TMI Blog2021 (6) TMI 621X X X X Extracts X X X X X X X X Extracts X X X X ..... registration at any time was inserted in section 12AA(3) of the Act w.e.f 01.06.2010. DIT(E) has cancelled the registration since inception - as contended by assessee that the cancellation could not have been made prior to the insertion of the provision thus, the DIT(E) clearly exceeded the jurisdiction. Assessee trust is also registered u/s 10(23C) of the Act, therefore, provision of section 13(5) of the Act is not applicable - The factum of registration u/s 10(23C) of the Act is not rebutted by the Revenue. DIT(E) is empowered to cancel the registration u/s 12AA(3) of the Act if he is satisfied that the activities of such trust or institution are not genuine and are not being carried out in accordance with its objectives of the trust/institution as the case may be - in the present case, the sole ground of cancellation of registration is that the assessee trust obtained a loan paid interest thereon and donated this sum to another trust. Admittedly, the other trust was also granted registration u/s 12A of the Act and its registration has not been cancelled and author of both the trusts is same person. We are unable to sustain the action of Ld.DIT(E) firstly, the registration h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had not violated any of the provisions and full explanations / submissions in this regard had been made in response to his show cause notice dated 28th March, 2011. 3. That on facts and in law, the Ld.DIT erred in not appreciating that the case of appellant was covered u/s 10(23C)(iiiae) of the Act and the Registration u/s 12A could not mean that compulsorily, the provisions of section 11,12 13 particularly provisions of section 11(5) are applicable and more so when the department in the past, had always accepted that the case of the appellant was covered u/s 10(22A) upto Assessment Year 1998-99 and u/s 10(23C)(iiiae) from Assessment Year 1999-2000 to 2006- 07. 4. That on facts and in law, the Ld.DIT erred in taking a view that the appellant trust had not been carrying on charitable activities wherein it was duly accepted position in the past that charitable activities in the form of running an OPD facility for poor and needy persons was being continuously run since the year 1982. 5. Without prejudice to the grounds hereinabove and without accepting any violation of law, even if there was any violation of provisions of section 11 (5) and 13 of the Act, it would onl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncelled. He submitted that the donation given by charitable trust to another charitable trust is not prohibited by the law. He further submitted that the provision of section 11(5) of the Act could not be applicable as the assessee trust is also registered u/s 10(23C)(iiiae) of the Act. He submitted that authority below grossly erred in constraining the provision of law and appreciating the facts of the case. 5. Per contra, Ld. CIT DR opposed these submissions and supported the impugned order. 6. We have heard Ld. Authorized representatives of both the parties and perused the impugned order and the material placed before us. The assessee was granted registration u/s 12A of the Act in the year 1980 since then the assessee was having registration u/s 12A of the Act. We find that Ld. DIT(E) while cancelling the registration, observed that the main objective of the assessee trust was running of a hospital but as per the examination of books of account for the Assessment Years 2005-06 to 2009-10, a very meager receipt from OPD was disclosed. It was also observed that the assessee trust was carrying out its charitable activity from a small one room space. It was observed by Ld.DIT( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... benefit over the years, the charitable organizations are nothing but public entities and the fund thus hold belongs to the public and investment and application of income are to be made strictly as per the provisions of law. The trusts cannot invest and dispose off the funds as they like it. Instead they should follow the procedure prescribed in the provisions of law, Provisions of section 11 (5) mandates all charitable institutions registered u/s 12A to hold the investment as per the conditions prescribed therein. Any deviation of said condition will tantamount to violation of the law and not only the amount subject to tax but consistent failure to comply to the law would attract cancellation of the registration. 12. Besides the above violation of section 2(15) and 13(1)(c), the assessee also hit by activity which is non-charitable in nature by obtaining the loan for interest and diverting the same to another sister entity as donation and claiming the same as application of money towards charitable activity which is clearly violation of conferring the benefits to specified persons without any reason. Further, the activity carried by the assessee does not amount to any charity ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ration since inception. Therefore, it was contended by Ld. Counsel for the assessee that the cancellation could not have been made prior to the insertion of the provision thus, the Ld.DIT(E) clearly exceeded the jurisdiction. For the sake of clarity, section 12AA(3) of the Act is reproduced as under:- 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 [as it stood before its amendment by the Finance (No.2) Act, 1996 (33 of 1996)]] 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.] 8. Another argument of the assessee is that since the assessee trust is also registered u/s 10(23C) of the Act, therefore, provision of secti ..... X X X X Extracts X X X X X X X X Extracts X X X X
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