that the name of the Trust was entered at TR/27966 in the Register of Trusts. There was no formal order granting registration to start with. Hence there is no requirement in law for passing of an order acknowledging the surrender when the Trust chose to surrender such registration. 2 a) The PCIT erred in holding that the surrender of registration by the Appellant vide its letter dated 19.02.2015 filed on 19.02.2015 is not valid and cannot be given effect to as there is no provision under law for acceptance of such surrender. The PCIT erred in not appreciating that the Appellant is entitle....
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....5TD of the ITA is on date of conversion which in turn has been defined as the date of the order cancelling the registration. c) The PCIT failed to appreciate that multiple SCNs were issued to the Appellant on various dates by the CIT(E) (10.03.2015 and 07.06.2017 referring to the Appellants' surrender letter filed, for violation of section 13(l)(d) of the ITA) as well as the PCIT (dated 08.03.2018 stating violation under section 13(l)(d) and 13(2)(h) of the ITA and 16.08.2019 stating that the activities of the Appellant are not carried out in accordance with the objects of the trust deed in addition to violation under section 13(l)(d) and 13(2)(h) of the ITA) each without disposal of the earlier ones (SCNs) and expanding the scope of the earlier ones. d) The PCIT failed to dispose the SCN dated 10.03.2015 issued by the CIT(E) and failed to appreciate that a change in incumbent who initiated a proceeding cannot abate the proceedings initiated by the erstwhile incumbent. e) The PCIT ought to have held that the impugned order passed under section 12AA(3)/(4) of the ITA, cancelling the registration of the Appellant is effective from the: i) date ....
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.... of appeal, on 26th October 2020, as follows, as also a petition seeking admission of this additional ground of appeal: That the order under section 12AA(3)/(4) of the Income Tax Act, 1961, of the learned Principal Commissioner of Income Tax -17, dated 31st October 2019, is barred by limitation inasmuch as it passed after an unreasonable time from the date of alleged default as well as surrender application filed by the appellant, and the first show cause notice issued by the (income tax) department in this regard. 4. Learned representatives fairly agree that whatever we decide in ITA No 7238/Mum/2019, in the case of Navajbai Ratan Tata Trust vs PCIT which was heard alongwith this set of appeal, will apply mutatis mutandis in this case as well. 5. Vide our order of even date, we have in the case of Navajbai Ratan Tata Trust vs PCIT, observed as follows:- 5. To adjudicate on this appeal, only some of the relevant facts need to be taken note of. The assessee before us is a trust settled by way of the trust deed dated 23rd December 1974, with its main objects including "the advancement of education, learning and industry in all its branches including in economy....
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....n compliance with the provisions of Section 13(1) of the Act. We understand that the said non-compliance would be construed as an activity of the trust which is being carried out in a manner that the provisions of Section 11 and 12 of the Act donot apply to exclude either whole or any part of the income of the Trust resulting in withdrawal of registration obtained by us under section 12A(a) of the Act. Accordingly, the assessee does not desire to continue to avail the benefits of registration made by the Trustees in 1975. Hence, you are hereby informed that the Trust would not be claiming exemption under section 11 of the Act, since, upon withdrawal of the registration or in any event cancellation of the registration under section 12A of the Act, it would not comply with the requirements of Section 12A(1)(a) read with 12AA(4) of the Act. We request you to kindly take note of the above an oblige. Thank you, Yours sincerely, On behalf of the Board of Trustees Trustee 7. Promptly, the Commissioner of Income Tax concerned took note of the above communication, and issued a show cause notice as to why the registration under section 12 A not....
