TMI Blog2011 (10) TMI 471X X X X Extracts X X X X X X X X Extracts X X X X ..... matter back for fresh perusal. Validity of Interest under 234A 234B - Held That:- Charging of interest mandatory. - IT APPEAL NOS. 5467 & 5797 (DELHI) OF 2010 AND 2876 (DELHI) OF 2011 - - - Dated:- 14-10-2011 - G.E. VEERABHADRAPPA, RAJPAL YADAV, JJ. S.B. Gupta and Nitin Gupta for the Appellant. Y.K. Kakkar for the Respondent. ORDER Rajpal Yadav, Judicial Member In this bunch of three appeals at the instance of assessee, ITA No. 5797/Del/2010 is directed against the order of Learned Director of Income-tax (Exemption) dated 29.10.2010 whereas ITA Nos. 5467 2876 are filed against the separate orders of Learned CIT(Appeals) dated 30.09.2010 and 28.04.2011 passed for assessment years 2007-08 and 2008-09 respectively. 2. First, we take ITA No. 5797/Del/2010: Learned counsel for the assessee submitted that learned Director of Income-tax (Exemption) has erred in canceling the registration granted under sec. 12A(a) of the Income-tax Act, 1961 by way of the impugned order. He pointed out that the Laxman Public School Society was formed by deed dated 25.5.1979. The main object of the society amongst other objects was to run, maintain, manage and administer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the learned counsel for the assessee. However, she pointed out that Act has been amended w.e.f. Ist of June 2010 meaning thereby the Learned Commissioner has powers to cancel the registration even granted under sec. 12A(a) of the Act after this date. The Learned Commissioner has passed the order on 29.10.2010, therefore, on such date he was having the jurisdiction to cancel the registration. According to the Learned DR, therefore, the judgment of the Hon'ble High Court is not applicable on the facts of the present case. 4. We have duly considered the rival contentions and gone through the record carefully. The facts of the present case are similar to the facts of Mool Chand Khairati Lal's case. In that case, registration was granted to the assessee on 4.12.1974 under sec. 12A(a) of the Act. In the case in hands, registration was granted to the assessee on 4.11.1982 under the old scheme of sec. 12A i.e. 12A(a) of the Act. The only difference is that in the case of Mool Chand Khairati Lal, learned Director of Income-tax (Exemption) has passed the order on 30.6.2009 whereas in the present case, such order has been passed on 29.10.2010. Hon'ble Court has considered the provisions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clause (b) of sub-section (1) [or has obtained registration at any time under Section 12A [as it stood before its amendment by the Finance (No. 2) Act, 1996 (33 of 1996)] and subsequently the 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: 6. At the outset, it may be pertinent to note that the title of Section 12A 'Conditions for applicability of Sections 11 and 12 was substituted with effect from 1st June, 2007 in place of previous title "Conditions as to registration of the Trusts etc. It means that prior to 1st June, 2007, this Section itself provided conditions regarding registration of trust etc. It is noted here because with the substitution of the present title, this Section no longer provides for registration of trust etc. A special provision has been enacted in Section 12AA providing for procedure for registration of trust etc. with effect from 1st April, 1997. It is also noted that Section 12A was inserted in the statute book by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sub-Section (3) of Section 12AA, it would be seen that the cancellation of the registration was provided where the registration was granted under clause (b) of sub-Section (1). Further cancellation under sub-Section (3) was also provided where the registration was obtained at any time under Section 12A (may be under clause (a) or clause (aa) of sub-Section (1) of Section 12A). But this power of cancellation of registration obtained under Section 12A came to be incorporated by way of amendment introduced by the Finance Act, 2010 with effect from 1st June, 2010. That being the interpretation of sub-Section (3), it is amply clear that the power to cancel the registration once granted was only confined to the registration granted under clause (b) of sub-Section 1 of Section 12AA till before 1st June, 2010. Of course, now with effect from 1st June, 2010, the power vests with the Commissioner even to cancel the registration granted under any of the clauses of sub-section (1) of Section 12A. In that view of interpretation, we are of the considered view that there was no power vested with the Commissioner to cancel or withdraw the registration granted to the assessee under Section 12A(a) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 11(1) of the Act would not be admissible. 