TMI Blog2012 (6) TMI 448X X X X Extracts X X X X X X X X Extracts X X X X ..... ter dated 18th November 2009 is only advisory in nature and is not an exercise of a statutory power withdrawing or cancelling of registration under section 12A – against assessee. - IT APPEAL NO. 1285 (MUM) OF 2010 - - - Dated:- 30-3-2012 - J. SUDHAKAR REDDY, SATBEER SINGH GODARA, JJ. P.J. Pardiwala and Nitesh Joshi for the Appellant. G.C. Srivastava for the Respondent. ORDER J. Sudhakar Reddy, Accountant Member This appeal preferred by the assessee, is directed against the impugned letter no.DIC(E)/u/s 14A/2009-10/185 dated 28th December 2009, passed by the Director of Income Tax (Exemption), Mumbai, wherein the subject is regarding amendments to the Memorandum of Association made on 1st June 2006, as well as on 21st August 2007, informing regarding non-existence of registration under section 12A, of the Income Tax Act, 1961 (for short "the Act"). Facts in brief:- 2. The assessee is a society duly registered under the Tamil Nadu Registration Act, 1975. The main object is to promote the game of cricket. The assessee was registered under section 12A of the Act with the Director of Income Tax (Exemption), Mumbai, (herein after for short "DIT"), on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct, to the assessee on 30th November 2009. A further letter dated 3rd December 2009, was written by the DIT on the intimation of amendments to Memorandum of Association, as on 1st June 2006, by the assessee to DIT, vide letter dated 28th November 2006. This was replied by the assessee on 14th December 2009. During the course of hearing, on 15th December 2009, certain queries were raised. The assessee replied on 16th December 2009, and intimated the amendments made to its Memorandum and rules on 21st August 2007. 6. The DIT, after considering the reply, passed the impugned order dated 28th December 2012, holding that - (i) when the objects of the institution, which are the basis of grant of registration are altered after grant of such registration, the very foundation of registration having been removed by the voluntary act of the assessee, the registration would not survive; (ii) the registration under section 12A, was granted vide order dated 12th February 1996, on the basis of the Memorandum and rules regulations of the assessee as on the date of registration and that, admittedly, the amendments were made on 1st June 2006 and also on 21st August 2007, but this had not been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder section 12A, was given to the authorities only w.e.f. 1st June 2010, which is much after passing of the order dated 28th December 2009, by the DIT and that this letter canceling/withdrawing registration under section 12A, is illegal. He relied on the judgment of Hon'ble Delhi High Court in DIT (Exemptions) v. Mool Chand Khairati Ram Trust [2011] 199 Taxman 1, for the proposition that the amendment brought out by Finance Act, 2010, is prospective in nature. Reliance was also placed on the judgment of Hon'ble Allahabad High Court CIT v. Manav Vikas Avam Sewa Sansthan [2011] 336 ITR 250. 9. He disputed the findings of the DIT that he was not canceling the registration but only withdrawing it and argued that the effect is the same. He submitted that there are two propositions on which he is relying i.e., - (i) the DIT has no power to withdraw the registration or to hold that the registration does not survive and (ii) without prejudice, such an act can be done only if the DIT or the Commissioner is satisfied that the activities of such trust or institution are not genuine or that the activities are not being carried out in accordance with the object of the trust or inst ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the advise by the author was by way of abundant caution and not a legal requirement. 11. The learned Special Counsel, G.C. Srivastava, representing the Revenue, submitted that the admitted position is that the assessee has changed its memorandum and rules and regulations twice i.e., on 1st June 2006 and for the second time is on 21st August 2007, and that these changes in objects were not intimated to the DIT for a period of three years, on the ground of inadvertence. He pointed out that only during assessment proceedings, in an enquiry made that the amendments were informed to the Revenue authorities. He submitted that what is registered is not merely the name of the assessee but the entire objects based on the Memorandum of Association and the rules regulations of the institution. He contended that the benefits under section 12A, flows from the objects and when there are material changes in the objects, the benefit would definitely be affected. The learned Special Counsel contended that the DIT has neither cancelled the registration nor withdrawn the registration and that he has just intimated the assessee of the consequences of the changes in the objects to the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the authorities. He pointed out that the DIT has not gone into by clause by clause and examination of amendments but has simply directed the assessee to file for fresh registration and also intimated the consequence of change of objects. He relied on the decision of Mumbai "E" Bench of the Tribunal in Sterlite Foundation v. DIT(E) , IT Appeal no.5340/Mum./2009, order dated 1st January 2010, and argued that withdrawal of registration under section 12A, was not held as illegal by the Bench. 