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....erstwhile CIT, Bombay City IV, Bombay. 4. You are requested to explain why the registration granted under section 12A should not be cancelled/ withdrawn in your case. In this regard, you are requested to attend in person or through your authorised representative before the undersigned and file the written submission and argue the matter on 20th March 20145 at 3 pm in my office. Yours faithfully Commissioner of Income Tax (Exemptions) Mumbai 8. As scheduled, the hearing did take place on 20th March 2015. The record of proceedings on that day, as recorded in the office of the Commissioner of Income Tax (Exemptions) is as follows: Shri Dilip Thakkar, CA, attended, alongwith Ms R Savaksha and Shri B S Taraporewala, and relied on letter dated March 11. Heard. Sd/xx D J T Sd/xx B S T Sd/xx R S Sd/xx CIT (E) 9. There was a long pause thereafter. Even tough the hearing was concluded on 20th March 2015, as evident from the remark "Heard" which is invariably followed by a formal order in respect of the hearing, the assessee did not receive any further communication from any of the income tax authorities in this regard....
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....ehalf of the Board of Trustees 10. There was no response to this letter. Neither the Commissioner of Income Tax concerned responded to the said letter, nor there was any other communication, from any of the income tax authorities, in connection with the above. 11. On 8th March 2018, and without any reference to any earlier proceedings as set out above, the respondent Principal Commissioner issued a notice requiring the assessee to show cause as to why the registration under section 12A granted to the assessee not be cancelled. This show cause notice stated as follows: No Pr CIT-17/12AA/2017-18/1 Date: 08/03/2018 Navajibai Ratan Tata Trust Bombay House, Homi Mody Street Mumbai 400 001 Sir, Sub: Show cause for cancellation u/s 12AA of registration granted under section 12A to Navajibai Ratan Tata Trust- reg- Kindly refer to the above. 2. Navajibai Ratan Tata Trust was granted registration under section 12 A of the Income Tax Act, by the Commissioner of Income Tax, Bombay City-IV, Bombay vide registration no. TR/10925 dated 15.03.1976 3. However, it is seen from the records that you have violated....
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.... 13(1) of the ITA which would be construed as an activity of the Trust which is being carried out in a manner that provisions of section 11 and 12 of the ITA do not apply to exclude either whole or any part of the income of the Trust, resulting in withdrawal of the registration under section 12A of the ITA. By the said letter the Trust had surrendered its registration. (iii) Acknowledging Trusts letter dated 11.03.2015, a show cause notice dated 13.03.2015 was issued by the CIT(E) proposing to cancel/withdraw the Trusts registration under section 12A of the ITA. The Trust was called for a hearing on 20.03.2015 on which date the Trust confirmed its agreement to the cancellation/withdrawal of the registration. Copy of the said letter dated 11.03.2015 is enclosed at page 42 to 43 of the PB, the show cause notice dated 13.03.2015 is enclosed at page 44 to 45 of the PB and a copy of the order Sheet of hearing on 20.03.2015 before CIT(E) is enclosed at page 46. Thus, the Trust submits that it has already surrendered the registration in 2015. iv) Pursuant to the surrender in 2015, the Trust filed its income tax return without claiming exemption under section 11 and 12 of....
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....ly distinct classes, according as they operate in pursuance of the will of the persons concerned, or independently of it. That is to say, the creation, transfer, and extinction of rights are either voluntary or involuntary. In innumerable cases, the law allows a man to acquire or lose his rights by manifestation or declaration of his will and intent directed to that end." (page 371) "The importance of agreement as a vestative fact lies in the universality of its operation. There are few rights which cannot be acquired through the assent of the persons upon whom the correlative duties are to be imposed. There are few rights which cannot be transferred to another by the will of him in whom they are presently vested. There are few which are not extinguished when their owner no longer desires to retain them. Of that great multitude of rights and duties of which the adult member of a civilised community stands possessed, the great majority have their origin in agreements made by him with other men. By agreements of contrary intent he may strip himself almost as destitute of rights and duties, as when in the scantiest of juridical vesture he made his first appearance before the ....
