The court affirmed that the Commissioner lacked jurisdiction to cancel educational trust registrations under Section 12A prior to the 2010 amendment, emphasizing the quasi-judicial nature of such orders.

JUDGMENT

Mr. Sanjeev Prakash Sharma, J.

The Revenue is in appeal in ITA No. 21 of 2011 before this court under Section 260A of the Income Tax Act, 1961 (hereinafter to be referred as "the Act") against the order dated 16.07.2010 passed by the Income Tax Appellate Tribunal, Chandigarh Bench-A, Chandigarh (hereinafter to be referred as "the ITAT") in ITA No. 510/CHD/2010 - M/s Young Scholars Educational Society, Barnala v. CIT, Patiala, whereby the order dated 26.03.2010 passed by the Commissioner of Income Tax, Patiala (hereinafter to be referred as "the Commissioner") was quashed and the registration granted to the assessee in terms of Section 12A of the Act vide order dated 04.07.1997 has been restored.

2. ITA No. 94 of 2011 has been filed by the Revenue before this court under Section 260A of the Act against the order dated 16.07.2010 passed by the ITAT in ITA No. 281/CHD/2010 - Baba Banda Singh Bahadur Education Trust, Fatehgarh Sahib v. CIT, Patiala, whereby the order dated 02.03.2010 passed by the Commissioner was quashed and the registration granted to the assessee in terms of Section 12A of the Act vide order dated 22.11.1993 has been restored.

3. Facts relating to ITA No. 94 of 2011 are being noticed for disposal of the appeal which raise common questions.

4. Learned counsel for the Revenue submitted that assessee - Baba Banda Singh Bahadur Education Trust is an Educational Trust claiming to be engaged in charitable activities by providing financial assistance to poor and needy students by way of fee concession. It filed an application under Section 12A of the Act and the same was registered by the Commissioner on 22.11.1993 and the name was entered in the register maintained for the purpose at Sr. No. 69-B. The ITO, Sirhind, conducted the review of the accounts of the trust for the assessment years 2004-2005, 2005-2006, 2006-2007, 2007-2008, 2008-2009 and found that the trust had generated huge surplus year after year, which were to the percentage of 65.79, 66.38, 55.19, 55.19 and 49.40 for the five assessment years, as mentioned above. A show cause notice was issued to the trust on 12.11.2009 proposing to cancel the registration granted under Section 12A of the Act.

5. The Trust submitted its reply and asserted that it was not being run for profit but the object was to carry out educational activities and the entire profits were diverted towards such educational development activities.

6. The Commissioner took up the matter for reviewing the registration under Section 12AA (3) of the Act and relying on the judgment passed by the Apex Court in Municipal Corporation of Delhi v. Children Book Trust and Safdarjang Enclave Education Society v. Municipal Corporation of Delhi (1992) 3 SC 390, it has been observed that the trust was not carrying on any charitable activities within the meaning of Section 2(15) of the Act but was engaged in trade and commerce with a motive to generate profits under the garb of education. It relied on the interpretation of charitable purpose and finding that imparting education per se is not a charitable activity. He proceeded to cancel the registration vide order dated 02.03.2010.

7. The respondent-assessee preferred appeal before the Income Tax Appellate Tribunal which allowed the same vide its order dated 16.07.2010, holding that the Commissioner was not empowered to cancel or withdraw registration invoking Section 12AA (3) of the Act.

8. The Tribunal held that the provisions of Section 12AA(3) only empowers the Commissioner to cancel registration of a trust which had been earlier registered in terms of Clause (b) of sub-section (1) of Section 12AA of the Act and did not include in its purview the cases relating to registration granted under Section 12A of the Act. It relied on an earlier order passed by Pune Bench of the Tribunal in Bharati Vidyapeeth v. ITO 119 TTJ 261 (Pune). The amendment in Section 12AA was further made by the Finance Act, 2010 with effect from 01.06.2010 empowering the C