Industrial Infrastructure Development Corporation(Gwalior) M.P. Ltd. v. Commissioner of Income-tax, Gwalior
[Citation -2018-LL-0216-16]

Citation 2018-LL-0216-16
Appellant Name Industrial Infrastructure Development Corporation(Gwalior) M.P. Ltd.
Respondent Name Commissioner of Income-tax, Gwalior
Court SUPREME COURT
Relevant Act Income-tax
Date of Order 16/02/2018
Judgment View Judgment
Keyword Tags state government undertaking • cancellation of registration • infrastructure development • rectification application • grant of registration • charitable purpose • public utility • prospective effect • quasi judicial order
Bot Summary: According to the appellant, since they 2 were engaged in public utility activity which, according to them, was for a charitable purpose under Section 2(15) of the Act, they were entitled to claim registration as provided under Section 12 of the Act. The Division Bench of the High Court placed reliance on Section 21 of the General Clauses Act and held that since there is no express power in the Act for cancelling the registration certificate under Section 12A of the Act and hence power to cancel can be traced from Section 21 of the General Clauses Act to support such order. Third, whether Section 21 of the General Clauses Act can be applied to support the order of cancellation of the registration certificate granted by the CIT under Section 12A of the Act, in case, if it is held that there is no express power of cancellation of registration certificate available to the CIT under Section 12A of the Act and 20. Fourth, what is the effect of the amendment made in Section 12AA introducing sub-clause(3) therein by Finance Act 2004 w.e.f. 01.10.2004 conferring express power on the CIT to cancel the registration certificate granted to the assessee under Section 12A of the Act. On the same principle it is held that the application of Section 21 of the General Clauses Act has no application to amend or rescind or vary a notification issued under Section 3 of the Commissions of Enquiry Act for reconstituting the commission by replacement or substitution of its 11 sole member except applicable for a limited purpose for extending the time for completing the enquiry. Lastly, while construing the provisions of the Representation of People Act, it is held that the Election Commission cannot, by recourse to Section 21 of the General Clauses Act, deregister or cancel the registration of a political party under Section 29A of the Act for the decision of the Commission to register a political party under 12 Section 29A(7) of the Act is a quasi judicial in nature. All the three High Courts after examining the issue, in the light of the object of Section 12A of the Act and Section 21 of the General Clauses Act held that the order of the CIT passed under Section 12A is quasi judicial in nature.


REPORTABLE IN SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION CIVIL APPEAL No.6262 OF 2010 Industrial Infrastructure Development Corporation(Gwalior) M.P. Ltd. .Appellant(s) VERSUS Commissioner of Income Tax, Gwalior Respondent(s) JUDGMENT Abhay Manohar Sapre, J. 1. This appeal is directed against final judgment and order dated 14.03.2007 passed by High Court of Madhya Pradesh at Gwalior in Misc. Appeal(Income Tax) No.6 of 2005 whereby Division Bench of High Court allowed appeal Signature Not Verified filed by respondent and set aside order Digitally signed by ASHA SUNDRIYAL Date: 2018.02.16 15:47:09 IST Reason: 1 passed by ITAT and restored order of Commissioner of Income Tax. 2. question involved in appeal lies in narrow compass. Few facts, however, need mention to appreciate same. 3. appellant is limited company registered under Companies Act. It is State Government Undertaking which is established with view to develop and assist State in development of industrial growth centers/areas, to promote, encourage and assist establishment growth and development of industries in State of M.P. appellant is "assesse" under Income Tax Act, 1961 (hereinafter referred to as Act ). 4. On 10.02.1999, appellant filed application in format prescribed under Section 12-A of Act to Commissioner of Income Tax (hereinafter referred to as CIT ) for grant of registration. According to appellant, since they 2 were engaged in public utility activity which, according to them, was for charitable purpose under Section 2(15) of Act, they were entitled to claim registration as provided under Section 12 (A) of Act. Since application for registration was delayed in its filing, appellant also made application for condonation of delay in filing application. 5. By order dated 13.04.1999, CIT (Gwalior) condoned delay and granted registration certificate as prayed for by appellant. In clause 3 of registration certificate, it was mentioned that certificate is granted without prejudice to examination on merits of claim of exemption after return is filed. 