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.... the benefit of the assessee. If it does not wish to avail that benefit for some reason, benefit cannot be forced upon him. It is for the assessee to see if the claim of depreciation is to his advantage. Rather, the ITO should advise him not to claim depreciation if that course is beneficial to the assessee........ ...........It is rightly said that privilege cannot be to a disadvantage and an option cannot become an obligation............ 18. It is then submitted that, as held by Hon'ble Supreme Court, in the case of Shri Lachoo Mal Vs Shri Radhey Shyam [(1971) AIR SC 2213], if there is nothing in the provision which prohibits a person from waiving a privilege, the doctrine of waiver can be applied and privilege can be given up. Learned counsel, in particular, relies upon the following observations made by Hon'ble Supreme Court: "The general principle is that every one has a right to waive and to agree to waive the advantage of a law or rule made solely for the benefit and protection of the individual in his private capacity which may be dispensed with without infringing any public right or public policy. Thus the maxim which sanction the non- observance....
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....at when no such fetters are placed under section 12A, the same cannot be inferred. 21. Learned counsel then submits that under section 12AA(4), an assessee can surrender a registration under section 12A and there will be no necessity to pass a formal order to that effect. Our attention is then invited to the wordings of Section 12AA(3) and 12AA(4), which are reproduced below for ready reference: Section 12AA: (3) Where a trust or an institution has been granted registration under clause (b) of sub-section (1) or has obtained registration at any time under section 12A and subsequently the Principal Commissioner or Commissioner is satisfied that the activities of such trust or 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, he shall pass an order in writing cancelling the registration of such trust or institution: Provided that no order under this sub-section shall be passed unless such trust or institution has been given a reasonable opportunity of being heard. (4) Without prejudice to the provisions of sub-section (3), where a trust or an institution....
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....y a concomitant act makes good his intention of relinquishment. In this case, according to the learned counsel, Hon'ble Supreme Court has held that when there is no provision in the statute requiring another person to accept the relinquishment, a party will have the unilateral right of relinquishment. 24. It is further contended that even if a ministerial order cancelling the registration is a statutory requirement, the order sheet endorsement will suffice for the purpose, and that in any event the fact of the learned Commissioner cannot prejudice the assessee. It is further contended that not passing the formal cancellation order has seriously prejudiced the interests of the assessee inasmuch the assessee has been declined benefit of exemption under section 10(34) and there can be a potential tax implication under section 115 TD as well. It is then submitted that failure of a statutory authority to discharge its statutory duty cannot prejudice the assessee. Reliance is placed on the judicial precedents in the cases of Kusheshwar Prasad Singh Vs State of Bihar [(2007) 11 SCC 447 (SC)], CIT Vs TVS Electronics Ltd ( TCA No 1457 of 2008; serial 38 of the legal paper book) and....
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....uld not have delayed disposal of the assessee's request for cancellation for an indefinite period. It was his duty to pass the order within a reasonable time frame. Once he does not do so, he is denuded of the powers to pass the order, and the impugned order must, therefore, be held to be time barred. In this background, he pleads for admission of his additional ground of appeal which is a pure question of law and must be adjudicated as such. 28 Shri Anil C Singh, learned Solicitor General, vehemently opposes the submissions so made by the learned counsel for the assessee. He submits that the purported unilateral surrender of registration by the appellant is not valid nor effective for several reasons which are in the alternative and without prejudice to one another. He submits that there is no provision to surrender a registration envisaged or provided under the Income tax Act, 1961. Registration is not merely a benefit which can be waived but a benefit coupled with obligations, and, is elementary, obligations cannot be unilaterally waived or surrendered. It is then contended that assuming whilst denying that a unilateral surrender is permitted under the statute, even the....
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.... otherwise in conformity of the provisions of the statute and in a sense, undertaking to comply with the statute and the purpose of rendering charitable services. To put it differently, registration is not a benefit available to all but a benefit which can be claimed by the Trusts which meet the criterions specified by the Act and which are willing to comply with it. To illustrate this point, learned ASG suggests, one may consider an example of a company. A company is entitled carry on a legal business. However, not all companies can carry out banking business. It is only those companies which undertake to comply with the requirements of grant of registration as a NBFC which would be entitled to carry on banking business. Similarly, Trusts can carry out charitable activities if they so desire but if they desire exemption from income tax for such acts, then registration under the Act is compulsory. Registration is dependent upon compliance of the obligations of rendering such charitable services. Therefore, according to the learned ASG, it is evident that the registration of a Trust under the provisions of the Act also carries with it responsibilities and obligations. It is, for exa....
