Violation of provision of sec. 13 couldn’t be a ground to cancel registration of trust

Lilavati Kirtilal Mehta Medical Trust v. CIT – [2019] 108 taxmann.com 272 (Mumbai – Trib.)

The assessee-trust was formed with the object of running hospital and research centre.

It was claiming sections 11 to 13 exemption since its registration. Subsequently, the Commissioner took a view that the manner of investment of funds was in violation of provisions of section 13.

He passed an order under section 12AA(3) cancelling registration of the trust. Assessee filed appeal against the cancellation order to the ITAT.

The Tribubnal held that the violation of section 13 empowers an assessing authority to forfeit section 11 and 12 exemptions only. For cancellation of registration under section 12AA(3) the Commissioner must be satisfied that the activities of the 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.

A Statutory Authority is required to operate within the confines of the applicable statutory rule.

 Thus, the Commissioner is required to act within the scope and ambit of section 12AA(3) while invoking his power to cancel the registration.

Therefore, in view of legal position, impugned order cancelling registration granted to assessee-trust was to be set aside.