12. In reply, Learned Sr. Advocate submitted that the DIT has not referred to any section under which the order has been passed and under these circumstances, it has to be assumed that the order has been passed under section 12AA(3) of the Act. He referred to Page-9 for assessment year 2007- 08 and argued that this is the manner in which the Assessing Officer understood the order dated 28th December 2009, passed by the DIT which is under challenge. He referred to the words "does not survive" and submitted that this tantamounts to withdrawing/canceling of registration. He relied on the following case laws for the proposition that the registration granted under section 12A, cannot be can ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nges in the objects to the Revenue authorities for a period of about three years and it chose to intimate the changes only after being questioned by the Assessing Officer during the assessment proceedings. The changes made in the memorandum and in the rules and regulations on 1st June 2006, are available in the paper book from Pages-36 to 41, and the changes made on 21st August 2007, are available in the paper book from Pages-47 to 80. The registration was granted to the assessee society on 12th February 1996, based on the pre-amended memorandum and rules regulations. 17. We agree with the findings of the DIT that granting of registration under section 12A, means granting of registration based on the objects and by-laws of the society as filed by the assessee along with the application for registration. Grant of registration under section 12A, does not mean that only the name of the society is registered. It means that the memorandum and by-laws are examined by the authorities and on being satisfied that the memorandum and by-laws fulfilled the conditions laid down under the Act, registration under section 12A, is granted and this, in turn, enables the assessee to avail the b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... illions of fans and sponsors likewise in the future. Globally, sports leagues have been modelled along the same lines, be in the English Premier League or the NBA. The Governing Council of the IPL comprised former Test captains MAK Pataudi, Sunil Gavaskar and Ravi Shastri and I.S. Bindra. Chirayu Amin, Arjun Jetley, Rajeev Shukla and Lalit Modi. The DLF Indian Premier League was the first time any Indian sport adopted the franchisee model in sports and conducted a Players' auction to ensure that each team in the league was balanced and competitive." 19. The said report, on this issue, concludes as follows:- "The DLF Indian Premier League has thus get new standards in entertainments, in-stadia and on the TV. Imagine a domestic event in India being covered globally, and our young cricketers playing with the world's best, showcasing their skills and also learning with the best coaches and support staff to help them improve their game. Had anyone imagined this for Indian cricket a decade ago but it is reality today. Additionally, the adrenalin packed Twenty 20 format, which is fast paced and exciting has also appealed to a global audience. And who knows a couple of years down ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is not for the assessee to unilaterally declare that the amendments are not drastic or substantive. If the assessee does not intimate the Revenue of the amendments on the ground that there is no statutory requirement, in our opinion, the assessee, as a consequence, cannot claim the benefit that flows under section 12A, for these changed objects; otherwise it would amount to a situation where the assessee shifts the goalpost midway and continues to claim benefit. There might be no statutory requirement for intimating the DIT of the changes in the memorandum and rules and regulations but if the assessee does not fulfil its undertaking to furnish the changes, then he cannot claim automatic benefits under sections 11 to 13 of the Act, for those altered objects, rules and regulations. Benefits under the Act cannot be claimed unless the changes are vetted by the authorities. 23. Learned Counsel for the assessee drew our attention to the provisions of section 11(4)(a) of the Act, and submitted that even if the assessee derives profit and gains of business, it does not automatically loose the benefits conferred under sections 11 to 13. This does not mean that the Act allows the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 12A, is not withdrawn or cancelled, the assessee society should not have any grievance. If the Assessing Officer has not understood the letter of the DIT dated 28th December 2009, as not withdrawing or canceling of the registration granted under section 12A, then the assessee can rely on the stand of the Revenue before the Tribunal which is that the registration granted on 12th February 1996, is not cancelled or withdrawn. No party can take contradictory stands in different proceedings on the same issue. 27. Be that as it may, as already stated that the registration under section 12A dated 12th June 1996, has not been extended to the amended clauses of the memorandum and rules and regulations of the society. If the amended memorandum and rules and regulations of the society or the activities of the assessee are such that they are in violation of the provisions of the Act, then the Assessing Officer is free to make assessments in accordance with law. In other words, the Assessing Officer is not bound by the registration granted under section 12A, to the extent the memorandum and rules and regulations have been amended. 28. Coming to the case laws relied upon by the parties, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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