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....on of a Trust is not merely a benefit but an obligation in terms of continuing to meet the requirements of registration by performing the requisite charitable acts, learned ASG once again goes back to the example of a company, and submits that an analogy could be drawn to the incorporation of a company. The incorporation of a company allows a company to have a separate juristic existence and is a benefit to the persons who have setup the company in terms of limited liability etc. However, the promoters cannot unilaterally strike out a company. Section 248 of the Companies Act, 2013 expressly recognises that the ROC would check that the company has no liabilities before it is struck off. The purpose and intent being that one cannot use/misuse the benefit and ignore the obligation and then seek to avoid the obligation on a plea of unilateral surrender. Similarly, even when a Company is registered as a charitable entity under Section 8 of the Companies Act, 2013 (Section 25 of the Companies Act, 1956), such company cannot unilaterally convert itself to a private company. Section 8(4)(i) expressly provides for permission of the Central Government before such conversion and detailed Rul....
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....- 1. plain and clear language of the provisions does not provide a power to surrender; 2. clear purpose and intent of the provisions relating to registration of Trust and cancellation thereof as explained above, do not envisage registration as a simplicitor benefit which can be unilaterally surrendered. Hence, such an interpretation is not only not borne out by the plain language of the statute but would be contrary to the meaning, purpose and intent of the Act. 3. The use of the word 'notice' in Section 12AA(4) relates to the aspect of the events coming to his/her knowledge. Mere notice of breach, it is respectfully, submitted would never suffice for the purposes of ordering a cancellation. If it is held so, it would mean that the Commissioner upon noticing a breach, without arriving at any satisfaction could cancel the registration of the Trust. It is submitted that such an interpretation must only be stated to be rejected. 4. Even the use of the word 'may in Section 12AA(4), it is respectfully submitted does not buttress the Appellant's submission any further. Firstly, it is submitted that the provision would have to be read in....
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....ra 29 and 30). Hence, the question of circumventing such a quasi-judicial act cannot and does not arise. It is reiterated that the statutory scheme which mandates a written order for cancellation places an obligation on the competent authority to carefully consider all relevant parameters in any given case before taking any final view. In the instant case, for example, various details would be required to be considered, which could include the following:- (a) Having regard to the clauses in the Trust Deed, whether the trustees had the power to apply for cancellation of registration? (b) Whether the Trust had complied with the provisions of the Act and had not abused its registration to seek undue benefit or unfair advantage? (c) Whether the Trust has complied with its obligations of using its income for charitable purposes? (d) Verification of the Tax liabilities and other proceedings like reassessments (147), review (263) pending against the Trust which are premised on the registration? 35. Learned ASG submits that an enquiry into these issues would be not only relevant but it is respectfully, submitted mandatory to ensure that no Asses....
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....ustees under the Trust Deed dated 23rd December, 1974, and therefore the question of trustees acting in purported violation of their constitutional document cannot and does not arise. As per the proviso, if at any time after the creation of the Trust, it is held that any of the objects or purposes as delineated in the Trust Deed, for which the corpus and/or income of the Trust Fund or any part thereof, as directed to be applied or expended, is/are not strictly charitable according to the law relating to Income tax in force at the relevant time so as to exempt the trustees from payment of income tax on the income of the Trust Fund, then in that eventuality the trustees shall apply and expend the corpus and/or income towards carrying out such objects and purposes as may be held to be strictly charitable so as to enable the trustees or the Trust to qualify for such exemption. As against such mandate being in the preamble of the Trust Deed, the trustees of the assessee Trust have blatantly and consistently violated the provisions of section 13(1)(d) and has made investments which are not in accordance with the objects of the Trust Deed. The trustees have no authority whatsoever to with....
