Bombay High Court held – Advisory communication from Director of Income Tax (Exemptions) regarding modification of objects did not amount to cancellation of registration under Section 12A of the Income Tax Act, 1961 – Income Tax Appellate Tribunal erred in making observations on the merits after dismissing appeal as not maintainable – Revenue not justified in treating advisory as non-statutory for appeal while relying upon it to deny exemption.

Held – Advisory communication was not an order of cancellation – Appeal not maintainable – Income Tax Appellate Tribunal exceeded jurisdiction in examining merits of advisory communication after holding appeal as not maintainable – Revenue not justified in treating advisory as non-statutory to dismiss appeal while using it to deny exemption. (Para - 28, 29, 33, 34, 40, 46, 52)

Acts & Sections Discussed:

Constitution Of India – Income Tax Act, 1961 – Section 12A – Section 12AA(3) – Section 12AB – Section 11 – Tamil Nadu Societies Registration Act, 1975

Subjects:

Income Tax Exemption – Charitable Institution – Advisory Communication – Maintainability Of Appeal – Registration Cancellation – Statutory Order – Jurisdiction Of Income Tax Appellate Tribunal

Issues:

a) Whether Income Tax Appellate Tribunal was justified in holding that advisory communication dated 28 December, 2009 – was not a statutory order – hence, no appeal was maintainable.
b) Whether Income Tax Appellate Tribunal exceeded jurisdiction by making observations on merits – after dismissing appeal on maintainability.
c) Whether Revenue could take contradictory stands – treating advisory as non-statutory to dismiss appeal – but relying upon it to deny exemption.

Submissions/Arguments:

Assessee – Board Of Control For Cricket In India (BCCI)
– Held that advisory communication amounted to cancellation of registration.
– Argued that Section 12AA(3) empowering cancellation – introduced only from 01 June, 2010 – hence, no authority to cancel registration earlier.

Revenue
– Contended that communication was advisory – not an order of cancellation – hence, appeal under Section 253 of the Income Tax Act, 1961 was not maintainable.

Ratio:

a) Advisory communication – not an order affecting rights or liabilities under Income Tax Act, 1961.
b) If advisory is non-appealable – it cannot be used to deny exemption.
c) Income Tax Appellate Tribunal lacked jurisdiction to examine advisory on merits – after dismissing appeal on maintainability.