Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2021 Supreme(Mad) 855

Before the Madurai Bench of Madras High Court
Case No : W.P. No. 7110 of 2008 & M.P. No. 1 of 2008 & M.P. No. 1 of 2012
Judges: THE HONOURABLE MR. JUSTICE S.M. SUBRAMANIAM
Parties : Vellore Institute of Technology, Represented by Chairman & Managing Trustee, G. Viswanathan, Vellore Versus Commissioner of Income Tax (Central-I), Chennai
Date of Judgment : 26-04-2021

Appearing Advocates:For the Petitioner:R.V. Easwar, Senior Counsel, Rubal Bansal, Suhrith Parthasarathy, Advocates. For the Respondent: A.P. Srinivas, Senior Standing Counsel.

Point of Law: Section 13 of Finance Act has introduced a new sub-section (2) in Section 52 of Income Tax Act with a view to countering evasion of tax on capital gains through device of an understatement of the full value of the consideration received or receivable on the transfer of a capital asset

Headnote:
Finance (No.2) Act, 1996 - Sections 12AA and 12AA(3) - Finance Act 2004 - Finance Act 2010 - Writ of Certiorarified Mandamus - Cancellation of registration - Sought to be assailed on the ground Reasons furnished for cancellation of registration is sought to be assailed on the ground - Amendment came into force with effect same cannot be invoked for the purpose of cancellation of registration made prior retrospectively is impermissible - pearing on behalf of the writ petitioner, mainly contended that the writ on hand rest on the jurisdiction with reference to the amended Finance Act - cancelling the registration done under Section 12A of the Act is untenable and without jurisdiction. In other words, on date of passing of the impugned order
Finding of the court: Implications of amendments are to be dealt independently with reference to facts and circumstances of each case - Judgments relied upon by parties in the present writ petition need not be applied with reference to facts and circumstances of present case - Commissioner or Commissioner was vested with power even prior registraion made under Section 12A of Act - Commissioner is satisfied activities of such Trust or Institution are not genuine or are not being carried out in accordance with objects of Trust or Institution, as case may be, and he shall pass an order in writing cancelling the registration of such Trust or Institution - Commissioner of Income Tax in impugned proceedings considered merits and demerits of case and assigned reason for cancellation of registration
Result: Writ petition dismissed

Judgment :-

(Prayer: Writ Petition is filed under Article 226 of the Constitution of India, praying for the issuance of a Writ of Certiorarified Mandamus, calling for the records of the case and quash the impugned order No.PAN: AAATN 0569 M dated 13.03.2008 passed by the respondent herein and to forbear the respondent from cancelling the registration of the petitioner Trust under Section 12AA(3) of the Income Tax Act, 1961.)

1. The proceedings dated 13.03.2008, cancelling the registration made under Section 12AA(3) of the Income Tax Act is under challenge in the present writ petition.

2. The reasons furnished for cancellation of registration is sought to be assailed on the ground that Section 12AA(3) of the Income Tax Act, 1961 (hereinafter referred to as the 'Act', in short), was amended by Finance Act 2010 with effect from 01.06.2010 inserting a clause.

3. In view of the fact that the amendment came into force with effect from 01.06.2010, the same cannot be invoked for the purpose of cancellation of registration made prior to 01.06.2010 retrospectively, which is impermissible.

4. The learned Senior Counsel, appearing on behalf of the writ petitioner, mainly contended that the writ on hand rest on the jurisdiction with reference to the amended Finance Act of the year 2010, which was given effect to from 01.06.2010. The learned Senior Counsel solicited the attention of this Court with reference to Section 12A of the Act regarding conditions for applicability of Sections 11 and 12 of the Act.

5. The writ petitioner-Institution was registered on 09.07.1984 under Section 12A(a) of the Act, vide C.No.2039(18)/84. Accordingly, the petitioner-Institution was extended certain benefits as permissible under the provisions of the Act. While-so, Section 12AA of the Act deals with "procedure for registration". Sub clause (3) contemplates the "procedure to be followed for cancellation of registration under Section 12A of the Act".

6. Learned Senior Counsel for the petitioner distinguished Section 12AA(3) of the Act by stating that a specific clause has been inserted through Finance Act 2010, which came into force with effect from 01.06.2010.

7. As far as the case of the petitioner is concerned, the registration was granted on 09.07.1984 and accordingly the benefit of exemptions were granted. The impugned order of cancellation was issued on 13.03.2008 and the amendment in Finance Act 2010 came into force with effect from 01.06.2010. The insertion made in Finance Act 2010 is that “or has obtained registration and at any time under Section 12A [as it stood before its amendment by the Finance (No.2) Act, 1996 (33 of 1996)].

8. In view of the fact that the insertion conferring power on the Commissioner to cancel the registration was granted with reference to the registration done under Section 12-A of the Act with effect from 01.06.2010 vide the Finance Act, 2010, the order impugned passed during the year 2008, cancelling the registration done under Section 12A of the Act is untenable and without jurisdiction. In other words, on the date of passing of the impugned order, the respondent is not vested with any power or jurisdiction to cancel the registration made under Section 12A of the Act, granting exemption to the writ petitioner-Institution.

9. In this regard, the learned Senior Counsel for the petitioner, in nutshell, contended the facts by stating that Section 12A of the Act, provides for compulsory registration of a Charitable Trust under the Act as a condition for enjoying exemption from taxation under Sections 11 and 12 of the Act with effect from 01.04.1973.

10. The writ petitioner-Vellore Institution of Technology was created as a Charitable Trust by a registered document No.94/84 in the Office of SRO, Vellore on 08.05.1984. On 09.07.1984, the petitioner-Institution obtained registration under Section 12A(a) of the Act vide C.No.2039(18)/84. Section

11. Section 12AA was inserted by Finance (No.2) Act, 1996 with effect from 01.04.1997 to provide f

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