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....the Act. The Trust, had sold the shares of TCS (which formed part of the Trust's corpus) and the proceeds thereof were utilized for investing in preference shares of Tata Sons Ltd. Following this, the exemption claimed by the Trust for AY 2010-11 was denied in assessment by Assistant Commissioner of Income Tax(Exemption), Mumbai vide order dated 10/02/2015 under section143(3) r.w.s. 147 of the Act. Meanwhile, in the case of Jamsetji Tata Trust, the Hon'ble ITAT, Mumbai, vide order dated 26/03/2014, wherein the facts are similar, confirmed the stand of the Assessing Officer that the Trust was violating the provisions of section 13(1)(d) which, inter alia, lays down that Trusts cannot hold any shares in a company (other than a public sector company).In the light of the above submissions, learned ASG submits that the purported surrender on 11th March, 2020 was not genuine but merely an attempt to escape liability for past wrongdoings and as such a letter addressed for collateral and/or oblique purposes. It is pointed out that the Comptroller and Auditor General Report had, much before the said surrender letter, categorically observed that investments of the trusts are in viola....
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....ons are not the gospel truth but simply perceptions of the auditor which may or may not be correct, and just because CAG takes a particular stand, it does not become an accepted fact. There are numerous occasions when these observations are found to be incorrect, and Hon'ble High Court has not approved such observations either. There is no question of lack of bonadfides on the part of the assessee in surrendering the registration, because the assessee is giving up a precondition of benefit rather than claiming it. It is then pointed out that in any case the whole debate on satisfaction about bonafides is misplaced inasmuch as the scheme of law does not provide for the same, as it does, for example, under section 273A where Commissioner's satisfaction about a declaration being in "good faith" is essential. He then refers to judicial precedents, such as in the case of ACIT Vs Agra Development Authority [(2018) 407 ITR 562 (All)], wherein it is held that the cancellation of trust can be with effect from the date of the show cause notice, and the first show cause notice was admittedly issued in March 2015. Learned counsel once again submits that when benefit can be given, without any p....
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....e tax department is so keen to extend registration under section 12A, for this extended period from March 2015 to October 2019, when the assessee does not want it. On the face of it, nothing really turns on this registration, in favour of the assessee or even against the assessee, so far exemption under section 11 is concerned, since after all, as learned ASG has strenuously argued, the assessee anyway has the option of claiming, or not claiming, the exemption under section 11, and merely because an assessee is registered under section 12A, the exemption under section 11 is not thrust upon the assessee. 43. To understand the possible reasons, one has to factor in certain rather recent legislative amendments. 44. The first such amendment is in section 11. By virtue of the insertion of sub section (7) to Section 11 with effect from 1st April 2015, tax exemption for 'dividends from Indian companies', on which dividend distribution tax is already paid by the company distributing dividends anyway, under section 10(34)- as is available to every other taxpayer, is no longer admissible to charitable trusts registered under section 12A. This sub section provides as follows....
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.... general provision of exemptions which are contained in section 10 of the Income-tax Act vis-a-vis the specific and special exemption regime provided in sections 11 to 13 of the said Act. As indicated above, the primary objective of providing exemption in case of charitable institution is that income derived from the property held under trust should be applied and utilised for the object or purpose for which the institution or trust has been established. In many cases it had been noted that trusts or institutions which are registered and have been availing benefits of the exemption regime do not apply their income, which is derived from property held under trust, for charitable purposes. In such circumstances, when the income becomes taxable, a claim of exemption under general provisions of section 10 in respect of such income is preferred and tax on such income is avoided. This defeats the very objective and purpose of placing the conditions of application of income etc. in respect of income derived from property held under trust in the first place. 7.4.1 Sections 11, 12 and 13 of the Income-tax Act are special provisions governing institutions which are being given benef....
