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2022 (8) TMI 727 - AT - Income TaxExemption u/s 11 - Cancelling Registration 12AA(3) and section 80G - contentions of the assessee that the registration granted u/s 12A cannot be cancelled with retrospective effect - whether the registration already granted can be cancelled retrospectively? - order giving effect of third member - HELD THAT:- The Judicial Member took a view that registration under section 12A and approval under section 80G(5) was rightly cancelled by the Pr. CIT(E) however, the cancellation of registration / approval would be treated only prospectively i.e. from the previous year in which the assessee sold the educational institutions and the activity of the assessee ceased to exist. Learned Accountant Member, however, took a view that the order cancelling the registration under section 12A and withdrawing approval under section 80G(5) has to be set aside and the matter be remanded to the record of the Pr. CIT(Exemption) for consideration de novo. The learned Accountant Member also took a view that the Pr. CIT(Exemption) has powers to cancel registration with retrospective effect i.e. from the date when the assessee infringes conditions subject to which registration under section 12A was granted and misused the status of the registered trust. Third Member HELD THAT:- the main aspect which has to be taken note of is the principle that the grant of registration u/s12A of the Act, does not automatically enable an assessee to claim exemption u/s 11 & 12 of the Act. The AO even in a case, where a trust or charitable organization for which registration u/s 12A of the Act subsists has to go in to the question, as to whether the income has been applied for charitable purposes and to the extent contemplated by Sec.11 & 12 of the Act. Even in a case, where the trust or charitable organization applies its income for charitable purposes, but does not have registration u/s 12A of the Act, such trust or charitable organization cannot claim the benefit of Sec.11 & 12 of the Act. The apprehensions expressed by the learned AM have to be addressed or looked into in accordance with law and the parties should be left to explore remedies open to them in law. Therefore, I agree with the learned JM that the impugned order cancelling registration has to be upheld and there is no necessity to set aside the impugned order and remand the issue for de novo examination by the CIT(E). Now this appeal is listed before the Division Bench for passing the order in accordance with majority opinion. Hon'ble Third Member concurred with the view of the Judicial Member and thereby as per the majority view, the impugned order of the Pr. CIT(Exemption) cancelling the registration granted under section 12A as well as withdrawing approval under section 80G(5) is upheld but the cancellation would be with effect from the previous year in which the assessee sold the educational institutions i.e. the previous year 2017-18.
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