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2019 (6) TMI 996 - HC - Income TaxRegistration u/s 12A - cancellation of registration with retrospective effect - power of CIT to initiate steps for cancellation of the registration of a Trust - benefit of carry forward of losses for subsequent years as contemplated under section 11 (1) (a) - rectification application filed to Income Tax Settlement Commission - Whether the money invested in acquisition of the TV Channel shall be considered to be in view of the object of the Trust? - Whether disclosure made before the Settlement Commission by the petitioner Trust is full and true? - HELD THAT:- Section 12 AA (3) of the Act of 1961, doesn’t suggest or in any way contemplate that the registration of the assessee may be cancelled with retrospective effect. And therefore, this court is of the view that the cancellation of registration can only be prospective. As regards the issue of the petitioner Trust’s disclosure being full and true or not; this court is of the view that the petitioner Trust’s disclosure shall be considered full and true for when it filed the settlement application before the Income Tax Settlement Commission, for it disclosed its undisclosed income in the said application and the same was allowed by the Commission, so also accepted u/s 245D (1), while declaring the said application as “not invalid” and maintainable u/s 245D (1). The Income Tax Settlement Commission should not have relied upon the arbitrary and illegal order dated 16th Jan, 2018, made by the respondent-department, while considering the rectification applications that were filed regarding the order dated 30th June, 2017. The Commission should have kept in mind, the petitioner Trust’s status at the time when the original order dated 30th June, 2017 was made and not the status subsequent to the order dated 16th Jan, 2018, made by the respondent-department. Thus, at the time of the passing of the original order, the petitioner Trust was a registered entity u/s 12A and withdrawal of the approval accorded u/s 10 (23C) (v) & 10 (23A) (via), as a consequence of cancellation or withdrawal of the same; cannot have retrospective effect as has been discussed earlier. It is therefore, evident from the factual matrix of the case at hand, that the petitioner Trust, is entitled to all the benefits u/ 11 (1) (a) of the Act of 1959, including set off or carry forward of losses to the subsequent year(s) and depreciation, in respect to expenses incurred for construction of educational buildings in terms and tune with the objects of the Trust. The exclusion of the investment made by the petitioner Trust in the TV Channel appears to be one such perversity. On a glance of the facts and materials available on record of the case at hand, it is evident that the said TV Channel was acquired by the petitioner Trust for educational training in 'Journalism' and 'Mass Communication', as it was offering courses for graduation and post-graduation in 'Mass Communication' and 'Journalism'. Applying principle of MAHARSHI MAHESH YOGI VEDIC VISHWAVIDYALAYA VERSUS STATE OF M.P. & ORS. [2013 (7) TMI 1044 - SUPREME COURT] it is evident that education cannot be confined to the meaning of one subject only and keeping this precedent in mind, it is concluded that the said investment in TV Channel shall be considered to be in consonance with the objectives and in the purview of the objects of the Trust. In the result, the petitioner-Trust is entitled to the benefit of Section 11(1) (a) of the Rajasthan Public Trust Act, 1959 and for carry forward of unabsorbed losses as well as benefit of amount spent on construction of new educational buildings. The petitioner-Trust is also entitled for benefit of amount incurred in acquisition of TV Channels and quashment of telescoped benefit of cash expenses. - Decided in favour of assessee.
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