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....t it is for the assessee to "voluntarily opt for the special dispensation". We will, however, come to this dimension a little later. 49. The next important legislative development is the introduction of Section 115 TD. By virtue of Section 115 TD, which is brought by the Finance Act 2016 with effect from 1st April 2016, an additional tax burden is put on the deregistration of a charitable institution in respect of its accreted income. This provision is as follows: Tax on accreted income. 115TD. (1) Notwithstanding anything contained in this Act, where in any previous year, a trust or institution registered under section 12AA has- (a) converted into any form which is not eligible for grant of registration under section 12AA; (b) merged with any entity other than an entity which is a trust or institution having objects similar to it and registered under section 12AA; or (c) failed to transfer upon dissolution all its assets to any other trust or institution registered under section 12AA or to any fund or institution or trust or any university or other educational institution or any hospital or other medical institution referred to....
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.... 52. One of the fundamental issues which have come up before us, in this case, is whether the registration under section 12 A constitutes a benefit or not, and whether an assessee, not inclined to continue with registration under section 12A, can be virtually compelled to continue with the said registration. 53. It is only elementary that, as is the mandate of section 119(1), the Central Board of Direct Taxes "may, from time to time, issue such orders, instructions and directions to other income-tax authorities as it may deem fit for the proper administration of this Act, and such authorities and all other persons employed in the execution of this Act shall observe and follow such orders, instructions and directions of the Board". The CBDT circulars thus bind all the field authorities. In Navnitlal Jhaveri Vs Sen [(1965) 56 ITR 198 (SC)], Ellerman Lines Ltd Vs CIT [( 1971) 82 ITR 913 (SC)] and K P Verghese Vs ITO [( 1981) 131 ITR 597 (SC)], Hon'ble Supreme Court has accepted the validity and binding nature of the beneficent or benevolent circulars, and recognized the taxpayer's right to enforce these circulars, in favour of the assessee, even in courts. In the case of....
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....nt for exemption under section 11, cannot be thrust upon an unwilling assessee. Viewed thus, an assessee has an inherent right to withdraw from this special dispensation of scheme of Section 11, 12 and 13, unless such an withdrawal is found to be malafide. For this short reason alone, once an assessee specifically requests for cancellation of registration, that request cannot be declined. That, however, is not the only reason for our coming to the said conclusion. 55. The present registration is under section 12A. As introduced by the Finance Act 1972, the relevant statutory provision is as follows: Conditions as to registration of trusts, etc 12A. 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 period of one year from the date of the creation of the trust or the establishment of the insti....
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....ther a benefit can be conferred upon an unwilling person. We do not think such a course is permissible in law unless this benefit is coupled with obligation or unless there is specific provision, such as in Section 115BAA, to the effect that once an assessee avails a specific beneficial provision, he cannot opt out of the same on his own in an unfettered discretion. When the law does not provide for such a restriction, even if it is considered desirable for any reasons whatsoever, it cannot be inferred- as is the mandate of the rule of 'casus omissus' in the principle of interpretation of laws. In any case, as is stated in Salmond, in his legendary treatise "The Theory of Law", "the law confers upon a man no rights or benefits which he does not desire". We are in most respectful agreement with these observations and that is the principle we must bear in mind while interpretating a statutory provision. The same is the principle conveyed through the Latin maxim "Invito beneficium non datur". In our considered view, therefore, an assessee unwilling to avail the "benefit" of registration "obtained" under section 12A cannot be compelled to, by action of or by inaction of the revenue aut....
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.... to 1st April 1997, takes that aspect of the matter beyond any doubt or controversy. In the present case, the registration was obtained on 15th March 1976, and, therefore, there was no question of registration being "granted" upon the satisfaction of the Commissioner "about the objects of the trust or institution and the genuineness of its activities", as is the situation post 1st April 1997. It was obtained by the assessee upon the filing of an application within the prescribed time limit, and the letter intimating the assessee of this registration as such, as reproduced earlier in this order, clearly evidences that position. 59. In our considered view, therefore, registration under section 12A on the facts of this case and particularly as it has been "obtained" prior to Section 12AA coming into force with effect from 1st April 1997, simply being a foundational requirement for exemption under section 11 and not putting assessee under any obligations, is in the nature of a benefit to the assessee. Much as we researched, we could not find any "obligations" imposed on the assessee on account of registration under section 12A, at least in terms of the registration obtained in....