6. On 27.11.2000, CIT issued show cause notice to appellant stating therein as to why registration certificate granted to appellant by order dated 10.02.1999 under Section 12A of 3 Act be not cancelled/withdrawn. show cause notice also set out factual grounds for withdrawal of registration certificate. appellant was asked to reply show cause notice. appellant accordingly filed their reply and opposed grounds on which withdrawal/cancellation of certificate was proposed. 7. By order dated 29.04.2002, CIT did not find any substance in stand taken by appellant in their reply and accordingly cancelled/withdrawn certificate issued to appellant. 8. appellant felt aggrieved and filed rectification application under Section 154 of Act before CIT on 04.07.2002 contending therein that order of CIT dated 29.04.2002 cancelling/withdrawing registration certificate contains error apparent and, therefore, it is 4 required to be rectified or/and recalled. It was contended that once CIT grants registration certificate under Section 12A, he has no power to cancel/recall certificate granted to Assessee. 9. On 20.12.2002, CIT rejected application filed by appellant for rectification holding that there was no error in his order cancelling registration certificate granted to appellant. In other words, CIT held that he had power to cancel certificate once granted by him and, therefore, order for cancelling registration certificate is legal and proper. 10. Aggrieved by said order, appellant filed appeal before Income Tax Appellate Tribunal, Agra Bench. By order dated 26.08.2004, ITAT allowed appellant's appeal and set aside order dated 29.04.2002 passed by CIT by which he had cancelled/withdrawn registration certificate. 5 11. Revenue felt aggrieved by order of ITAT and filed appeal in High Court at Gwalior Bench under Section 260-A of Act. High Court, by impugned order, allowed appeal filed by Revenue and set aside order passed by ITAT and restored order of CIT. 12. Division Bench of High Court placed reliance on Section 21 of General Clauses Act and held that since there is no express power in Act for cancelling registration certificate under Section 12A of Act and hence power to cancel can be traced from Section 21 of General Clauses Act to support such order. In other words, in opinion of High Court, Section 21 is source of power to pass cancellation of certification granted by CIT when there is no express power available under Section 12A of Act. 6 13. It is against this order, assessee felt aggrieved and filed this appeal by way of special leave before this Court. 14. None appeared for appellant (assessee). Mr. Radhakrishan, learned Counsel appeared for respondent (Revenue). 15. Having heard learned counsel for Revenue and on perusal of record of case, we are inclined to allow appeal and while setting aside impugned order, restore order of ITAT. 16. main questions, that arise for consideration in this appeal, are four: 17. First, whether CIT has express power to cancel/withdraw/recall registration certificate once granted by him under Section 12A of Act and, if so, under which provision of Act? 18. Second, when CIT grants registration certificate under Section 12A of Act to 7 assessee, whether grant of certificate is his quasi judicial function and, if so, its effect on exercise of his power of cancellation of such grant of registration certificate? 19. Third, whether Section 21 of General Clauses Act can be applied to support order of cancellation of registration certificate granted by CIT under Section 12A of Act, in case, if it is held that there is no express power of cancellation of registration certificate available to CIT under Section 12A of Act? and 20. Fourth, what is effect of amendment made in Section 12AA introducing sub-clause(3) therein by Finance (No-2) Act 2004 w.e.f. 01.10.2004 conferring express power on CIT to cancel registration certificate granted to assessee under Section 12A of Act. 21. In our considered opinion, CIT had no express power of cancellation of registration 8 certificate once granted by him to assessee under Section 12A till 01.10.2004. It is for reasons that, first, there was no express provision in Act vesting CIT with power to cancel registration certificate granted under Section 12A of Act. Second, order passed under Section 12A by CIT is quasi judicial order and being quasi judicial in nature, it could be withdrawn/recalled by CIT only when there was express power vested in him under Act to do so. In this case there was no such express power. 22. Indeed, functions exercisable by CIT under Section 12A are neither legislative and nor executive but as mentioned above they are essentially quasi judicial in nature. 23. Third, order of CIT passed under Section 12A does not fall in category of "orders" mentioned in Section 21 of General Clauses Act. expression "order" employed in Section 21 9 would show that such "order" must be in nature of "notification", "rules" and "bye laws" etc. ( see Indian National Congress(I) vs. Institute of Social Welfare & Ors., 2002 (5) SCC 685). 