8. The brief facts of the case are that the assessee has filed its return of income on 25.3.2009 declaring a deficit/loss amounting to Rs. 81,68,507. The case of the assessee was selected for scrutiny assessment and a notice under section 143(2) was issued and served upon the assessee. In response to the notice, Shri Niren Gupta, CA and Shri Anupam Sharma, CA appeared before the Assessing Officer from time to time. On scrutiny of the accounts, it revealed to the Assessing Officer that the assessee has debited a sum of Rs. 1,18,05,316 being advance for purchase of land, from income and loss account of the school. According to the assessee, it was an application of income. Assessing Officer directed the assessee to file copy of the agreement for purchase of the land, copy of sale deed, if any, and also directed the assessee to explain how the advance for purchase of land is eligible towards application of income during the year. Assessing Officer has provided number of opportunities to the assessee but assessee did not file these documents. It pointed out that the documents containing receipt for payment and agreement to sell have been mi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act, any income thereof if the trust or institution is created or established for the benefit of any particular religious community or caste; ( bb ) ** ** ** ( c ) in the case of a trust for charitable or religious purposes or a charitable or religious institution, any income thereof- ( i ) if such trust or institution has been created or established after the commencement of this Act and under the terms of the trust or the rules governing the institution, any part of such income enures, or ( ii ) if any part of such income or any property of the trust or the institution (whenever created or established) is during the previous year used or applied, directly or indirectly for the benefit of any person referred to in sub-section (3) : 13. A bare perusal of clause (c) of sub-sec. (11) would make it clear that if part of income of the trust or any property during the previous year used or applied directly or indirectly for the benefit of any person referred to under sub-section (3) then sec. 11 would not operate for exclusion of such income from the taxability. Admittedly, Mrs. S.K. Aggarwal is a specified person, no dispute has been raised ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ards corpus donation. The assessee is not having any detail except copy of the receipt exhibiting the receipt of amount. One such sample has been placed at page 32 of the paper book. Thus, taking into consideration the nature of amount received by the assessee, we are of the view that it is an income of the assessee. There is no such overriding title on such alleged donations. It appears that as a condition precedent for admission, assessee charged these amounts from the students. Therefore, after taking into consideration the discussion made by the learned revenue authorities, we do not find any merit in the contentions of the assessee. However, learned counsel for the assessee submitted at the time of argument that it has incurred certain expenditure towards medical welfare and development activities. The gross amount cannot be taxed. Only the net amount would be the taxable income of the assessee. We remit this issue for a limited purpose to the Assessing Officer to verify the expenses, if any, relating to these receipts and also verify whether such expenses have been claimed in the total expenses while working out the income and expenditure account for the purpose of applicatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dismissed for want of prosecution but then he proceed on decide it on merit. Considering these aspects and the non-availability of any discussion either in the assessment order or in the Learned CIT(Appeals)'s impugned order, we remit the issues raised in ground Nos. 5, 7 and 8 to the file of the Learned CIT(Appeals) for readjudication. 19. In ground No. 6, assessee has challenged chargeability of interest under sec. 234A and 234B of the Act. Charging of interest would be consequential in nature. 20. In ITA No. 2876/Del/2011, assessee has raised the following grounds of appeal: 1. That the Learned CIT(Appeals) was wrong to uphold the application of the provision of Sec. 13(3) and denial of the benefit u/s. 11 of the Act. 2. That the Learned CIT(Appeals) was wrong to confirm that the order of the Director of Income-tax (Exemption) passed under sec. 12AA(3) on 29.10.2010 is applicable to this assessment year. 3. That the Learned CIT(Appeals) was wrong to confirm the inclusion of Rs. 6500000 received as Benevolent Fund, in the computation of the total income. The same be excluded in the facts of the case and as per law. 4. That the Learned CIT(Appeals) was wro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... datory, hence dismissed. 5. Ground No. 8 is general." 22. Since we have allowed the appeal of assessee and restored the registration cancelled under sec. 12A of the Act, the issues are to be examined afresh in the light of availability of registration under sec. 12A of the Act to the assessee. The impugned order of the Learned CIT(Appeals) cannot be termed to be a speaking order. Learned First Appellate Authority has not assigned any reason as to how he concurred with the conclusion of the Assessing Officer. Sub-section (6) of sec. 250 mandates the Learned CIT(Appeals) to state the point in dispute for determination and then record reasons in respect of his conclusions. The impugned order is not in the spirit of sub-section (6) of sec. 250, therefore, we set aside the impugned order restored all these issues to the file of the Learned CIT(Appeals) for the assessee for readjudication . Learned First Appellate Authority shall keep in mind that registration under sec. 12A of the Act has been restored to the assessee and the issues are to be examined in the light of the registration available to the assessee. It is needless to say that the observations made by us will not impair ..... X X X X Extracts X X X X X X X X Extracts X X X X
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