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....ee came to the notice of the Commissioner, as not only he received the communication of the assessee but also issued a show-cause notice to the assessee requiring the assessee to show cause why the registration not be cancelled and concluded hearing thereon, the Commissioner had the powers, under section 12AA(4), to cancel the registration obtained by the assessee under section 12A. It is well settled legal position that whenever law confers any powers in any public authority, such a public authority has the corresponding duty to exercise these powers when circumstances so justify or warrant. As observed by a coordinate bench of this Tribunal, in the case of Ashok Anant Sabnis Vs ACIT [(2009) 29 SOT 29 (Pune)], "All the powers of someone holding a public office are powers held in trust for the good of the public at large. There is, therefore, no question of discretion to use or not to use these powers. It is so for the reason that when a public authority has the powers to do something, he has a corresponding duty to exercise these powers when circumstances so warrant or justify-a legal position which has the approval of Hon'ble Supreme Court". In the case of Lala Hirdaya Naraya....
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....r with retrospective effect or prospective, depends upon the facts and circumstances of the case and the Commissioner has power to cancel the registration from the time when such breach has occurred." It cannot be, and is not, the law that formal order cancelling registration of a trust, on account of disability attracted by the trust or for any other legitimate reason, can only be with a date with effect from the date of the order so cancelling the registration. General implications of this proposition apart, on the peculiar facts of this case, such an approach will incentivise the wilful delay and inertia on the part of the income tax authorities. As we have seen earlier in our legal analysis, wherever a public authority has a power, that public authority also has the corresponding duty to exercise that power when circumstance so warrant or justify. Viewed thus, the Commissioner had not only the power, but also the corresponding duty, to hold that the cancellation of registration is to take effect from the date on which the violation with the statutory requirements for grant of exemption occurred, the date on which such a violation or breach was noticed or at least the date on wh....
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....provided several examples from the corporate law, particularly with respect to removal of a company's name from the records of the Registrar of Companies, which cannot be done unilaterally by the company. In our humble understanding, that example will not hold good in the present context inasmuch as the incorporation of a company brings a new legal entity into existence, and its extinction cannot indeed be a unilateral process, but then registration under section 12AA does not bring into existence any legal entity or even a legal entitlement; all it does is to provide for a minimum qualification for entitlement to exemption under section 11 which must depend on a large number of other qualifying conditions. In our considered view, therefore, the legal position vis-à-vis an incorporated entity being brought to an end and cancellation of a registration obtained under section 12A have different implications in character, and there is no parity between these situations. 65. There is no dispute that certain investments made by this Trust donot qualify the benefit of exemption under section 11, and that precisely was the reason that the assessee had requested the Commissi....
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....orities to insist that the assessee must have continue with the registration under section 12A when the assessee does not want it. It is nobody's case that there were certain specific obligations on the part of the assessee which the assessee must perform as a quid pro quo for the registration per se. Whatever obligations a charitable institution has towards the income tax authorities, these obligations are a quid pro quo for exemption and not a foundational requirement for the exemption. All these things are, however, academic in the light of our findings that the Commissioner had the duty, much more than the power, to cancel the registration under section 12A upon the fact of admitted violation of section 13(1) coming to his notice, and that such cancellation had to effective from the date on which the disability for exemption under section 11 is attracted (which is not ascertained on the facts of this case), the date of this fact coming to the notice of the Commissioner (i.e.11th March 2015), from the date on which the first show-cause notice was issued (i.e. 13th March 2015), or,at the minimum, from the date on which hearing in this regard was concluded and the order thereon wa....