24. In other words, order, which can be modified or rescinded by applying Section 21, has to be either executive or legislative in nature whereas order, which CIT is required to pass under Section 12A of Act, is neither legislative nor executive order but it is "quasi judicial order". It is for this reason, Section 21 has no application in this case. 25. general power, under Section 21 of General Clauses Act, to rescind notification or order has to be understood in light of subject matter, context and effect of relevant provisions of statute under which notification or order is issued and power is not available after enforceable right has accrued 10 under notification or order. Moreover, Section 21 has no application to vary or amend or review quasi judicial order. quasi judicial order can be generally varied or reviewed when obtained by fraud or when such power is conferred by Act or Rules under which it is made. (See Interpretation of Statutes, Ninth Edition by G.P. Singh page 893). 26. Relying upon aforementioned rule of interpretation, this Court has held that Government has no power to cancel or supersede reference once made under Section 10(1) of Industrial Disputes Act, 1947. [See- State of Bihar vs. D.N. Ganguly & Ors. (AIR 1958 SC 1018)]. Similarly, on same principle it is held that application of Section 21 of General Clauses Act has no application to amend or rescind or vary notification issued under Section 3 of Commissions of Enquiry Act for reconstituting commission by replacement or substitution of its 11 sole member except applicable for limited purpose for extending time for completing enquiry. (See- State of Madhya Pradesh vs. Ajay Singh, AIR 1993 SC 825). It is also held while construing provisions of Citizenship Act that certificate of registration of citizenship issued under Section 5(1)C of Citizenship Act cannot be cancelled by authority granting registration by recourse to Section 21 of General Clauses Act. (See- Ghaurul Hasan vs. State of Rajasthan, AIR 1967 SC 107 and Hari Shanker Jain vs. Sonia Gandhi, AIR 2001 SC 3689). And lastly, while construing provisions of Representation of People Act, it is held that Election Commission cannot, by recourse to Section 21 of General Clauses Act, deregister or cancel registration of political party under Section 29A of Act for decision of Commission to register political party under 12 Section 29A(7) of Act is quasi judicial in nature. [See Indian National Congress(I) (supra)] 27. It is not in dispute that express power was conferred on CIT to cancel registration for first time by enacting sub-Section (3) in Section 12AA only with effect from 01.10.2004 by Finance (No.2) Act 2004 (23 of 2004) and hence such power could be exercised by CIT only on and after 01.10.2004, i.e., (assessment year 2004-2005) because amendment in question was not retrospective but was prospective in nature. 28. issue involved in this appeal had also come up for consideration before three High Courts, namely, Delhi High Court in case of Director of Income Tax (Exemptions) vs. Mool Chand Kairati Ram Trust, (2011) 243 CTR(Del) 245, Uttaranchal High Court in case of Welham Boys School Society vs. CBDT, (2006) 285 ITR 74(Uttaranchal) and Allahabad High Court in case of Oxford 13 Academy for Career Development vs. Chief Commissioner of Income Tax & Ors. (2009) 315 ITR 382 (All). 29. All three High Courts after examining issue, in light of object of Section 12A of Act and Section 21 of General Clauses Act held that order of CIT passed under Section 12A is quasi judicial in nature. Second, there was no express provision in Act vesting CIT with power of cancellation of registration till 01.10.2004; and lastly, Section 21of General Clauses Act has no application to order passed by CIT under Section 12A because order is quasi judicial in nature and it is for all these reasons CIT had no jurisdiction to cancel registration certificate once granted by him under Section 12A till power was expressly conferred on CIT by Section 12AA(3) of Act w.e.f. 01.10.2004. 14 30. We are of considered view that view taken by abovementioned three High Courts in respective cases is in conformity with law and we accordingly approve said view taken by these High Courts in three aforementioned decisions. 31. In light of foregoing discussion, appeal succeeds and is allowed. Impugned order is set aside and order of ITAT is restored. 32. Needless to say, CIT would be free to exercise his power of cancellation of registration certificate under Section 12AA(3) of Act in case at hand in accordance with law. J. [R. K. AGRAWAL] J. [ABHAY MANOHAR SAPRE] New Delhi; February 16, 2018 15 Industrial Infrastructure Development Corporation(Gwalior) M.P. Ltd. v. Commissioner of Income-tax, Gwalior
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